Switzerland’s EFG International is to acquire the Swiss private banking arm of Brazil’s beleaguered Grupo BTG Pactual for CHF1.33bn worth of cash and shares, it was announced today, ending days of speculation that a deal was imminent.
Published reports of the sale of the division, BSI, highlighted speculation that EFG is hoping the deal will boost it into fifth place in Switzerland’s private banking hierarchy.
BSI was founded in 1873 in Lugano as the Banca della Svizzera Italiana. The announcement of its sale to EFG comes just months after BTG completed the acquisition of the business from Italy’s Generali Group, which had bought it in 1998.
BTG had paid Generali US$1.7bn for it, according to press reports from July 2014, when that deal was first announced.
Grupo BTG Pactual decision to sell BSI is seen as having been in response to the arrest of its billionaire founder, André Esteves, in November, in connection with an investigation into corruption charges surrounding the state-run oil giant Petrobras. According to Brazilian Supreme Court documents, he allegedly assisted in the obstruction of justice.
Under the terms of the deal, BTG will receive a stake worth approximately 20% in EFG as well as representation on its board.
Bank industry experts say EFG’s acquisition of BSI, when completed, will make it Switerland’s No. 5 private bank, in terms of size, behind UBS, Credit Suisse, Julius Baer and Pictet. Until now it has been the country’s 12th-largest private bank.
In a statement carried on both EFG International’s and BSI’s websites, EFG International chief executive Joachim Straehle said: “By combining the complementary strengths of BSI and EFG, we are forming a leading global private bank with strong roots in all language regions of Switzerland.”
He added that “BSI’s long-standing experience and EFG’s entrepreneurial spirit…will provide a powerful value proposition to clients and employees alike”, and that the transaction was “in the best interest of the Swiss financial centre”.
‘Swiss pure-play private bank’
EFG International calls itself “a Swiss pure-play private bank”. It was founded in Zurich in 1995 by two entrepreneurs with long-standing experience in Swiss private banking, and went public on the SIX Swiss Exchange in 2005.
From the outset, EFG’s majority shareholder (currently 54%) hasbeen EFG Bank European Financial Group (EFG Group), a Swiss holding bank based in Geneva
ultimately controlled by the Latsis family interests.
Outside of Switzerland, EFG maintains outposts in the UK, Madrid, Monaco, Luxemburg, Hong Kong, Singapore and Miami. At the end of December, it had CHF 83.3bn in assets under management and 462 CROs, who, it says, are “at the centre” of its entrepreneurial business model.