2013 has seen a major drive in consolidation. A tsunami of M&A in the wealth management industry has been triggered by tougher regulation, tax treaties and continuing margin pressure and competition.
The private banking sector has lifted the spirits of investment bankers as global M&A in different sectors has, on the contrary, dramatically fallen.
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Data gathered by our sister company, WealthInsight, shows that deals across the global wealth management industry have increased by a staggering 640% in 2013, since 2007. This is the highest increase the industry has even witnessed. According to research, more than $1.1trillion of high net worth (HNW) assets has been transferred since 2008.
French bank Societe Generale has surprisingly gone from predator to prey: Singapore’s DBS and Dutch bank ABN AMRO are battling to snap up its Asian private bank unit.
In addition, HSBC, which has pulled out of a staggering 54 countries, is believed to have put its Global Asset Management up for review with $412.9 billion of assets.
Asia, one of the favourite destinations of wealth in 2013, is under the consolidation radar. The region is experiencing rising competition and cost pressures, and will see more M&A activity as international private banking businesses join on the band wagon of booming prospects in the region.
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By GlobalDataCountries such as Switzerland and the rest of Europe have also been witnessing a significant number of buyers and sellers, with M&A becoming a staple of most of the banks’ business models.
Global auditor KPMG has estimated that another 25-30% of Swiss private banks will disappear in the next three years: almost 50% of all deals were driven by EU entities during 2008 and 2012.
In the UK, 50% of wealth managers in London will depart in three years, with a large number of foreign firms struggling and looking for merger solutions.
Some of the key M&A deals that made the headlines this year included:
29 January. Bank Sarasin and Bank Safra finalise powerhouse merger
Brazil’s Safra Group announced its final merger with Bank Sarasin after it acquired the Swiss bank in November 2011.
Private bank Sarasin, formerly controlled by Netherland-based Rabobank, was bought in a deal valued at CHF1bn ($1.09bn) in November 2011.
The merger will form Bank J. Safra Sarasin with assets under management of CHF130bn.
19 February. Bancolombia acquires HSBC Bank (Panama)
Bancolombia acquired HSBC Latin America Holdings, a wholly-owned subsidiary of HSBC Holdings plc, for $2.1bn. Under the agreement, Bancolombia will assume the entire financial operation in Panama which held through HSBC Bank (Panama) and its subsidiaries, Financomer SA, HSBC Seguros Panama Panama SA and HSBC Securities SA.
22 March. Schroders acquires Cazenove Capital Holdings
UK Schroders entered into an agreement to acquire independent wealth manager Cazenove Capital Holdings for approximately £424m. Through the deal, Schroders’ assets will significantly increase in both the private banking and UK intermediary space, and will raise its total AuM to approximately £254bn.
25 March. Credit Suisse buys Morgan Stanley wealth management unit in EMEA
Later in March, Credit Suisse bought Morgan Stanley’s wealth management businesses in Europe, the Middle East and Africa (EMEA), excluding Switzerland at an undisclosed price.
Worth over $13bn of AuM, Morgan Stanley’s unit will be integrated into Credit Suisse’s private banking & wealth management division with the Swiss bank’s AUM growing to about $850bn.
1 April. Credit Suisse sells JO Hambro Investment for £50m
Credit Suisse Group AG agreed to sell British wealth manager JO Hambro Investment Management (JOHIM) to Bermuda National Limited for £50m.
JOHIM is a London-based investment manager specializing in discretionary portfolio management for private clients, charities and institutions and has a range of in-house managed investment funds. JOHIM has around £3.6bn in assets under management and £4.8bn in assets under control.
31 May. Merrill Lynch merges with Julius Baer
Geneva-based Merrill Lynch Bank merged its branches in Zurich and Dubai into Bank Julius Baer.
After Julius Baer acquired Merrill Lynch’s International Wealth Management (IWM) business outside the US on 1 February 2013, Merrill Lynch Bank was the first business to be transferred to the Julius Baer Group. The latter begun the transfer of Merrill Lynch’s IWM business in Hong Kong and Singapore on 28 May.
27 June. Falcon acquires Hyposwiss’s private banking business in Central and Eastern Europe
Switzerland-based Falcon Private Bank acquired the Central and Eastern Europe private banking business of Hyposwiss Private Bank Zurich, a wholly owned subsidiary of St. Galler Kantonalbank. The purchase price for the transaction was not disclosed.
14 July. HSBC sells private banking activities in Luxembourg to VP Bank
Germany-based HSBC Trinkaus & Burkhardt agreed to sell its private banking and fund business in Luxembourg to Liechtenstein’s VP Bank Group for an undisclosed price.
The two units had AuM of approximately 1.5bn ($2bn) and 0.7bn (US$0.9bn) respectively at 30 June 2013.
In May, HSBC announced it was selling its Monaco business, but then, despite the interest from Safra group, the bank decided to retain the unit.
31 October. Kleinwort Benson acquires BHF-BANK from Deutsche Bank
Kleinwort Benson Group (KBG), the wholly-owned subsidiary of RHJ International (RHJI), agreed to acquire private bank BHF-BANK (BHF) from Deutsche Bank for 354m ($486.3m).
As per the agreement, KBG acquired 91% stake in BHF for 322m, while RHJI will acquire the remaining 9% stake directly by issuing RHJI shares to Deutsche Bank at par value
1 November. Morgan Stanley acquires 30% stake in Mitsubishi UFJ’s wealth management arm
Morgan Stanley agreed to buy a 30% stake in Mitsubishi UFJ Financial Group’s Japanese wealth-management business.
Mitsubishi UFJ Morgan Stanley Securities, the securities joint venture between Mitsubishi UFJ Financial Group and Morgan Stanley, will hold 75% of the private banking unit while the Japanese lender’s main commercial banking unit will hold the remaining 25% stake.
No further terms of the deal were disclosed.
5 December. ABN AMRO acquires Credit Suisse Group’s German private banking activities
Credit Suisse Group has recently agreed to sell its domestic private banking activities in Germany to Bethmann Bank, ABN AMRO’s private bank in Germany.
Bethmann Bank will take over Credit Suisse’s 9000 private customers, who have a combined wealth of 10 billion ($13.6 billion) with investible assets exceeding 1 million in the country.
The acquisition will increase Bethmann’s number of clients to 20,000 and raise its assets under management (AuM) to 34bn from 24bn previously.
