Switzerland's EFG International has to pay less for BSI private bank than originally agreed with the previous owners, BTG Pactual of Brazil.
EFG International paid 1.06 billion francs for Banca della Svizzera Italiana, the name under which BSI is formally known. The total price is made up of 575 million francs in cash, 86.2 million EFG shares valued at 454 million francs and 31 million francs of AT1 instruments issued by EFG International, the company said in a statement today.
This is substantially less than the 1.3 billion originally agreed at the time of the announcement of the acquisition.
A Leading Swiss Private Bank
«The closing of the acquisition marks a historic milestone for both EFG International and BSI,» said Joachim Straehle, CEO of EFG International, according to the statement. «Together we are forming a leading pure play private bank with strong Swiss roots, a broad international presence and an entrepreneurial spirit.»
EFG International will become one of Switzerland's leading private banks, with about 148 billion francs in assets under management and about 700 relationship managers.
Shares Locked as Security
As announced previously, BTG Pactual has agreed to indemnify EFG International against certain known liabilities and damages relating to breaches of any representations and warranties, covenants, obligations and other matters related to specific legal cases.
As a security for potential indemnification claims by EFG International, 51 million EFG shares have been transferred into a Swiss escrow account and will be locked up for two years.
Integration process
The completion of the acquisition will be followed up by the process of integrating the business of BSI into EFG International. Joint teams are working on the preparations for a gradual integration. The full legal integration is expected for the second quarter of 2017.
The Singapore business however will be fully integrated by the end of this month already through an accelerated asset deal. A review of clients in conformity with rules of the Finma and MAS regulators has taken place and the process of an asset and staff transfer is in progress, EFG said.
The bank will continue to operate under the EFG brand name. The positioning of the company and a new logo will also be concluded by mid-2017.
Third-Quarter Results
Assets under management at EFG International declined to 79.8 billion francs by the end of September, from 80.6 three months earlier. BSI reported a drop to 69 billion from 76 billion in the previous quarter.
EFG is on target in respect to the cost-cutting program. It reduced the headcount of full-time-equivalents (FTEs) by 40 to 2,016 and plans to reach 1,990 by yearend.
Net profit in the third quarter 2016 was further impacted by costs and provisions relating to the acquisition and integration of BSI, and a negative contribution from life insurance following premium increases, EFG said. The bank confirmed its medium-term targets.
