Swiss Banker Eric Syz Eyeing Assets of RBS’s CouttsGiles Broom
Banque Syz & Co. SA, the Geneva private bank and asset manager, may add assets of Coutts to a list of acquisition targets in Europe, owner and co-founder Eric Syz said.
“We might be one of the contenders for part of Coutts, but it depends how it’s sliced and diced,” Syz, 56, said in an interview at the firm’s offices yesterday. “Nobody’s seen the details of what’s for sale, or whether they might sell it in tranches to different buyers.”
Syz & Co is seeking to acquire businesses with between 1 billion Swiss francs ($1.1 billion) and 10 billion francs of client assets under management, Syz said. The company had 35 billion francs of assets at the end of June. He said the bank has analyzed about five businesses in Switzerland and the rest of Europe as potential targets.
Coutts, the iconic British private bank that oversees the wealth of Queen Elizabeth II, had 32.6 billion francs in client assets at its separate Zurich-based international arm at the end of last year. Royal Bank of Scotland Group Plc, Britain’s largest state-owned lender and the owner of Coutts, is considering selling the international unit and examining options including joint ventures or a merger, according to an Aug. 11 memo to employees.
The memo helped clarify at least four years of speculation that the assets might be sold as managing offshore wealth from Switzerland is unusual for a British government-owned bank. Coutts reported a full-year loss for 2013 at its international unit. Lloyds Banking Group Plc, which also counts the U.K. government among its shareholders, sold its loss-making Swiss private banking business to Union Bancaire Privee last year.
Syz said the company isn’t for sale and he associates the firm alongside a group of Swiss wealth managers considered the “consolidators” in a market where deals are expected to accelerate. His remarks follow reports at the turn of the year that the firm might be a target for acquisition by one of the larger Geneva banks.
Swiss banks Julius Baer Group Ltd., EFG International AG, Vontobel Holding AG and Union Bancaire Privee have said this year they are seeking acquisitions. J. Safra Sarasin Holding AG and LGT Group already made deals this year, while the country’s biggest lenders UBS AG and Credit Suisse Group AG, would also have the means to acquire banks in Switzerland. Financial companies headquartered in Brazil, the Middle East and Asia may also buy the assets.
Syz said it’s difficult to predict how quickly deals will emerge, with so many banks looking to sell to fewer than 10 potential buyers from Switzerland. It’s a costly process for purchasers because of the amount of due diligence on clients.
Prices for Swiss banks may vary depending the quality of the assets. Factors include account holders’ tax compliance and their propensity to use a bank’s services in ways that help generate revenue. A typical transaction may shift the seller’s client assets without transferring a legal entity -- and any outstanding legal risk -- to the buyer.
Coutts in Switzerland was one of 106 banks that applied for a non-prosecution agreement from the U.S. Justice Department through a voluntary disclosure program at the end of last year. That process, which involves revealing information about U.S. cross-border accounts to the authorities and may lead to a fine, isn’t resolved.
Some banks that are ready to sell aren’t attractive prospects given their older European client assets may not be tax-compliant in their home countries, Syz said. In the Swiss market, some of these so-called “legacy assets” will change hands for free, or not at all, according to Syz.