Anyone visiting Flowbank's website today will no longer find information about the digital bank's offerings and marketing activities, including sports sponsorship, as was the case until recently. Instead, they are met with an information letter from the law firm Walder Wyss dated June 17th.

The black background with white text is fitting for the sad occasion, as it details the specifics of the quasi-funeral of the neobank, which was launched in 2020 with high hopes and ambitions. Last week, the Financial Market Supervisory Authority (Finma) essentially used a regulatory sledgehammer. They imposed bankruptcy on the institution and appointed Walder Wyss as the liquidator.

Contracts for Difference Closed

The information letter is primarily directed at Flowbank customers but also illustrates to a broader audience how a (fortunately very rare) bank bankruptcy generally, and a digital bank bankruptcy specifically, proceeds.

On the day of the bankruptcy opening, the liquidator closed the positions in Contracts for Difference (derivative financial instruments that allow trading of value changes in an underlying asset and are often used speculatively) and converted all foreign currency deposits into Swiss francs. Additionally, all contracts between the bank and its customers, such as Contracts for Difference, contracts for financial instruments, and (other) derivative contracts, were immediately terminated.

Business Operations Ceased

The letter also states that with the opening of the bankruptcy, the bank's business operations have been ceased. Without the liquidator's consent, the bank and its organs are no longer allowed to conduct legal transactions.

Walder Wyss intends to pay out the privileged deposits, that is, 100,000 Swiss francs per customer, as quickly as possible. Until then, however, the accounts remain frozen, meaning withdrawals or transfers are not possible. Customers will be informed about the repayment modalities in a circular as soon as possible.

«Innovative, Profitable Bank in Full Growth»

According to the Banking Act, stocks, bonds, fund units, and other securities held by bank customers in custody accounts are segregated in the event of bankruptcy, meaning they remain the property of the customers. The corresponding transfer modalities will be communicated to Flowbank custody account holders as quickly as possible, writes the liquidator.

On Thursday evening, the founder commented on the forced closure of his bank. In a statement, Charles Henri Sabet expressed incomprehension about Finma's measure against an «innovative bank in full growth, which was profitable and recognized and appreciated by thousands of customers and partners in Switzerland and abroad.»