Swiss asset managers are less expensive to buy than foreign rivals. Smaller banks tend to pay more for their acquisitions than bigger ones because they are under greater pressure to act.
Apart from a few spectacular transactions, Switzerland had a rather quiet 2015 in respect to mergers and acquisitions (M&A) in wealth management. This is one of the conclusions in a study by Scorpio Partnership called «Wealth Management Deal Tracker» (available for purchase online).
The study authors counted six major takeovers last year, with a total of 46.9 billion Swiss francs of asset under management changing hands. This is significantly less than in 2014, when 138 billion in assets were sold. Signs are that the expected fines in the drawn-out dispute with the U.S. tax authorities put a damper on M&A activities in Switzerland.
Lower Multiple
The biggest transaction was the acquisition of Coutts International by Union Bancaire Privée with 30 billion francs in assets changing hands. The purchase of Royal Bank of Canada (Switzerland) by Bank Syz was a further notable exception to the trend, when 10 billion francs in assets under management were sold. The third important transaction was the purchase of La Roche by Notenstein private bank, with 6 billion in client assets.
The deals are particularly interesting because they show that the prices paid in Switzerland were significantly lower than those paid abroad. Globally, the buyer on average pays 2.14 percent of the purchased assets, while the Swiss have to fork out between 1 and 2 percent.
One more sign of course that Swiss banks have become less attractive as potential takeover candidates with their legacies of unfettered offshore banking.
Small Banks Pay More
Small buyers paid more for their acquisitions than bigger ones, the report showed. The authors conclude that the smaller institutes tend to feel the demands arising from the structural changes in banking more strongly than big banks and therefore are under greater pressure to keep or reach the critical size.
Among smaller transactions count the takeover of Finter Bank by Vontobel (1.6 billion in assets transferred), Julius Baer's acquisition of Fransand Gestion (1.3 billion) and the purchase of IDB (Swiss) by Hyposwiss Private Bank Geneva (1.35 billion).
Swiss banks made ten acquisitions abroad last year.
U.K., U.S. Top the List
The study authors counted 124 M&A transactions worldwide, the highest number in eight years. The total of assets changing hands amounted to $408 billion, down from 461.4 billion a year earlier. The multiple paid rose to 2.14 percent from 2.06 percent.
The U.K. registered the most transactions (51), with the U.S. in second place (41), Asia in third (16) and Europe ex-Switzerland and U.K. with 8.
