banking, Swiss Life has sold Banca del Gottardo to BSI, the Swiss
subsidiary of Italy’s Generali, for CHF1.875 billion ($1.67
billion). The deal will create a dominant private bank in
Switzerland’s Italian-speaking Ticino region, with assets of about
CHF100 billion. Gottardo and BSI, the area’s two biggest private
banks, both focus on wealthy north Italian clients and had already
been pursuing shared back-office ventures to cut costs.
Although Swiss Life had regularly denied rumours of a sale of
Lugano-based Gottardo, it was known to be keen to divest the
under-performing unit. The bank suffered a net outflow of client
money from its private banking operations of CHF875 million in the
first half of 2007. This was primarily due to the departure of
client adviser teams in Lugano and Luxembourg last autumn. The loss
of client funds compared with a net inflow in the first half of
2006 of CHF399 million.
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The merger with BSI will herald a major consolidation of the
private banking sector in southern Switzerland, especially in
cities such as Lugano and Ticino that have historically served
Italian clients. As a result, local employment in the banking
sector could be hard-hit.
Swiss Life said the deal with BSI followed a strategic review
conducted in October. Admitting that significant additional
investment would be needed in Gottardo, the Swiss insurer said that
it preferred to concentrate on its core business. It will book a
net CHF600 million gain on the disposal.
Swiss Life was also believed influenced by the fact that valuations
for private banks have soared on the back of booming wealth
management business. The sale price is significantly higher than
the CHF1.5 billion it had been seeking previously for
Gottardo.
Gottardo has also been extensively restructured and reduced in
size, with the recent sale of its Monaco private bank and its
leasing subsidiaries.
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By GlobalDataHowever, there were some critics of the deal. Fabrizio Croce, an
analyst at Landesbanki Kepler, contended that the insurer has sold
its best asset, “a pearl for a life insurance group like Swiss
Life”. Gottardo’s CHF164 million of net profit over the first half
of 2007 accounted for 18 percent of the insurance group’s operating
result in the period, he noted.
Generali is ambitious to grow its asset management business.
Earlier this year, Banca Generali, its banking unit, transferred
its wealth management operation to wholly owned subsidiary Banca
BSI Italia.
