Swiss Life has agreed to sell Banca del Gottardo to BSI, the Lugano-based Swiss private banking unit of Italian financial services group Generali, for SFr1.875 billion ($1.66 billion). BSI and Banca del Gottardo will be merged to create a new Swiss private banking institution, headquartered in Ticino, with SFr100 billion in assets under management. The transaction is expected to be completed by the end of the first quarter of 2008, subject to regulatory approval. Banca del Gottardo has SFr36.3 billion of assets under management and posted a net profit of SFr85.2 million in the first half of 2007. Assets under management are distributed 65 per cent in Switzerland, 9 per cent in Italy, 16 per cent in the rest of Europe and 10 per cent in the rest of the world. The merged entity will be headed by Alfredo Gysi, currently chief executive of BSI. Rolf Aeberli, chief executive of Banca del Gottardo, will leave after the merger planned by mid-2008 but remains in his current position pending completion of the transaction. Mr Gysi said: "By joining forces with Banca del Gottardo, and with the strong commitment of Generali, we now have the opportunity to build an even more competitive private banking business with strong roots in Ticino, an attractive franchise across Switzerland and attractive growth opportunity in and outside of Europe. With the new combined bank, we will further develop and grow our businesses from this promising platform.” The new bank will have a presence in the three major Swiss financial centres of Zurich, Geneva and Lugano, but will retain its management base in Lugano. Generali said it expects to realise over SFr120 million in cost synergies from the merger. Headcount reduction as a result of duplications, said a statement, would be mitigated through early retirements, natural fluctuation and envisaged growth. The sale price consists of a purchase price of SFr1.775 billion and the bank’s dividend of SFr100 million for the year 2007, payable in 2008. This is subject to potential adjustments based on year-end figures regarding assets under management and equity. Generali said the acquisition of Banca del Gottardo forms part of its strategy to grow its asset management business. BSI has been part of the Generali Group since 1998 and accounts for assets under management totalling SFr64 billion. It has achieved average annual growth of 13 per cent in assets under management over the past four years, and reported a net profit of SFr106 million in the first half of 2007. In recent years, it has built up an international presence covering Monte Carlo, Paris, Hong Kong, Singapore, Buenos Aires and Montevideo. Generali also owns Banca Generali with assets under management of SFr42 billion. Swiss Life group chief executive Rolf Doerig said: “Together with Banca del Gottardo, we came to the conclusion that Swiss Life is not the best owner for the next stage of development, as we intend to focus our investments on our life and pensions business and enhance our respective market positions. "We are very happy to have achieved a solution which is not only financially attractive but also makes best use of Banca del Gottardo’s franchise. Joining forces with BSI creates a strong Ticino-based private banking institution with an attractive value proposition in Switzerland and beyond.”