Notenstein Private Bank, the St Gallen-headquartered subsidiary of Raiffeisen, is to buy the client assets from the Swiss subsidiary of the Germany’s Landesbank Baden-Württemberg for an undisclosed sum.

Switzerland's Notenstein Private Bank, the St Gallen-headquartered subsidiary of Raiffeisen, is to buy the client assets from the Swiss subsidiary of Landesbank Baden-Württemberg for an undisclosed sum.

Notenstein said in a statement that it was acquiring the client assets of wealth management firm LBBW (Switzerland) AG as a result of a “strategic reorientation” by Germany's LBBW.

The deal will add around SFr1 billion ($1.08 billion) to Notenstein’s current SFr20.8 billion in assets under management.

The move is also a sign of continued busy M&A activity in the European wealth management arena, including Switzerland, as firms look to sell businesses that have become unprofitable, sometimes in the face of increasing pressure on Swiss bank secrecy laws and legacy issues associated with them.

Notenstein said the planned takeover was part of the bank's strategy to strengthen its core business of wealth management for private clients in Switzerland and Germany.

“The acquisition of these client assets underpins our long-term strategy in private banking: to expand our market share in selected key markets. Moreover, we are well acquainted with LBBW (Switzerland) AG thanks to our years of cooperation. I am confident that we are the ideal partner for the new clients that will be joining our bank,” said Adrian Künzi, chief executive of Notenstein Private Bank.

The news comes following a strategic review by Germany's LBBW that has seen the bank downsize the remaining elements of its non-core banking business again since the beginning of the year.

The transaction is expected to be concluded in the fourth quarter of 2014.

M&A

There have been a number of mergers and acquisitions in Switzerland in the past year amid an environment of increasing regulatory costs and falling profits.

A recent study by KPMG and the University of St Gallen of 94 private Swiss banks found that more than a third made a loss in 2013, while the number of private banks in the Alpine state has declined from 182 in 2005 to 139 last year.

In June, HSBC Private Bank (Suisse), the Swiss subsidiary of Hong/Kong London-listed HSBC, agreed to sell a portfolio of its private banking assets in Switzerland worth $12.5 billion to Liechtenstein's LGT Bank (Switzerland), as part of its strategy to streamline its business in the US and Europe.

Other examples include Credit Suisse buying part of the non-US wealth management business of Morgan Stanley; Julius Baer buying the non-US wealth arm of Bank of America Merrill Lynch and Lloyds Banking Group selling an international private banking arm to Union Bancaire Privee. Generali, the Italian insurer, has also put Lugano-headquartered BSI up for sale, reportedly.