A list of mergers and acquisitions in Swiss banking over the past two years reveals a surprise winner in the ongoing consolidation in Swiss banking.
Banking experts have long warned that private banking is about to undergo a pronounced phase of restructuring that will lead to a drop in the number of institutions vying for the rich. It hasn’t happened to a substantial degree yet. It is a rather slow process – and yet, more than 30 banks have disappeared over the past five-year period.
The year with the most transaction in Switzerland has been 2015, with ten deals completed. In 2017, five deals were announced and this year the sale of Notenstein La Roche to Vontobel was the only one so far, according to a list compiled by KPMG.
Foreign Expansion
In fact, the M&A activities of Swiss firms are rather more substantial than the KPMG numbers would suggest, because Swiss finance is more eager to widen their business activities abroad than in their home market.
Julius Baer for one has been very active: in 2012, the Zurich-based private bank bought the international wealth management of Merrill Lynch. It followed up with Commerzbank’s business in Luxembourg, Reliance and GPS Investimentos in Brazil as well as Kairos in Italy. Over the past two years, the pace of acquisitions has abated.
And the Winner Is...
A closer look at the KPMG numbers however reveals a surprise winner among private-banking players: UBS, Switzerland’s largest bank. However, the purchases by UBS didn’t make great headlines, mainly because of the size of the acquired business in relation to UBS’ scale.
If UBS for instance acquires 15 billion Swiss francs ($15.2 billion) worth of assets under management of Nordea in Luxembourg, the market hardly takes note. Even if that deal was almost the same size as the purchase of Notenstein by Vontobel, which affected assets worth 16 billion francs.
Notable Absentees
Looking at the study in detail reveals just how few Swiss companies are taking part in the M&A circus – the biggest absentee being Credit Suisse. The Geneva-based private banks also have kept a low profile. Lombard Odier was the only one to get a mention in the list – as the seller of its Dutch onshore business.
The reasons for the passive approach by most companies however aren’t to be found in an absence of opportunities in Switzerland. KPMG says that at least two dozen private banks are due to be sold because they are loss-making and hardly able to get themselves out of their troubles.
The Time Is Right
But many banks have been busy adjusting to the new «clean» business model of Swiss banking and the changes this implied for offshore activities. Some companies are still in the process of finishing the reforms, others presumably are about to get ready for an active participation in the consolidation.
KPMG’s banking expert Christian Hintermann suggests that prices are rising and owners of banks that stand no chance of coming back from the brink are well advised to sell now.
