ZKB Eyes Swiss Private Banking Acquisitions as Sector Shrinks

Zuercher Kantonalbank, Switzerland’s fourth-biggest bank, said it’s considering acquisitions in the country’s shrinking private banking sector as smaller rivals struggle with rising costs and negative interest rates.

"Domestic private banking is interesting if it offers a certain size and is a good fit," Martin Scholl, ZKB’s chief executive officer, said in an interview Friday.
He said ZKB is looking to buy banks with assets of at least 20 billion francs ($21 billion).

Earlier, ZKB posted net income of 722 million francs ($739 million) for 2015, up from 647 million francs last year.

The number of banks in Switzerland has been declining for at least 10 years, hurt by tougher regulations, the strong franc and low interest rates. Some smaller targets have been snapped up by larger competitors seeking to expand market share.

ZKB, one of Switzerland’s five systemically relevant banks, may find itself in competition with Credit Suisse Group AG, the country’s second-largest lender. CEO Tidjane Thiam has said he may buy smaller Swiss banks to build business in the home market. Patrik Gisel, head of Swiss Raiffeisen, said in an interview in November that he’s interested in banks with mainly Swiss clients and would prefer one big acquisition over two to three smaller ones.

ZKB bought the part of Swisscanto Holding AG it didn’t already own from other Swiss cantonal banks for 360 million francs in 2014. That helped lift client assets to 258 billion francs at the end of last year.

Asked for the implications of increasingly negative interest rates, CEO Scholl said ZKB is "considering all options if SNB tightens further."

In December 2014, the Swiss National Bank introduced negative interest rates to discourage bank deposits and make Swiss franc investments less attractive.

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