Comment: Switzerland loses its charm for state-backed foreign banks
Banks being propped up by state funds may find it increasingly difficult to retain Swiss private banking subsidiaries given the level of political rhetoric being directed at offshore tax havens.
As Wealth Bulletin reported yesterday, the future of Coutts Bank von Ernst looks open to question now its parent, Royal Bank of Scotland, is 70% owned by the UK government.
Analysts at investment bank Keefe Bruyette & Woods agree. In a note published today, Matthew Clark and Andrew Stimpson said: "Heightened political opposition to tax havens in the EU and US may prompt large foreign banks (under increased influence of the State) to dispose of their Swiss subsidiaries."
Coutts Bank von Ernst - which was recently rebranded under the RBS Coutts name - would be the biggest asset on the block, with assets of Sfr54bn (€34bn), according to Morgan Stanley.
The UK's Lloyds Banking Group, of which the government owns 43%, could also be under pressure to offload its Swiss private bank, which has Sfr25bn in assets.
ABN Amro, ING, Merrill Lynch and Dresdner Bank are four other international banks that have received significant state funding and retain Swiss private banking subsidiaries, according to Morgan Stanley.
Nationalisation of any of these institutions would surely spell a sale of their Swiss banks. Governments could hardly be seen to be talking tough against tax havens while simultaneously making money from their supposedly iniquitous practices.
The problem the prospective sellers face would be finding buyers at the right price. Bottom fishing is the only game in town at present. Even the potential domestic acquirors such as Julius Baer and EFG would need to feel they were getting a cheap deal in order to pay the inevitable premium for a capital raising. SG and Morgan Stanley could also be interested - although the latter is preoccupied with its Smith Barney deal in the US and the former may want a more international prize.
Consolidation may, indeed, be in the offing in Swiss banking. But expect it to be a painful process.
del.icio.us
Digg
Newsvine
reddit
StumbleUpon