Wealth Manager Study Says Deals Surged as Prices Dropped

Mergers and acquisitions among wealth managers rose in 2013, with almost $760 billion of client assets traded, according to Scorpio Partnership.

More than 60 transactions occurred this year, with purchase prices tumbling to an average of 1.22 percent of managed assets from 3.7 percent in 2008, the London-based consultancy said in an e-mailed statement today, citing a study it conducted.

“The M&A tempo has reached a new level,” Sebastian Dovey, a managing partner at Scorpio, said in the statement. “The question these findings raise is: how much further can M&A valuations actually fall?”

More than 40 percent of the assets acquired in the past five years exchanged hands in 2013, according to Scorpio, which analyzed 236 deals for the study. Buyers spent more than $8 billion since Dec. 31 as they absorbed businesses that oversee money for affluent individuals and families.

Julius Baer Group Ltd., Switzerland’s third-largest wealth manager, is integrating as much as 72 billion Swiss francs ($81 billion) of the Merrill Lynch client assets it agreed to acquire from Bank of America Corp. last year.

Credit Suisse Group AG, the nation’s second-biggest bank, agreed to buy Morgan Stanley’s private-banking operations in the U.K., Italy and Dubai and sold its German private bank to ABN Amro Group NV. Union Bancaire Privee, the Geneva-based wealth manager, purchased international private-banking units from Lloyds Banking Group Plc.

Subdued client activity, the elimination of commission paid to fund distributors and the growing cost of implementing regulation or paying fines are prompting some firms to reduce costs or sell operations, PricewaterhouseCoopers, an accounting firm, said in a report published in June.

Further Consolidation

This year’s flurry of deals presages “further consolidation” in private banking in 2014, Tracey Reddings, chief executive officer of JPMorgan Chase & Co.’s U.K. wealth unit, said last month at a conference in London.

DBS Group Holdings Ltd. and ABN Amro made final offers for Societe Generale SA’s private-banking business in Asia, two people with knowledge of the matter said on Nov. 26.

Royal Bank of Canada will consider acquisitions as it seeks to expand its wealth-management unit, Chief Financial Officer Janice Fukakusa said in June.