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UBP Buys Coutts International As M&A Merry-Go-Round In Industry Continues

Tom Burroughes

27 March 2015

, the Geneva-headquartered bank, confirmed today it has agreed to acquire Royal Bank of Scotland’s international private banking and wealth businesses under the Coutts brand.

The sale, which follows RBS’s decision to create a UK-focused bank, includes business managed from Switzerland, Monaco, the Middle East, Singapore and Hong Kong, and assets under management of over SFr30 billion ($31 billion).

A report yesterday in the Financial Times claimed that the purchase price – which was not disclosed in statements by the banks today – was between $600 million and $800 million. This publication understands that this range of figures is an overestimate of the actual price paid by UBP.

As UBP has in the past told WealthBriefing that acquisitions are a part of its strategy – the firm has already bought units such as the international private banking arm of Lloyds Banking Group – today’s announcement is not a surprise. It comes at the end of a bidding process said to have included Singapore-headquartered DBS Group. (To see an interview with the firm, click here.

“The acquisition represents a major step forward in the bank’s growth strategy, enabling it to both broaden its wealth management activities and to further its global reach,” UBP said in a statement.

"The acquisition is an excellent strategic and geographic fit as the international business of Coutts has a strong foothold in markets where, until this point, UBP had a limited presence. UBP will also strengthen its presence in Switzerland and in Monaco, significantly boost its footprint in growth markets such as Central and Eastern Europe, the Middle East and Asia, and considerably increase its asset base in select European markets,” it continued.

Guy de Picciotto, UBP’s chief executive, said: “This acquisition confirms our commitment in further developing our wealth management business and represents a significant milestone in our growth strategy. This is particularly true for high-potential markets such as Asia, where the international business of Coutts has built long-standing relationships with high net worth clients. We look forward to welcoming the new teams; their breadth of know-how in wealth management will perfectly complement our investment management expertise.” 

The transaction, carried out with the support of Caurus Partners and TC Capital, remains subject to the requisite regulatory and other approvals being obtained. In this regard UBP will seek to obtain a banking licence in Hong Kong, subject to the approval of the local regulatory authority.

(To see recent results from UBP, see here.  The bank's Asia private banking head is to step down this year - see here.

In its statement, Royal Bank of Scotland said that the “sale comprises client relationships outside the British Isles and associated staff. RBS will continue to service UK private banking and wealth management client needs, together with those of international clients with a strong connection to the UK, from the British Isles through its Coutts and Adam & Company brands.”

The sale includes relationships managed from Switzerland, Monaco, UAE, Qatar, Singapore and Hong Kong.

As at 31 December 2014, assets under management were approximately SFr32 billion and total risk weighted assets were SFr2 billion.

“The price paid will be determined in part by assets under management on closing. RBS anticipates receiving a premium. The resulting capital benefit to RBS is expected to be modest after writing off goodwill related to the business and taking into account anticipated exit and restructuring costs. In the Q1 2015 results, the business to be sold will be treated as a disposal group, resulting in an expected charge in the order of £200 million, primarily relating to the goodwill write off. Initial closing of the transaction is envisaged in Q4 2015, when a majority of the business is expected to transfer, with the remainder during the first part of 2016,” RBS said.

“Last year we set out a clear strategy to create a truly UK-focused bank. This announcement is another important step in that process. Following an extensive review, it was clear that the bank we are building would not be the most appropriate owner of the business being sold,” Alison Rose, chief executive, commercial and private banking at RBS, said.

“We gave careful consideration to identifying a buyer with the capability to take on this business in order to minimise the impact on clients and staff. We believe that in UBP we have found a good long-term owner for this business,” Rose added.