Search for growth fuels urge to merge
With private banking contributing anything up to 20% of global bank profits, capturing market share through mergers and acquisitions is a preoccupation of wealth managers.
"YOU NAME THE private bank, they're out there looking for an acquisition," says Boston Consulting Group's head of private banking and wealth management, Christian de Juniac. That might be a slight exaggeration but there will be plenty of M&A activity in the wealth management industry this year as banks strive to expand. In a KPMG survey of 190 private banks in 2004, one-third said that their business strategy called for an acquisition to be made within the next three years – the main objectives being geographical expansion or increased market share.
There seems to be no regional bias to private banks' expansion strategies. Asia-Pacific, the Middle East, the US, Western Europe, Russia, India and China all feature as targets.
It will be supply that dictates the number of deals to close in 2005. In western Europe, in particular, targets are limited. Banks are being forced to buy small wealth managers or regional private banking operations of universal banks retreating from the sector.
Some famous names could be on the block. Last month, Swiss private bank Julius Baer announced a one share, one vote structure, significantly reducing the family's control and leading to speculation that a merger or acquisition could be in the offing.