Morgan Stanley Sells EMEA Private Wealth Business To Credit Suisse

Tom Burroughes

27 March 2013

Ending months of speculation that it was spinning off parts of its non-US wealth business, Morgan Stanley said it is selling its Europe, Middle East and Africa private wealth management business in the UK, United Arab Emirates and Italy to Credit Suisse.

The financial size of the transaction, expected to be completed in the third quarter of this year, was not disclosed by Morgan Stanley. Credit Suisse said the acquired business had a total of $13 billion of assets.

The statements from both the US and Swiss firms did not spell out whether there will be any employment implications from the deal, such as job cuts to deal with any duplication issues. This publication has contacted both firms and hopes to elaborate on these issues in due course.

Morgan Stanley said the deal comes at the end of a strategic review of its EMEA private wealth management business. It is understood from those familiar with the matter that the firm had failed to achieve the kind of scale it needed in the EMEA region. However, other foreign sectors, such as Asia, Latin America and the Swiss market are still seen as offering growth potential.

“Under the plan, the firm’s Swiss private bank, Bank Morgan Stanley, will be more closely aligned with the firm’s institutional securities group, enabling the businesses to better meet international wealth management client needs. This move follows a similar realignment of the firm's Asian PWM business with ISG,” it said in a statement today.

There has been widespread speculation in recent months that Morgan Stanley was looking to spin off its non-US wealth arm, a move that to some degree mirrors the decision over a year ago by Bank of America Merrill Lynch to sell its non-US wealth business to Julius Baer. At home, it is rumoured – but not yet definitely confirmed – that Morgan Stanley may buy the rest of its wealth management joint venture in the US with Citigroup, consolidating its focus on the home rather than international market.

There had been a number of high-profile departures from Morgan Stanley’s PWM unit in the past year. For example, in July last year, this publication exclusively reported that Pavlos Bailas had stepped down from his role as head of private wealth management for Europe, Middle East and Africa at Morgan Stanley to pursue personal interests outside of the firm.

The deal also underscores how a number of private banks have been involved in merger and acquisition moves in the past year. In addition to this and the BoA Merrill Lynch – Julius Baer deal, Credit Suisse has sold part of its Clariden Leu business to Switzerland’s Falcon Private Bank; Quilter, the wealth manager, has merged with the UK’s Cheviot Asset Management in a mid-market deal; Canada-headquartered Canaccord, owner of Collins Stewart, has bought the UK wealth firm Eden Financial; and Generali, the Italian financial services group, is looking to sell its Swiss private bank BSI Group.

Review

“The restructuring is a culmination of a thorough strategic review of our EMEA PWM business,” Colm Kelleher, president of the institutional securities group, said in a statement from Morgan Stanley.

“Our Swiss Bank is an integral part of our international wealth management offering, and by aligning the bank with our leading institutional franchise, we see considerable opportunities to better meet client needs and grow our international business,” Kelleher said.

Credit Suisse

In its statement, Credit Suisse said the $13 billion of client assets it had acquired was mainly held for people in the ultra high and high net worth segments.

“The transaction complements Credit Suisse’s leading wealth management business in Europe and reinforces the bank’s focus on growing its UHNW and HNW client segments. The acquisition will add scale to the bank’s core growth markets in EMEA including the UK, Italy, Nordics, Russia and the Middle East. In the UK market, the acquisition will significantly increase Credit Suisse’s client base, making the bank a top ten player and leading wealth manager,” the bank said.

The businesses acquired will be integrated into Credit Suisse’s private banking and wealth management division, it said.

“Accelerating our growth momentum in our international markets and in our UHNW client segment remains a key priority for Credit Suisse. Morgan Stanley has developed a strong foothold in wealth management over the past years and its high quality client base and experienced employees perfectly complement our ambitions to grow our share in these areas,” Romeo Lacher, head of private banking for Western Europe at Credit Suisse, said.

“The acquisition is structured as an asset purchase for the businesses involved. Subject to satisfying certain closing conditions, it is expected to close later this year,” it said.