Assicurazioni Generali SpA (G) is seeking offers for its Swiss private bank BSI Group from buyout firms including Apax Partners LLP and companies such as Royal Bank of Canada (RY), according to three people with knowledge of the situation.
Generali’s advisers, JPMorgan Chase & Co. and Mediobanca SpA (MB), are sending sales documents to potential buyers this month for the 139-year-old wealth manager, said the people, asking not to be identified because the discussions are private. The so- called information memorandums will be sent to at least 20 potential buyers, one of the people said. Indicative offers are due in January, two people said.
Generali Chief Executive Officer Mario Greco, who took the helm in August, is reviewing the strategy of Italy’s biggest insurer to bolster profit and strengthen capital weakened by the sovereign-debt crisis. Generali may battle to find a buyer as the erosion of Swiss banking secrecy and higher regulatory costs crimp margins, complicating the task of assessing the financial health and business model of a private bank.
BSI’s book value is about 2.3 billion euros ($2.96 billion), according to Trieste, Italy-based Generali. The insurer may struggle to sell the private bank for that amount, two of the people said.
Officials at Generali, Apax, RBC, JPMorgan and Mediobanca declined to comment.
BSI, the largest private bank in Switzerland’s Italian- speaking region, has been expanding operations abroad, winning clients in Singapore and Hong Kong. The firm boosted client assets under management by 4.9 percent to 81.5 billion Swiss francs ($87 billion) in the first half from the end of 2011, according to Lugano, Switzerland-based BSI. Net income rose 33 percent to 42.6 million francs in the period.
RBC CEO Gordon Nixon has said his firm would explore “strategic acquisitions” amid a slowdown in Canadian consumer lending. Toronto-based RBC, the nation’s largest lender, has named wealth and asset management as one of the areas it plans to grow.
Generali and other European insurers are selling non-core assets before the planned implementation in 2016 of Solvency II regulations, which requires capital reserves to be aligned with risks to boost protection for policyholders.
The Italian insurer has hired Citigroup Inc. to advise on the sale of Generali USA Life Reassurance Co., a unit that may be valued at $800 million to $1 billion, people with knowledge of the matter have said.
Generali said Nov. 9 that its solvency ratio, a measure of its capacity to absorb losses, rose to 140 percent at the end of September from 130 percent at the end of June. Third-quarter profit jumped to 291 million euros from 20 million euros after year-earlier writedowns of Greek bonds and stakes in Italian companies weren’t repeated.
Apax, which is based in London, owns financial firms including Israeli fund manager Psagot Investment House Ltd. and personal-finance information provider Bankrate Inc.
Potential buyers such as RBC and Apax haven’t decided whether they’ll make a bid for BSI, the people said.
Swiss banks are seeing withdrawals by American and European clients who are repatriating assets following a crackdown on tax evasion that has widened since the U.S. sued UBS AG three years ago. Higher compliance and regulatory costs as wealth managers pursue a new “white-money strategy” are also crimping profit margins.