Published by Finews Asia – 1st November 2016
Legal acquisition completed, newly appointed CEO and how much they paid… Read More Below
EFG Completes BSI Acquisition
Following receipt of all regulatory approvals, EFG International has announced it has completed the acquisition of BSI from BTG Pactual. EFG International now becomes one of the largest private banks in Switzerland. What about Asia?
The closing of the acquisition marks the beginning of the process to integrate BSI into EFG International. Preparations for the gradual integration have been driven by joint EFG and BSI teams and are well on track.
Asian Business Units
EFG now becomes one of the largest private banks in Switzerland with approx. CHF 148 billion in AuM, CHF 43.7 billion in total assets, 700 relationship managers and a presence across 40 locations worldwide. The full operational integration of BSI in Singapore, via an accelerated asset deal, will take place by the end of November 2016.
Politically Exposed Persons
A review of clients has taken place, in conformity with both the Swiss regulator FINMA and the Monetary Authority of Singapore (MAS) rules, and the process of transfer of assets through client novation and transfer of Client Relationship Officers and other staff is in progress. EFG says that all «Politically Exposed Persons»(PEPs) and other high risk clients were reviewed and only those complying with EFG International policies will be transferred. Screening of all standard clients has been completed.
Hong Kong Moves
The BSI business in Hong Kong witnessed several departures with bankers not willing to wait for the takeover. Julius Baer in Asia managed to tempt an entire Indian BSI team to join it. The BSI group of companies will be incorporated within EFG International through several legal mergers and asset deals, depending on the location of the business and other operating considerations.
1MDB Saga
All necessary legal steps are expected to be completed in the second quarter 2017. The completion of the deal by EFG comes in the week when the trial of the former BSI banker Yeo Jiawei commenced in Singapore.
New Branding?
The migration of BSI’s business to EFG’s IT platform is expected to complete by year end 2017. Regarding the future brand of the combined business, a joint decision has been taken to follow a single brand strategy globally by building on the existing EFG name and renewing the current brand positioning and design to reflect the heritage, corporate values and visual identity of both EFG and BSI. The process of developing the renewed brand positioning and logo is ongoing and planned for completion by mid-2017.
EFG International Appoints New CEO at BSI
EFG International appointed a new chief executive officer for BSI, the Ticino-based private bank it recently acquired. He isn’t likely to last long in the position though, because the unit will be fully integrated in less than a year’s time.
Thomas Mueller is the new CEO at BSI. He will replace Roberto Isolani with immediate effect, EFG International said in a statement today. Isolani was handed a seat on the supervisory board of EFG International instead. Isolani lasted only about five months in the job, having replaced Stefano Coduri at the end of May following the investigation into BSI’s role in the corruption scandal surrounding the 1MDB state fund of Malaysia.
Chairman of Takeover Board
Mueller was the group CFO at J. Safra Sarasin for six years, the same bank incidentally which EFG Chief Executive Joachim Straehle managed from 2006 to 2013. Previously, Mueller was head of finance and risk at Swiss Life and at Banca del Gottardo in Lugano (2002 to 2005). He started his career at one of banks that later merged into Credit Suisse as head of the treasury and later switched to Marc Rich Holding, taking charge of trading with interest instruments. Mueller, 51, is also chairman at the Swiss Takeover Board. The government-appointed commission is a body that ensures compliance with the rules applicable to public offers.
New Head of Americas
EFG International also appointed Marcelo Coscarelli as head of Americas and member of the executive board, starting January 1, 2017. Coscarelli was managing director for wealthy and high-net-worth clients at Citibank Latin America. From 2008 through 2012, he was COO at Itaú Private Bank International in Miami. EFG International today announced the completion of the acquisition of BSI. It paid 1.06 billion Swiss francs for the private bank, which will be fully integrated into EFG by mid-2017.
That’s How Much EFG Paid for BSI
Switzerland’s EFG International has to pay less for BSI private bank than originally agreed with the previous owners, BTG Pactual of Brazil. Following the completion of the acquisition, EFG will now fully integrate the Ticino-based bank, which suffered a decline in assets under management following the news about its involvement in the 1MDG scandal.
EFG International paid 1.06 billion francs for Banca della Svizzera Italiana, the name under which BSI is formally known. The total price is made up of 575 million francs in cash, 86.2 million EFG shares valued at 454 million francs and 31 million francs of AT1 instruments issued by EFG International, the company said in a statement today. This is substantially less than the 1.3 billion originally agreed at the time of the announcement of the acquisition.
A Leading Swiss Private Bank
“The closing of the acquisition marks a historic milestone for both EFG International and BSI,” said Joachim Straehle, CEO of EFG International, according to the statement. “Together we are forming a leading pure play private bank with strong Swiss roots, a broad international presence and an entrepreneurial spirit.” EFG International will become one of Switzerland’s leading private banks, with about 148 billion francs in assets under management and about 700 relationship managers.
Shares Locked as Security
As announced previously, BTG Pactual has agreed to indemnify EFG International against certain known liabilities and damages relating to breaches of any representations and warranties, covenants, obligations and other matters related to specific legal cases. As a security for potential indemnification claims by EFG International, 51 million EFG shares have been transferred into a Swiss escrow account and will be locked up for two years.
Integration process
The completion of the acquisition will be followed up by the process of integrating the business of BSI into EFG International. Joint teams are working on the preparations for a gradual integration. The full legal integration is expected for the second quarter of 2017. The Singapore business however will be fully integrated by the end of this month already through an accelerated asset deal. A review of clients in conformity with rules of the Finma and MAS regulators has taken place and the process of an asset and staff transfer is in progress, EFG said. The bank will continue to operate under the EFG brand name. The positioning of the company and a new logo will also be concluded by mid-2017.
Third-Quarter Results
Assets under management at EFG International declined to 79.8 billion francs by the end of September, from 80.6 three months earlier. BSI reported a drop to 69 billion from 76 billion in the previous quarter. EFG is on target in respect to the cost-cutting program. It reduced the headcount of full-time-equivalents (FTEs) by 40 to 2,016 and plans to reach 1,990 by yearend. Net profit in the third quarter 2016 was further impacted by costs and provisions relating to the acquisition and integration of BSI, and a negative contribution from life insurance following premium increases, EFG said. The bank confirmed its medium-term targets.
