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The downturn, which has seen fraud by US businessman Bernard Madoff, rich clients withdrawing savings and a tax haven crackdown, has trained the spotlight on acquisition interest from players in the region, which analysts feel will intensify.
Despite recent blows to the sector, private banking and wealth management remains an attractive sector for many groups, with the offshore wealth management industry estimated to be worth some $7 trillion by the Boston Consulting Group.
“There are certain sets of players that are potentially interested in acquisitions: private equity firms, banks that are already focused offshore players and players that, out of geography, do not really have a proper private banking industry, like Middle Eastern players,” said Stefan Jaecklin, who covers the wealth management industry for consultancy Oliver Wyman.
Indian conglomerate Hinduja Group has a private banking business in Switzerland through its Geneva-headquartered Hinduja Bank and sources familiar with the matter have said Hinduja Bank may consider small private bank acquisitions.
Last year, Abu Dhabi investment company Aabar acquired the Swiss private banking activities of troubled US insurer AIG. State-run Bank of China is also keen to expand in this area. It invested in Geneva-based asset manager Heritage Fund Management (HFM) last year and began operating a private bank and asset management firm in Switzerland.
While it is hard to place a value on any likely deals, since many private banks are family-owned and unlisted, analysts say that transactions in the sector are more likely to be worth hundreds of millions of dollars rather than in the billions.
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