Swiss private bank EFG International opened a Pandora’s box with the acquisition of troubled BSI. After two years digesting the troubled Swiss private bank, EFG is returning to the acquisition trail.
The Swiss private bank gave investors at its shareholder meeting on Friday a glimpse of business in the first three months of the year under new CEO Giorgio Pradelli. Zurich-based EFG, controlled by Greece’s wealthy Latsis family, is on track with net new money growth, the bank said in a statement.
Fresh money was within the bank’s target band of 3 to 6 percent, but at the lower end of the target, which was set last year. The bank won money in all its markets except central Switzerland, Italy, and Ticino – the former hunting grounds of Banca della Svizzera Italiana, or BSI, which was acquired by EFG two years ago. The deal very quickly turned into a firefighting exercise when BSI was found to be up to its neck in the 1MDB scandal.
Inflows Offset
EFG narrowly avoided having its Milan office shut last year following a regulatory investigation by Italy’s central bank. Since buying BSI, EFG has suffered withdrawals from wealthy clients, which continued in the first quarter.
The bank said inflows elsewhere absorbed the withdrawals, as well as swings in financial markets as well as foreign exchange. EFG’s assets under management climbed to 143 billion Swiss francs ($145.1 billion), from 142 billion francs at year-end.
M&A Hunt
Besides growing by hiring, EFG is prepared to return to the acquisition hunt as soon as the BSI merger is tied up, EFG board director Steve Jacobs told Swiss newspaper «Finanz und Wirtschaft» (in German, behind paywall) recently.
According to Jacobs, this could be as soon as next year. He views critical mass in wealth management at at least $150 billion, which EFG is $5 billion short of.
The bank didn’t disclose any profit figures on Friday, but said that income in the first quarter mirrored the lower assets, on average, in the first quarter as well as the hit from other, undisclosed items. As for spending, the bank said it lowered costs in the first quarter and is still banking on 240 million francs in savings by year-end from the BSI deal, including by joining up the information technology operations of the two banks.
