Union Bancaire Privée has increased its AuM by around a third in a deal consistent with its desire to be a big hitter in global private banking.

Last Friday’s official announcement that Geneva-headquartered Union Bancaire Privée, has agreed to acquire Royal Bank of Scotland’s international private banking and wealth businesses under the Coutts brand will not be a big surprise to the market. What is now certain is that this deal is another step in RBS slimming down and possibly returning to full private ownership, and it is also a further chapter in the ascent of UBP.

The sale by RBS includes business managed from Switzerland, Monaco, the Middle East, Singapore and Hong Kong.

UBP has made no secret – certainly not to this publication – of its desire to be a large, pure play private bank; it already had assets under management of around SFr100 billion ($103.4 billion) at the end of last year and the RBS deal brings in more than SFr30 billion, a significant boost. Just over a year ago, its cost-income ratio – an important measure of health – was below 70 per cent. It may be that the costs of bringing this RBS outfit under the UBP umbrella may bump that figure up a bit. As yet, there are few major details on how those much-touted M&A “synergies” will be brought into being; there may well be a period when we see some staffing changes and moves. Already, there have been a few moves from Coutts and UBP in different parts of the world, possibly as senior managers, sensing what would happen, decided they did not want the uncertainty of a post-M&A episode. Others, of course, may decide that having a Swiss private bank as an owner, rather than a part-state-owned UK bank, is preferable in the longer term.

Certainly, with RBS choosing to focus on its UK business, the deal makes a degree of sense. UK finance minister George Osborne, whose Conservative Party now goes to the national polls in May, wants the bank to slim down and achieve enduring profitability so it can be brought back into the private sector. While not a major issue, it is anomalous that a state-owned bank, bailed out by taxpayers some of who cannot afford to have a private banking account, should be indirect supporters of a brand such as Coutts.

In an interview run last Friday, the bank told this publication that the Coutts brand will be integrated under the UBP name - in other words, the brand will not remain or at least may be somewhat diluted in its impact. There may have been a degree of intellectual property right haggling around that point - Coutts is a valuable brand and RBS may have been unwilling to let it persist post-sale under another umbrella outside of the UK.

Consider the views of Scorpio Partnership, the consultancy, which argues that UBP seems to have snapped up the business at a cheap price. Scorpio says that in 2014, wealth managers were on average, as a share of AuM, paying about 2.1 per cent in M&A deals; it said that while there is no confirmation of what UBP forked out for RBS’s businesses, it appears that the priced paid for Coutts “could appear to be at a marked discount”. By the standards of such multi-jurisdiction deals, Scorpio said the deal proceeded relatively quickly.

“The question is not what but why is it priced so low. Does it come down to the obvious willingness to offload the business by RBS or is it the integration factors with UBP: staff and advisor retention rates, market reaction and client satisfaction? Inevitably it will be a combination for both. We know from Dealtracker that acquisitions are now more about quality rather than quantity,” the consultancy continued in comments emailed to this publication.

“The strategic drive and intent of UBP is noteworthy. This time last year we specifically picked out UBP as one to watch because of a series of structural changes that indicated their intentions and they are not disappointing. It is likely now that they will go into a phase of change management integration as we assume their deal appetite has largely been satisfied. The key will be in the integration process to improve the cost:income factors in the model and also to transition the higher value accounts,” it added.

In any event, UBP, a firm that was hit by the Bernard Madoff Ponzi scheme scandal over half a decade ago, has recovered, and it is clearly on the M&A march. This Coutts move may not be the last deal it does although, given the complexity of the operation it has just bought, we might not see another piece of shopping from that bank at least for a few months yet.