The Swiss private banking sector will undergo further consolidation after the Geneva-based Union Bancaire Privée (UBP) agreed a deal to buy the non-British business of Coutts from the Royal Bank of Scotland (RBS).
RBS said Friday it expects the handover to be completed by the end of the year subject to regulatory approval, which includes UBP getting a bank license in Hong Kong. Neither bank disclosed the price that will be paid for the CHF32 billion ($33.4 billion) of assets under management.
UBP would only say that estimates ranging from $600 million to $800 million, put out by some news media, were too high.
The deal is the latest in a string of recent acquisitions (either completed or in process) as some foreign banks decide to exit the Swiss market. Some banks have been spurred by the need to shed non-core activities after the global financial crisis and tightening of regulations.
A joint report by KMPG and the University of St Gallen last year found that a third of private banks in Switzerland made a loss in 2013. Analysts believe other foreign banks in Switzerland may have been put off by a number of tax evasion scandals involving Swiss banks.
Enhance global footprint
The number of foreign owned banks operating in Switzerland has shrunk from a high of 162 in 2009 to 121 in May of last year. The trend continued last summer with the Israeli-owned Bank Leumi agreeing to sell to Julius Baer, and Portugal’s Espirito Santo private bank also announcing a change of hands.
In January, British bank Standard Chartered told Reuters it would wind down its Swiss private banking business after failing to find a buyer. Under fire HSBC private bank in Geneva slimmed down its operations by selling a portion of its Swiss-based assets last year.
Earlier this month, the Danish Jyske bank said it would shut down its Swiss private banking operations.
RBS said the sale of Coutts International is part of an ongoing strategy to focus its business more on its UK activities. RBS has steadily retrenched its activities since being bailed out by the British government in 2008.
UBP chief executive Guy de Picciotto said in a statement that the deal represented a “milestone” in the bank’s growth strategy. “This is particularly true for high-potential markets such as Asia, where the international business of Coutts has built long-standing relationships with high net worth clients,” he said.
The bank added that its position would also be strengthened in Switzerland, Monaco, Europe (particularly central and eastern Europe) and the Middle East. UBP acquired CHF10 billion of assets by buying Lloyds bank’s international wealth management business in 2013.
RBS will retain the Coutts brand name by keeping its British based customers, which includes Queen Elizabeth II. The parts acquired by UBP will trade under a different banner once the sale is completed.
The Swiss-based Coutts operation has recently attracted unwanted attention from the German authorities. RBS chief executive Ross McEwan told reporters in February that the bank is cooperating with a German tax evasion investigation.
UBP would not comment directly about the investigation, but a spokesman said that the bank was confident it would not inherit any legacy legal issues by taking over assets from Coutts.