Banque Havilland, once a discreet player in the European private banking sector, is now caught in a severe regulatory storm. The Luxembourg financial authorities have revoked the bank’s licence, and troubling connections to sanctioned Russian oligarchs have come to light. The ongoing scandal highlights serious concerns about the bank’s governance and its anti-money laundering (AML) practices, prompting unprecedented actions from regulators.
This case has also reignited old tensions related to the 2009 sale of Icelandic bank Kaupthing’s Luxembourg unit to the Rowland family, the financiers behind Banque Havilland. The ongoing legal struggle of Italian investment manager Umberto Ronsisvale, who has been contesting the bank’s management in Luxembourg court for the past 15 years, is particularly revealing in this context.
“It seems we are witnessing a repeat of the Kaupthing saga. High-priced lawyers will be battling to justify Havilland’s actions, already sanctioned everywhere globally, attempting to shift the losses onto clients and the Luxembourg tax payers,” Ronsisvale said.
‘Change needed in Luxembourg‘
“Luxembourg should change,” said Ronsisvale in an interview with Investment Officer. “My case will oblige them to change. They cannot stop it. This should be known by everybody now that Banque Havilland is going down.”
For Luxembourg, the eventual demise of Banque Havilland could bring to light “embarrassing“ information for regulators, law firms and the government, Ronsisvale said, underlining that the case is telling for decisions made by people who still wield political, legal and regulatory power, including now prime minister Luc Frieden, who signed off on the sale of Kaupting Luxembourg to the Rowland family as finance minister in 2009..
Ronsisvale, 55 years old, in 2009 became the owner of Luxembourg real estate Sicav fund ImmoCroissance by buying it in the Kaupthing fire sale. Less than an hour after he became owner, Banque Havilland called default on a major loan to ImmoCroissance. “123 million euro was wiped out in 50 minutes,» he said.
‘Relentless pursuit of profit’
The ImmoCroissance fund is now owned by three sitting and former executives of Banque Havilland, Peter Lang, Jean-Francois Willems and Marc Arand, according to its 2023 annual report filed with the Luxembourg Business Register. Per 2023 the fund managed a real estate portfolio with three properties in Luxembourg collectively valued at 34.4 million euro.
A long legal battle in Luxembourg eventually led to a ruling by Luxembourg’s Supreme Court in 2018 saying Ronsisvale is entitled to ownership of the fund. Banque Havilland however has yet to respect this ruling. The bank did not respond to a request for comment.
“Kaupthing should have been declared bankrupt and liquidated in 2009, rather than being allowed to continue under the same leadership,” Ronsisvale said. “It is clear that stringent sanctions must be imposed on this Havilland management team and that they should be expelled from the financial market. Their relentless pursuit of profit at all costs is concerning.”
Thorough investigation needed
Ronsisvale’s concerns point to possible legal implications. The piecemeal acquisition of Kaupthing Luxembourg might have been used to hide liabilities or to avoid regulatory or contractual obligations, he said. If conflicts of interest are proven, it could lead to investigations into breaches of fiduciary duty, fraud, or other legal violations. He stressed the need for a thorough investigation to ensure transparency and integrity in Luxembourg’s financial sector.
Banque Havilland has acknowledged the revocation of its licence and stated that it will legally challenge the ECB›s decision, which it has described as «irreparable.» The bank and its owners are no stranger to fierce court battles. After losing its UK licence last May and being fined 10 million pounds by the UK›s Financial Conduct Authority (FCA) for currency manipulation, it also took that decision to court. The case is still ongoing.
Regulatory clampdown
The European Central Bank (ECB) revoked Banque Havilland’s banking licence on 1st August 2024. Luxembourg’s financial regulator CSSF followed up by suspending the bank’s payments, effectively freezing its operations and appointing lawyer Laurent Fisch and Ernst & Young (EY) as administrators.
CSSF declined to explain why the licence was revoked, citing ‘reasons of professional secrecy’, and neither did the ECB.
Recent media reports have played a role in this decision at the ECB, Investment Officer has come to understand. In particular, the June 28 court reporting by Bloomberg from Monaco, when a public prosecutor demanded a six-month jail sentence for a private banker working for Banque Havilland who had accepted a 15 million euro cash deposit without proper AML checks. In parallel, regulatory concern has been fueled recently when Monaco was graylisted by the Financial Action Task Force, the G7 anti-money laundering body, this summer.
The regulatory actions follow years of growing concerns about the bank’s governance. Banque Havilland’s problems are not new. In recent years, the bank has faced several controversies, including allegations of currency manipulation and money laundering, but the current situation appears to be the most serious.
Russian connections
At the centre of this crisis is David Rowland, the British billionaire behind Banque Havilland. Rowland’s ties to high-profile figures like Prince Andrew have attracted significant media attention, but it is his connections to Russian oligarchs that have likely played a key role in the current regulatory actions.
According to reports from Finews.ch and The Times, Rowland’s business dealings with sanctioned Russians, such as billionaires Gennady Timchenko and Boris Rotenberg, are now under intense scrutiny. Timchenko, a close ally of Vladimir Putin, was reportedly a client of Banque Havilland in Luxembourg. While there is no direct evidence that the bank helped Timchenko bypass sanctions, the mere association has raised concerns among regulators.
Monaco yacht meeting
One particularly troubling event involved a meeting arranged by Rowland on his family yacht in Monaco in 2017. According to The Times and the Organized Crime and Corruption Reporting Project (OCCRP), Boris Rotenberg, another sanctioned Russian oligarch with close ties to Putin, attended this meeting. The discussions included opening bank accounts for Rotenberg’s then-non-sanctioned wife, Karina. Despite her husband’s sanctioned status, Banque Havilland reportedly opened at least one account for her, further complicating the bank’s regulatory situation.
The opening of these accounts, especially in such a sensitive context, raises questions about the bank’s compliance with international AML standards. Luxembourg authorities and the ECB may have seen this case as the final straw, leading to the recent regulatory crackdown.
Compliance failures
Banque Havilland has already faced significant financial penalties for its AML deficiencies. In 2018, the bank was fined one million euros by the CSSF. More recently, Reporter.lu revealed that in May, the bank received another fine of five million euros following a CSSF on-site inspection, setting a record for Luxembourg, although the CSSF has yet to confirm this.
Banque Havilland has issued a statement saying it will challenge the ECB’s decision in court.