The short history of the Geneva digital bank, founded in 2020 and shut down by the Financial Market Supervisory Authority (Finma) in mid-June, has been extended by another chapter. However, this is not a continuation but an episode that essentially belongs in the 2023 yearbook.

Last Friday, the Swiss business newspaper «L'Agéfi» dedicated its editorial and nearly two full pages to the now-bankrupt digital bank. The reason for this is that the Geneva Court of Appeal lifted super-provisional measures on Wednesday that had been imposed in the first instance in October 2023 at the bank's request against «L'Agéfi.»

These measures forced the newspaper to remove all traces of two articles from the internet and social media. The newspaper subsequently challenged this decision legally—and has now succeeded.

Unwelcome Reporting by the Business Newspaper

One of the two articles was published by «L'Agéfi,» which by no means has a reputation for being a fundamental critic of the Swiss banking sector (the acronym stands for «Agence économique et financière»), on October 19, 2023. According to the newspaper, the publication was preceded by a conversation with the Flowbank management.

During this conversation, the management had ultimately demanded that the title of the planned article be «Flowbank will be profitable in 2023.» The editorial team refused, and the conversation ended abruptly. The article was therefore largely based on the annual report and other publicly available information.

The second sanctioned article, published a week later, referred to various extraordinary findings made by the external auditor PwC in its report, including that the bank's internal control system did not comply with Swiss law. The article also addressed the high turnover in senior positions.

Gag Order Against Press Freedom

«L'Agéfi» celebrates the Court of Appeal's decision as a victory for press freedom. Flowbank had prevented the newspaper from doing its job, according to the editorial. The «incomprehensible decision» of the first judge had made entire articles disappear from the web. Moreover, the judge had gagged the newspaper regarding the provisional measures themselves.

The editorial concludes that censorship should never have been applied, and the ease with which such provisional measures can be imposed is very concerning. The imbalance in financial strength between the parties—a bank against a media company—highlights the extent of the threat to freedom of information.

Finma Takes a Stand

However, the newspaper does not stop at reviewing the past and drawing lessons from the case but also provides updates on the current situation. FINMA confirmed that it had «very closely monitored» the bank in recent months and weeks.

The authority also indicated that customer account balances (up to 100,000 francs) and securities would be reimbursed within seven days once the company handling the liquidation received the bank data of the customers.

Walder Wyss Informs Creditors

Meanwhile, the liquidator Walder Wyss has posted new information on the Flowbank website this week. According to the information, the e-banking platform of the institution has been reactivated to automate the process of repaying privileged deposits. Eligible individuals will be notified individually by email when the process begins.

Walder Wyss urges customers with cash balances in a Flowbank AG account to provide instructions for the transfer (bank details of the account to which the repayment should be made). The repayment will be made within a few days.

«Substantial Doubts»

Finam justified the forced closure of Flowbank mainly due to the lack of capital. In various media, Charles-Henri Sabet, founder and CEO of the digital bank, criticized that the authorities had failed to disclose that he had deposited the required capital on time with a Swiss bank.

«L'Agéfi» now quotes a Finma spokesperson who noted that this emergency injection had raised so many substantial doubts that approval was out of the question. It was also not the first time the bank's capital had fallen below the capital requirements.

And—this thread can be continued—it is unlikely to be the last time that the saga of the unfortunate Flowbank provides material for reporting.