UBP and Discount Bank to merge

The planned merger will lift UBP into the top three of Geneva private banks Keystone Archive

Two private Geneva banks have announced their intention to merge to create a financial institution managing some SFr80 billion ($47.11 billion).

The Union Bancaire Privée and the Discount Bank and Trust Company have entered negotiations and signed a letter of understanding to create one of the top three Geneva private banks, which would have 1,400 staff.

A short news statement said the discussions now taking place between the two banks should enable an agreement to be reached “in the course of the coming weeks”.

Predator not prey

The development ends weeks of speculation that UBP was up for sale, and observers say that it shows the bank is rather a predator than being a prey. Reports say the new banking group would keep the name UBP.

They add that the merger would help the two institutions attain a critical mass in an ever-increasing world of competition.

The chairman of UBP, Edgar de Picciotto, has said that such a critical mass would be between SFr80 and SFr100 billion of assets under management, a prerequisite that would be fulfilled if the merger is successfully completed.

Latest takeover

The de facto acquisition by UBP would be the latest in a series of takeovers made by the de Picciotto family over the past years.

In 1984, it bought the Banque du Rhône et de la Tamise and five years later acquired Morgan Grenfell Securities. It also acquired the much larger TDB American Express Bank in 1989.

The Discount Bank and Trust Company belongs to the American-Israeli Recanati family, which has built its economic base on three pillars – the Overseas Shipholding Group, IDBH Holding that specialises in venture capital for high-tech companies and the Discount Bank Group in Geneva.

A member of the executive board of UBP, Michael Wyler, said the two families have known each other for several years.
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Sharing a common philosophy

“They share a common philisophy regarding how to act with clients on a private level,” he told swissinfo.

“The banks both offer a very personalised service. They both offer some sophisticated financial instruments to their clients, so it was quite natural for them to join their efforts.”

“They also realise that to survive over the next century you need to have a certain size and alone they would have had difficulties to grow to that size,” he added.

Asked about possible job cuts, Wyler told swissinfo that it was clear that a restructuring would take place but it was far too early to assess the situation.

“We are all conscious though that good staff is difficult to find and good staff is important to retain, so we’ll certainly do our best to keep our staff as much as we can,” he added.

Observers have noted that smaller private banking operations will now have to reflect on their strategy because there is less and less room for them in the banking landscape.

swissinfo with agencies