Swiss Life abandons Banca del Gottardo deal

The Lugano-based Banca del Gottardo has almost SFr40 billion in assets under management Keystone

Switzerland’s largest life insurer, Swiss Life, has ditched plans to sell its banking unit, Banca del Gottardo to a consortium of buyers, including Italy’s UniCredito and the swissfirst bank.

“The two parties were too far apart on price to reach an agreement,” Swiss Life said in a statement on Tuesday.

Swiss Life wanted at least SFr1.5 billion ($1.2 billion) for Banca del Gottardo, although the private bank made a loss of SFr160.5 million in 2002.

“Our valuation…is realistic,” said Rolf Dörig, chief executive officer of Swiss Life.

“A fact that is confirmed by the bank’s good result in 2003, with a profit of SFr85 million.”

The failed deal saw shares in Swiss Life fall by at least two per cent to SFr235.50 during morning trading, amid concerns it would complicate the insurer’s turnaround plans.

Modest profit

The insurer is expected to announce a modest profit for 2003, after crashing to a record loss of SFr1.69 billion in 2002.

Since then, Swiss Life has been shedding assets, sacking staff and refocusing on insurance, after an ill-fated expansion into the banking industry.

Swiss Life – which posted a 2003 first-half provisional profit of SFr66 million – said it would review the bank’s situation in coming weeks, and provide further details on March 30, when it presents its annual results.

“Due to the bank’s good performance, we are confident that we can extract this value [SFr1.5-billion asking price] by different means, and thus find a better solution for our shareholders,” Dörig said.

Banca del Gottardo has almost SFr40 billion in assets under management.

Analysts said the failure of the sale means management at Swiss Life will have to continue to spend time on finding a solution for Gottardo instead of working on the implementation of a growth strategy.

swissinfo