M and A

Swiss Private Banking M&A Noise Level Rises Post-Pandemic

Tom Burroughes, Group Editor, London, 29 June 2020

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One of the most prominent figures in the private banking and corporate advisory space talks to this news service about how he is already seeing requests for buying books of business as lockdowns ease.

Wealth managers in Switzerland are pursuing private bankers to snap up assets in an increasingly Darwinian marketplace created by COVID-19 and the yield-squeezing impact of negative interest rates, a senior figure in the industry says.

Switzerland’s roster of registered banks shrank to 248 at the end of 2018, according to the Swiss Bankers Association, declining from more than 300 a decade before. A crackdown in the Alpine state’s decades-old secrecy laws, rising regulatory costs and negative official interest rates (-75 basis points) have hit margins. The SBA, for example, has warned that negative Swiss rates are causing major problems. 

And with the hit from the pandemic, the economic and business outlook in Switzerland is going to be a tough one for some time, but demand for help and advice on M&A is actually rising, Ray Soudah, who founded MilleniumAssociates, said. The business offers corporate finance advisory, and has been involved in dozens of Swiss banking merger and acquisition deals.

“The demand for acquisitions has increased,” Soudah, whose business marks its 20th anniversary this year, told WealthBriefing in a call. “It is a sign of desperation.”

“Interest to do business is picking up,” Soudah said.

A few weeks ago, banks and individual bank figures were shy to broach the subject of M&A but that’s not the case any longer, he said.

Ernst & Young, aka EY, in January this year warned that the Swiss banking industry’s financial health is vulnerable, particularly at the retail end.

Some bankers have merged or even left the field. For example, in May Falcon Private Bank said that it was in advanced talks to move its client portfolio and front-office staff to another private bank, and cease activities during 2021. The announcement came a few days after a media report said that FINMA, the Swiss regulator, might strip the controversy-hit Falcon of its bank licence in the Alpine state.

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