Private banks pick up the pace of M&A

THERE WILL BE no rest this year for M&A advisers covering the private-banking sector. Last year's 20-plus deals are expected to be matched and, some say, doubled as private banks and wealth managers struggle to come to terms with increased costs, regulatory changes and more demanding clients. In a survey by IBM Business Consulting in the first quarter of 2003, 70% of European private banks said they had considered merging or acquiring over the previous 12 months. Sixty per cent had considered forming an alliance, and more than 35% had looked at divesting (see graph).

Of the 35%, almost all did end up divesting. In continental Europe in particular, several international private banks pulled the plug on local operations, selling to rivals that had a greater commitment to building scale. Last year Merrill Lynch sold its German private-client business to UBS. Although the arm managed $1.4 billion in German private clients' assets, the business was not competitive.