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WealthBriefing Research: Wealth Management Acquisitions Rise Steeply in 2005

Contributing Editor, 16 June 2005

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Acquisitions in the wealth management sector rose by 58 per cent in the first five months of 2005, compared with the same period a year ago,...

Acquisitions in the wealth management sector rose by 58 per cent in the first five months of 2005, compared with the same period a year ago, according to a survey by WealthBriefing. So far this year there have been 41 acquisitions in the wealth management sector, compared with 26 in the first six months of 2004 (see Table).

Fifteen of these acquisitions were in the US; another five were in the UK, and only two were purely Swiss deals. Many of the acquisitions in Europe were cross-border, representing 16 of the deals, which shows the popularity of cross-border deals in the wealth management sector.

“Appetite for acquisitions is very buoyant,” said Ray Soudah, director of Millenium Associates, the wealth management mergers & acquisitions specialist.

He added: “With the scarcity of organic growth opportunities and the continuing need for financial firms, specialised private and institutional asset managers to improve cost/income ratios, activity in M&A transactions is fast increasing and national borders are playing a decreasing role. I see activity remaining high for 2005 and beyond.”

The appetite for acquisitions has grown significantly during the last six months. Senior management from at least 15 financial firms have made public pronouncements about their desire to buy a private bank/wealth manager.

In the last six months, the following firms have made public their ambitions to acquire wealth management firms: ABN Amro, Barclays, BNP Paribas, Citigroup, Deutsche Bank, Eaton Vance Investment, EFG, ING, JP Morgan, Julius Baer, London & Capital, Mellon, Merrill Lynch, Rathbones, UBS.

Organic growth appears to be becoming increasingly difficult for many firms. Profitability has improved for a great many wealth managers, but this is due to improved asset performance and exchange rate movements, said Mr Soudah. “Very few firms are growing by adding net new money.”

Mr Soudah said this will increase the move towards consolidation in the sector. “There will eventually come a day when many wealth management firms can’t hide behind the artificial growth of profits when their assets are actually shrinking. Many will be forced to sell.”

The consolidation argument is also a major tenet of the annual PricewaterhouseCoopers Global Private Banking/Wealth Management survey for 2005. “More and more, size will matter as international banks go on an acquisition trial and local/national banks look to achieve scale through less costly growth strategies,” said the survey, released today.

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Wealth Management M&A Activity First Half 2005
Acquiring Firm Firm Acquired Location Private Client Assets under Management of new entity
Barclays ING Securities Bank (wealth management operations: ING Private Bank & ING Ferri) France/UK €2.8 billion

Fortune Management

Dr Höller Vermögensverwaltung und Anlageberatung

Switzerland N/A

Lombard Odier Darier Hentsch

DekaBank(Swiss) private bank (20% stake)

Switzerland N/A

Webster Financial Corporation

J. Bush & Co

US N/A

Sanders Morris Harris Group

Edelman Financial Center

US $10 billion

Bank Sarasin

Colombo Switzerland/Italy Colombo adds AUMs of around $600 million

Encore Bank

Linscomb & Williams

US $2 billion
Kaupthing Bunardarbanki

Singer & Friedlander

Iceland/UK N/A
Banco Monte dei Paschi de Siena

TrinityCapM

Italy/UK N/A

Kredietbank Luxembourgeoise

Effectenbank Sroeve

Holland/Luxembourg $9.7 billion

Garrison Financial Corp

Tahoe Advisers

US N/A

ABN Amro

Nachenius, Tjeenk & Co

Holland

Nachenius had around €1.3 billion of AUMs.

Boston Private Financial Holdings

Gibraltar Financial

US N/A
Spanish private investors

Banco Privado Portugues (17% stake)

Spain/Portugal N/A

UBS

Dresdner Bank Lateinamerika (private banking division)

Switzerland/US/Latin America N/A

PrivateBancorp

Bloomfield Hills Bancorp

US Bloomfield had around $330 million of AUMs
Management Buy-Out

Ernst & Young Investment Advisers

Canada N/A

NewAlliance Bancshares

Cornerstone Bancorp

US Cornerstone had around $217 million of AUMs
New Alliance Bancshares

Trust Co. of Connecticut

US N/A

Liechtensteinische Landesbank

Swisspartners Investment Network (bought a majority stake after earlier purchase)

Liechtenstein/Switzerland $3.7 billion

Silvercrest Asset Management

Heritage Financial Management

US Heritage had around $400 million of AUMs

Washington Trust

Weston Financial Group

US Weston had around $1.2 billion of AUMs

WestLB

Weberbank

Germany Weberbank had around $3.79 billion of AUMs

Investec

HSBC's private client & wealth management business in South Africa UK/South Africa HSBC's wealth management business in SA had around $514 million of AUMs

ABN Amro

Bank Corluy

Holland/Belgium

Sal Oppenheim

Montgomery Oppenheim (full control of, compared with a minority stake beforehand)

Germany/Ireland N/A

Janney Montgomery Scott

Parker/Hunter Inc.

US Parker had around $492 million of AUMs

Duncan Lawrie

Douglas Deakin Young

UK

Douglas had around $473.5 million of AUMs

BB& T Group

Sterling Capital Management

US N/A

Yorkshire Investment Group

Manor Management Services

UK $565 million

Charles Stanley

Rowan Dartington

UK Rowan had around £300 million of AUMs

Bank Hapoalim

Bank of New York-Inter Maritime Bank

Israel/Switzerland N/A

BNP Paribas

Turk Ekonomi Bankasý (50% stake)

France/Turkey N/A

Kredietbank Luxembourg

Aurel Leven Gestion

Luxembourg/France Aurel had $1.3 billion of AUMs

Bank Leumi

Riggs Bank & Trust (Channel Islands)

Israel/UK N/A

Merriman Curhan Ford & Co

Catalyst Financial Planning & Investment Management

US N/A

Arrow Partners

Landmark Investors

US N/A

UBS

Property division of Siemens Kapitalanlagegesellschaft

Switzerland/Germany N/A

Compass Bancshares

Stavis, Margolis Advisory Services

US Stavis had around $500 million of AUMs

UBS

Etra

Switzerland/Italy Etra had around $653 million of AUMs
Invectec (Car Sheppards Crosthwaite)

Rensburg (Investec will own 47% of the merged Rensburg and Carr Sheppards Crosthwaite)

UK N/A

EFG Bank

Dresdner Lateinamerika Financial Advisors

Switzerland/Germany/Latin America N/A

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