Swiss jewels there for the brave bidder
Recent losses spurred by the credit crisis mean banks are shying away from corporate activity – and potential targets are few and expensive
Following the credit crunch and resulting problems in some large banks and asset management groups, is it a good or bad time to speak about acquisitions in this area? According to M&A consultants, corporate activity in the mega space – which can really increase scale and balance sheet impact – is down to a trickle. We are less likely to see the type of mergers such as the long-discussed BNP Paribas/SocGen combination, or the buyout of acquisition-target Commerzbank by Deutsche. True, the hostile RBS/Santander/ Fortis buy-up/break-up of ABN Amro is going ahead, but only because Barclays was unable to conclude the deal. The real winner in the complicated transaction increasingly looks to be Fortis, which will vastly increase the size of its private banking and asset management franchises. Fortis ahead It will certainly gain leadership in the Benelux market, which is now considered one country by bankers and asset managers – especially as there is much talk in Europe about whether Belgium will continue to exist at all as a country. What Fortis does not appear to have gained in the deal is a second-country home market, something vital for wealth management organisations to have if they can add serious revenue to their account from private banking. But this is increasingly difficult to achieve, according to Swiss-based consultant Ray Soudah of Millenium Associates. Through the deals he tracks, Mr Soudah believes buyers outnumber sellers by 60 to 1 in wealth management and that only UBS, Credit Suisse, HSBC and possibly Standard chartered have achieved success in more than one market, and are able to leverage capabilities globally through an efficient distribution network. However, not everything these giants have touched has turned to gold, he warns, with onshore private banking franchises in Germany never really taking off. Near east promise Mr Soudah reserves a little praise for KBC, which bought wisely in Central and Eastern Europe. The Belgian bank identified the near East as a more viable alternative to neighbouring Germany or France, after the home market for its favoured, computer-generated structured products became saturated. KBC has spurned open architecture, and is able to distribute the same simple products to a new clientele in the former Eastern Bloc. The Netherlands’ Rabobank also gets a pat on the back for increasing its stake in Swiss bank Sarasin. Bigger banks, however, need to be more ambitious if they are to succeed in wealth management. “Why don’t people buy Julius Baer?” asks Mr Soudah. “Are they really serious or committed if they don’t?” With takeover speculation again mounting, JB shares are trading at record highs. The price will be more expensive than last year. But any buyer also gets GAM, the top-performing multi-manager firm. “It’s a double whammy, GAM plus private banking,” says Mr Soudah.
