Zürcher Kantonalbank, Switzerland’s fourth-biggest bank, is reported to be mulling the acquisition of smaller, private banking rivals in the Swiss market.
The plan comes as these smaller rivals “struggle with rising costs and negative interest rates”, Bloomberg reported, citing an interview with ZKB’s chief executive, Martin Scholl, pictured, after the company posted its full-year results on Friday.
“Domestic private banking is interesting if it offers a certain size and is a good fit,” Bloomberg quoted Scholl as saying, adding that ZKB would be looking at only those banks with assets of at least CHF20bn (US$21bn).
In the year to the end of December, ZKB posted net income of CHF722m, a 12% increase from 2014’s CHF647m, ZKB reported. In a statement accompanying its results, the bank said the main drivers of this result included higher commission and fee income it had received, due to its 2014 acquisition of the 82% of Swiss asset manager Swisscanto Holding it didn’t already own at that point, as well as “solid interest income and a strong performance in trading”.
At the end of 2015, Zürcher Kantonalbank said it was managing some CHF257.5bn of client assets, compared to CHF208.7bn at the end of 2014, an increase of 23% that the bank noted had been driven “primarily by the acquisition of Swisscanto”.
According to Bloomberg, the number of banks in Switzerland has been falling over the past decade, as a result of tougher regulations, the strong Swiss franc, and low interest rates. Negative interest rates were introduced in Switzerland in December 2014, in an effort to discourage bank deposits and make Swiss franc investments less attractive.
ZKB has been designated as one of Switzerland’s five “systemically relevant” banks. Founded in 1870, it operates more than 97 branches, the majority of which are in the canton of Zurich, making it the biggest cantonal bank in Switzerland, the leading universal bank in the greater Zurich area, and one of the biggest banks in all of Switzerland, according to its website.
As reported here last month, Switzerland’s Leodan Privatbank said it was to cease to exist as an independent entity going forward because it was “too small to survive” in today’s tougher regulatory environment, and that it was currently in talks with a “medium-sized” Swiss bank to take on its clients and some of its employees.