By Margot Patrick, Giovanni Legorano and John Letzing
LONDON--Amidst a global crackdown on tax evasion that has shaken up Switzerland's offshore financial center, Standard Chartered PLC is seeking a buyer for its Swiss private bank, while two investment funds are looking at the Swiss wealth-management unit that Italian insurance giant Assicurazioni Generali SpA has put on the block.
Standard Chartered, which still aims to grow its private banking in other financial hubs including Singapore, Hong Kong and London, is selling the small Swiss unit after deciding it wasn't crucial to its efforts to be a dominant force in trade financing, investment and wealth management across Asia, Africa and the Middle East. It will continue to run a commercial bank in Switzerland.
Meanwhile, investment companies Cinven and Investindustrial have been looking at BSI, a Swiss-based bank that Generali put up for sale more than a year and half ago as part of its efforts to improve its financial position and refocus on core businesses, people familiar with the matter said. These people also say Portuguese lender Banco Espirito Santo has been interested in buying BSI but has put those plans on hold due to the asset quality review the European Central Bank is carrying out on euro-zone banks. A spokesman for Banco Espirito Santo didn't reply to an email seeking comment.
The moves come as both companies are trying to shed noncore operations and boost their financial health. Since Mario Greco took the helm of Generali in August 2012, the company sold a number of businesses or stakes in companies, including part of its shares in Banca Generali and a U.S.-based reinsurance business. Standard Chartered Chief Executive Peter Sands pledged in November to counteract a slowdown in some of its significant markets by getting out of businesses with limited appeal.
Meanwhile, Swiss private banking has become a tougher business in recent years. The country's banking system has been turned upside down by intense legal pressure from U.S. and European authorities aiming to track down undeclared assets hidden in Swiss accounts, spooking clients and driving a steady flow out of the world's largest offshore financial center. Indeed, such pressure is complicating the sale of BSI, with Italian authorities gearing up for a fresh crackdown on Italian money stashed in Switzerland.
More than a third of Switzerland's roughly 300 banks, including the Swiss units of Barclays and Coutts, have signed up for a U.S. Justice Department program unveiled last year that enables lenders to exchange information about U.S. accounts in exchange for guarantees that the banks won't be prosecuted.
Standard Chartered hasn't disclosed whether it signed up for the DOJ program, but it is under extra pressure to stay on the right side of U.S. laws after signing two-year deferred prosecution agreements with the DOJ and New York attorney general in December 2012 over transactions with Iranian clients.
A spokesman said the decision to sell the Swiss unit was made after a "comprehensive review." He declined to say if potential buyers have been contacted.
Standard Chartered's planned exit also highlights how the private banking business is shifting away from Switzerland and to the emerging markets.
Standard Chartered declined to say how much money the Swiss private bank manages or how many clients would be affected, but with just 65 employees, it is far smaller than Swiss private banking giants UBS AG and Credit Suisse AG.
Meanwhile, one person familiar with the matter said it would be difficult for Generali to sell the business for more than 1.5 billion Swiss francs ($1.7 billion), slightly less than two-thirds of its book value. Tax amnesties launched in Italy in recent years have driven money out of Swiss banks. A new effort by Rome to push Italian tax evaders to come clean also is weighing on the price for BSI, the person said.
Write to Margot Patrick at [email protected], Giovanni Legorano at [email protected] and John Letzing at [email protected]