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Safra Sarasin swoops on Morgan Stanley’s relationship managers

The chairman of Swiss private bank J Safra Sarasin explains in an interview with Euromoney how nimble execution is key in the private-banking consolidation wave that has freed up relationship managers, in a deal that also reflects Morgan Stanley’s strategic shifts.

Morgan Stanley announced on Wednesday the sale of $10 billion of its Swiss bank client assets for EMEA and Latin America to J Safra Sarasin, a Swiss private bank. The terms of the deal were undisclosed, and the pricing will depend on traction of the clients and staff. 

Morgan Stanley CEO James Gorman seems to be moving the firm in the direction of a US and Asia wealth management business with a smaller investment bank.

In 2013, Morgan Stanley sold its EMEA wealth management business to Credit Suisse. Several months ago it announced the transfer of its Asia clients out of the Swiss private bank – with branches in Zurich, Geneva, Hong Kong and Singapore – to its institutional business in Asia. That process continues and is reported to involve about $40 billion of client assets.

James Gorman
James Gorman, Morgan
Stanley CEO

J Safra Sarasin did not acquire any US client assets as part of the sale. 

One wonders if Gorman is streamlining the whole business to rid himself of legacy infrastructure issues and offshore headaches before thinking about tackling beyond Asia and the US.

For J Safra Sarasin, the firm says the acquisition is a “logical extension of [its] private banking business for EMEA and Latin America”. J Safra Sarasin, which was formed in 2011, manages SFr131 billion ($149 billion). The Safra Group as a whole has around $205 billion in assets under management.

J Safra Sarasin chairman Ilan Hayim says in an interview with Euromoney that Sarasin has been looking at several buying opportunities from the increasing number of foreign and domestic banks that are looking to shed assets. Many banks in Switzerland are looking to sell or part with assets as a result of growing complexities and costs around having offshore clients and their tax implications. Morgan Stanley’s unit is reportedly among Swiss banks taking part in the US Department of Justice’s voluntary programme to identify undeclared assets. 

Hayim says Morgan Stanley had several bidders, but his bank was seen as a better fit for relationship managers and clients. The number of relationship managers affected will be less than 100.

While consolidation heats up in Switzerland and asset sales increase, Hayim says relationship managers will be the decision-makers in the sales, with brand a defining factor too.

“It will be less which partner the bank wants but rather which partner do the relationship managers see as being a fit, and whether the buying firm has the financial strength, reputation and clarity suitable for clients,” he says.

With just one shareholder and being more streamlined, speed was another advantage in the deal. Hayim says negotiations lasted only six weeks.

He says the deal brings more high-quality staff to J Safra Sarasin, adding: “It is not easy to find good people or to convince them to move in Switzerland. So the type of consolidation happening in Switzerland right now gives access to good relationship managers. This is a fairly small deal, but with high-quality staff you can attract more clients down the line.”

The bank also recently hired a team of relationship managers out of Bank of Singapore in Singapore and Dubai.

The bank continues to eye opportunities in Switzerland, but is not driven by size, says Hayim.

“There are many more sellers than buyers in Switzerland right now, but it’s about the cultural fit and whether you can integrate the clients and employees,” he says. “It takes time to integrate, and making acquisitions for the sake of building size or reducing costs would be the wrong way to play this consolidation opportunity.”

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