Recent Swiss Banking News

Switzerland’s private banks have been struggling in their home market in recent years after a string of investigations into issues of tax evasion erupted. With many international banks retreating from the Swiss market, a new focus has been brought to Asia, where local billionaires are responsible for some of the world’s fastest growing wealth.

The latest display of this trend comes from Union Bancaire Privee (UBP), one of Switzerland’s largest private banks, which has historically done a poor job at incorporating itself into the Asian market. Three years ago it attempted to set up shop with a small team of 18 people, but they ended up only managing a couple of billion dollars worth of assets.

When organic growth proved to be too slow for president Guy de Picciotto, UBP decided to acquire Coutts International as a means of expediting expansion of the business. Coutts is a wholly owned subsidiary of National Westminster Bank and part of the commercial and private banking division of The Royal Bank of Scotland Group. They currently have over 40 offices in the United Kingdom, Switzerland, the Middle East, and — most importantly — Asia.

“This acquisition confirms our commitment in further developing our wealth management business and represents a significant milestone in our growth strategy,” Guy de Picciotto said in a news release. “This is particularly true for high-potential markets such as Asia, where the international business of Coutts has built longstanding relationships with high-net-worth clients.”

But Coutts isn’t the bank’s first acquisition. They actually mark the fourth purchase in five years, including the Swiss subsidiary of ABN Amro Bank, Nexar Capital, and Lloyds private bank. The bank has made a total of 22 acquisitions since it was established his father, Edgar de Picciotto, in 1969. Their more recent acquisitions have helped the bank rebuild its asset base, which was almost halved during the financial crisis. UBP reported 98.7 billion francs in assets at the end of 2014 versus their peak of 135 billion back in 2007.

The sale of Coutts International is a single part of RBS’s larger effort to refocus its business within the UK. The bank also sold another $3.7 billion of shares in U.S. arm Citizens and is still looking to slash the size of its investment bank by three-quarters in the next five years. RBS will be keeping Coutts’ UK arm, which includes Britain’s royal family among its most important customers. The British government gave RBS a £45 billion bailout during the financial crisis, so they hold an 80 percent stake in the bank.

UBP announced recently that it will be taking on between 290 and 340 people out the 400 staff members from Coutts in Switzerland. Up to 150 of the acquired staff will be responsible for winding down the Coutts International unit, which should conclude by the end of 2017. They have not yet stated plans for Coutts’ Asian operation, which also employs roughly 400 people, but cuts are expected to be less severe.

UBP previously had almost 100 billion Swiss francs (S$142.3 billion) under management at the end of last year. The acquisition of Coutts will expand their assets approximately 30 percent, bringing them to 130 billion Swiss francs.

The transaction is subject to regulatory approval but is expected to close in the fourth quarter. The transfer should be complete by early 2016. The price of the deal will be depend on the level of assets under management at completion, which will be determined in the first half of next year.

Thank you for reading!

-Andrew Leighton Chamberlain