Latsis's EFG in Talks to Buy BTG Swiss Unit to Double Assets

  • Brazil's BTG selling off assets amid corruption scandal
  • EFG would need capital increase for purchase, analyst says

EFG International AG is in exclusive talks with Brazil’s Grupo BTG Pactual SA to buy its Swiss bank BSI SA, a deal that would double its assets under management.

A decision is imminent, EFG, the Swiss private bank controlled by billionaire Spiro Latsis and his family, said in an e-mailed statement on Friday. Bloomberg reported the talks last month, citing a person with knowledge of the matter.

The Brazilian bank, which completed the purchase of BSI five months ago, has been selling off assets to raise cash after the arrest and subsequent release of then-Chief Executive Officer Andre Esteves in November amid a widespread corporate corruption scandal that sent its bonds and shares into a tailspin. After losing almost half their value in 2015, shares have rebounded 12 percent this year.

“EFG has no excess capital, so there would have to be a capital increase,” said Andreas Venditti, a Zurich-based analyst with Vontobel Holding AG. “BTG needs cash, not EFG shares” though it may accept a partial share deal if there are no other offers, he said.

EFG climbed as much as 4.3 percent in Zurich trading and was up 2.7 percent at 6.76 francs as of 10:04 a.m. That cuts the decline for this year to 34 percent.

Zurich-based EFG oversaw 80 billion francs for clients at its banks in Europe, Asia and the Caribbean at the end of June while BSI had about 82 billion francs in assets under management. BSI’s assets under management may have shrunk in the second half of the year because of an Italian tax program, Venditti estimated.

Under the agreement that’s being discussed, BTG would retain a 20 percent to 30 percent stake in the combined entity, Reuters reported earlier, citing a source it didn’t identify. A deal could be announced as soon as next week, the news agency said.

BTG’s Esteves, who has since been released from jail and is under house arrest, has denied any wrongdoing through his lawyers.

BTG completed the acquisition of BSI from Italy’s Assicurazioni Generali SpA for 1.25 billion Swiss francs in September.

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