Switzerland's largest insurance company Swiss Life has announced it will sell Banca del Gottardo to Generali's banking unit BSI for SFr1.9 billion ($1.55 billion).
BSI and Gottardo will be merged to become one of the leading Swiss private banking institutions with SFr100 billion in assets under management.
The transaction is expected to be completed by the end of the first quarter of 2008, Swiss Life said in a statement on Wednesday. The headquarters of the new entity will remain in Lugano, Switzerland.
Because the sale will go through next year, Banca del Gottardo will be fully consolidated in Swiss Life's 2007 financial statements. In the first half of 2008, the transaction is expected to contribute SFr600 million to Swiss Life's post-tax profit.
The total consideration for the sale was SFr1.875 billion, comprising the purchase price plus Gottardo's 2007 dividend of SFr100 million, payable next year.
"We came to the conclusion that Swiss Life is not the best owner for the next stage of development, as we intend to focus our investments on our life and pensions business," Swiss Life chief executive Rolf Döring said in a statement.
Analysts have long been expecting Swiss Life to sell Gottardo with general estimates of a purchase price of around SFr1.7 billion.
"This move by Swiss Life is not surprising; over the last two to three years it became crystal clear that Banca del Gottardo was no longer a strategic asset for Swiss Life," René Locher, insurance analyst with Bank Sal. Oppenheim, told swissinfo.
"The price is definitely at the higher end of expectations," he added.
Locher said the move was good news for Swiss Life, "because the insurer's business model works perfectly without Banca del Gottardo".
Swiss Life celebrates its 150th anniversary this year. The Zurich insurance company posted record results for 2006, with net profit up nine per cent to SFr954 million.
According to Dörig, Swiss Life will achieve its 2008 profit target of SFr1 billion already this year.
"We are very happy to have achieved a solution [for Gottardo] which is not only financially attractive but also makes the best use of Banca del Gottardo's franchise," Dörig said.
swissinfo with agencies
Zurich-based Swiss Life is Switzerland's largest insurer.
The sale of Banca del Gottardo will add SFr600 million to Swiss Life's net profit in the first half of 2008.
The SFr1.875-billion deal between Swiss Life and Generali consists of the purchase price of SFr1.775 billion and the bank's dividend of SFr100 million for the year 2007.
Lugano-based BSI is a wholly owned subsidiary of the Italian financial services group Generali.
BSI and Banca del Gottardo will be merged to become one of the leading Swiss private banks.
Founded in 1857 under the name Rentenanstalt, the Swiss Life Group is one of the leading European insurers in the life and pensions sectors.
The group, which has its headquarters in Zurich, is active in 60 countries and employs some 8,700 people, half of them in Switzerland.
Following a crisis in the financial markets and a series of uncertain acquisitions, Swiss Life found itself at an all-time low with losses of SFr1.7 billion in 2002.
But the country's largest insurer made a rapid recovery. Last year it posted net profits of SFr954 million.