This publication caught up with the Swiss private bank on the day it agreed on an acquisition taking it into the higher echelons of the wealth management industry.
Today, as this publication had understood would be the case earlier in the week, Union Bancaire Privée purchased the non-UK private banking and wealth businesses of Royal Bank of Scotland, operating under the illustrious Coutts brand. (The transaction size was not disclosed but WealthBriefing understands that a media report claiming a figure between $600 million and $800 million is an overestimate.) The move means UBP has acquired more than SFr30 billion (around $31 billion) of assets, increasing its total AuM (based on the bank’s published results at the end of 2014) by around a third. In the hours after the deal was officially announced, WealthBriefing interviewed Michel Longhini, managing director, private banking (also interviewed here), about the deal and its implications.
How does this acquisition compare with the others that
UBP has done in terms of changing the scale and focus of the
The acquisition is a major milestone for UBP. It illustrates our strong commitment to further develop our wealth management capabilities, while building an even more robust franchise. UBP’s footprint will be bolstered not only in Switzerland and Monaco, but also in key growth regions where, until now, the bank has only had a limited client base. Thanks to this acquisition, UBP will reach critical mass in regions such as Central and Eastern Europe, the Middle East and Asia – areas in which Coutts International has built a strong presence and long-lasting relationships with high net worth clients.
In integrating previous acquisitions, what sort of
lessons will be applied to handling this
Every integration is different, but some things are essential: A strong commitment from top management of UBP; a very transparent and shared process; direct contact between top management and all staff in the first days following the announcement, clear deadlines on the main steps, and so forth. We must say that the initial contact with Coutts Management show a very strong cultural fit.
What will happen to the Coutts brands?
The acquired RBS activities will be integrated into UBP and will, therefore, operate under UBP’s name and brand. RBS will continue to service its UK Private Banking and Wealth Management clients through Coutts and Adam & Company.
A thorny issue for any bank of course is ensuring that
the acquired assets don't fall foul of subsequent controversy
such as undeclared assets, etc - an issue of particular concern
in Switzerland. What sort of diligence checks has UBP done about
the Coutts businesses, such as in Zurich?
The advantage with an asset deal – as opposed to a share deal – is that the past remains in the past. Nonetheless, RBS is committed to tax compliance and adheres to the government’s Code of Practice on Taxation for Banks. UBP has also taken all the necessary steps to respond to legal and regulatory changes in order to be fully compliant. The Bank has implemented several tax conformity policies, and the transferred assets will be subject to the same due diligence.
Does the bank have any sort of target about what
attrition rate (the share of the assets that might not come
across if old Coutts clients move elsewhere) is
We will definitely face some natural attrition but we are relatively comfortable in our capacity to successfully onboard clients and relationship managers and we will do everything possible to make sure they will benefit from a smooth transition and enjoy banking with UBP. In our experience, good communication and continuity in the actual relationships are key to a successful integration and limited client attrition.
Where in the global private banking league does this deal
put UBP today?
This acquisition should bring us close to the top five private banks in Switzerland.
What would you say is the most appealing part of this
That it is an excellent strategic and geographic fit. The business we are acquiring enjoys a strong foothold in growth market markets where UBP intended to grow organically. It represents a huge step forward. The quality of Coutts teams is also a major asset for UBP – in many areas.
At this stage, are you able to give any indication about planned cost savings, staffing issues, etc? Does UBP have any specific targets?
UBP intends to establish its target operating model by the end of June 2015, and will adapt the future organisation accordingly.
Finally, is the bank still open to other deals or do you think a period of focus on bedding down the transaction is now likely for the rest of 2015?
We now have to process this operation. For the time being, the focus is on welcoming the new teams and clients and making sure the transition is as smooth as possible. Once again it is not just another deal, but a major milestone for UBP and we intend to fully focus on it in order to make it a success.