The wave of private bank takeovers is the number one topic among Swiss bankers. This means the Vontobel bank is a bit of an anomaly.
The Swiss bank is strengthening its core funds business through two new deals.
Vontobel is taking over the British funds boutique TwentyFour Asset Management, which specializes in funds for bonds, particularly asset-backed securities, and manages funds worth €5.8 billion ($6.39 billion).
The bank has also confirmed reports that it is negotiating with the Bank of New York Mellon to purchase its German-based funds company, Meriten Investment Management, which has €24.5 billion under management. Meriten was once a subsidiary of the now defunct German WestLB bank and about 70 percent of funds are invested in bond products.
According to sources, the deal isn’t yet done and there are other interested parties. BNY Mellon had no comment.
Acquisition of a bank seems more necessary than ever before, lest Vontobel becomes overly dependent on asset management.
Michael Kunz, an analyst at Zurich-based Kantonalbank, said both acquisitions make strategic sense. TwentyFour’s specialties funds are an interesting addition since in the current low interest rate environment, customers are searching for profitable investments. “If, in addition, it should come to an agreement with Meriten, it could be interpreted as a near substitute for the Swiss Raiffeisen business,” he said.
Swiss Raiffeisen, the country’s third-largest bank, markets Vontobel’s investment products but the tie-up is due to expire in 2017. Raiffeisen has owned its own private bank since 2012, and has major ambitions of its own in asset management. By acquiring Meriten, Vontobel would be able to open up new avenues of marketing in Germany while compensating for the loss of the Raiffeisen partnership.
TwentyFour is growing at a rate of 20 percent per year. Analysts estimate the purchase price at around two percent of the clients’ assets, or just under €120 million. Meriten is thought to be worth between 0.8 and one percent of managed assets, which would result in a value of around €200 million.
Vontobel refused to comment on estimates and plans to manage the purchases with its own capital, though it says its dividend policy remains unchanged. At the end of 2014, the bank disclosed an equity-to-assets ratio of 21.3 percent, well above international bank capital standards. The Swiss global financial services firm UBS has a ratio of 13.4 percent.
Nonetheless, Vontobel chief executive officer Zeno Staub said: “We remain capable of acting.” He added that the bank also wants to participate in the consolidation of the private banks, particularly those with up to CHF20 billion ($21 billion) in assets.
Acquisition of a bank seems more necessary than ever before, lest Vontobel becomes overly dependent on asset management. In 2014, asset management contributed about CHF108 million to pre-tax profits of CHF173 million. Vontobel is also active in investment banking and managing the assets of private clients.