Canada's RBC, Other Banks Potential Bidders For BoA's Non-US Wealth Arm - Report

Tom Burroughes

17 May 2012

Royal Bank of Canada and Credit Suisse are among banks trying to buy the non-US wealth management businesses of Bank of America Merrill Lynch in a deal that could be worth around $2 billion, according to Reuters, quoting unnamed sources.

Another bank, Zurich-listed Julius Baer is also a potential suitor, the report said.

None of the banks responded to Family Wealth Report seeking comment at the time of going to press.

If a deal does happen, it will represent one of the bigger merger and acquisition deals in wealth management during recent years. Despite talk of how the sector, faced with tighter margins, is ripe for consolidation, actual deals have tended to lag behind the talk. There have been some piecemeal changes internationally, such as the move by Brazil’s Safra Group to buy the controlling stake in Switzerland’s Sarasin, the private bank, from its previous owner, Netherlands-based Rabobank.

In an ironic twist, RBC recently inked a deal with global consultancy and research firm Capgemini to produce the annual global wealth report that in the past had been done between Capgemini and Merrill Lynch. The move is a sign perhaps of how RBC has gained ground in status as a wealth management player in recent years; it also has a significant presence outside its domestic market.

Up for grabs

Bank of America has reportedly put its non-US wealth business up for sale, a unit that includes units in Asia excluding Japan, Europe and the Middle East and Latin America. The bank has so far declined to comment about the matter. Analysts such as Christopher Wheeler at Mediobanca have told this publication that such a transaction would make sense as BoA, which acquired Merrill Lynch in January, 2009, has failed to achieve critical mass in its non-US wealth business in recent years.

Bank of America’s non-US business manages about $90 billion of an estimated $2 trillion that the BoA wealth division oversees globally, as the news service reported.

Some earlier estimates had put the deal value at as much as $3 billion, though sources said this week that a $1.5 billion-$2 billion price tag may be more realistic, the news service said.

The first round bids closed earlier this month and Bank of America is in the process of notifying the shortlisted bidders, it added.

Spokespersons for Julius Baer, Credit Suisse and Royal Bank of Canada declined to comment. Bank of America also declined to comment on the matter.