RBS Sells Coutts International to UBP in Swiss Retreat
(Bloomberg) — Royal Bank of Scotland Group Plc agreed to sell its Coutts International private banking business to Switzerland’s Union Bancaire Privee, as the bailed-out British lender retreats from the Swiss wealth market.
RBS is expected to sell Coutts for 350 million francs ($360 million) to 400 million francs, depending on how many client assets are transferred, said a person with direct knowledge of the matter who asked not to be identified because the deal is private. The sale includes businesses in Switzerland, Monaco, the Middle East, Singapore and Hong Kong and assets under management of about 32 billion Swiss francs, RBS said on Friday.
RBS, the U.K.’s biggest state-owned bank, joins lenders such as Bank of America Corp., Morgan Stanley and Lloyds Banking Group Plc in exiting Switzerland, the world’s largest offshore financial center, over the past three years. Firms are selling their businesses amid low profitability and international scrutiny of the industry.
“It was clear that the bank we are building would not be the most appropriate owner of the business being sold,” Alison Rose, chief executive officer of RBS’s commercial and private banking business, said in the statement. “We believe that in UBP, we have found a good long-term owner for this business.”
‘Modest’ Benefits
RBS spokesman James Abbott declined to comment on the price of the transaction. Capital benefits will be “modest,” the bank said in the statement. It will take a charge of 200 million pounds ($296 million) in the first quarter related to the sale, primarily for a goodwill write-off. Initial closing of the transaction is expected in the fourth quarter.
Chief Executive Officer Ross McEwan, 57, is shrinking the lender’s global operations as he seeks to reverse seven straight annual losses and a return to public ownership. The bank is keeping Coutts’ British business, which includes Queen Elizabeth II among its clients. Investors agreed to buy a 25 percent stake in a public offering of RBS’s U.S. unit Citizens Financial Group Inc yesterday.
RBS shares fell 1.4 percent to 344.50 pence at 9:37 a.m. in London. They have decreased 12 percent this year.
UBP Ambitions
UBP, founded by Chairman Edgar de Picciotto in 1969 and run by his son, CEO Guy de Picciotto, is seeking to build networks in emerging markets, while bolstering the profitability of its Swiss hub through asset purchases. With almost 100 billion francs of client assets at the end of last year, it acquired the Swiss unit of Lloyds in 2013 and ABN Amro Group NV’s business in the country two years earlier.
“This acquisition confirms our commitment in further developing our wealth management business and represents a significant milestone in our growth strategy,” Guy de Picciotto said in a separate statement. “This is particularly true for high-potential markets such as Asia, where the international business of Coutts has built long-standing relationships with high net worth clients.”
Tax Probe
Coutts traces its history to the 17th century. It is participating in a U.S. Justice Department program that requires Swiss banks to help the U.S. catch tax dodgers and pay a fine in return for a non-prosecution deal. More than 100 Swiss banks entered the program at the end of 2013, in exchange for avoiding potential indictments. Its Swiss unit is also under investigation in Germany over alleged tax evasion by clients.
McEwan said in February RBS would provide an indemnity to any potential buyer to protect it from such probes. Goldman Sachs Group Inc. advised RBS on the sale, the British bank said. Caurus Partners and TC Capital advised UBP.
