The world of wealth management mergers and acquisition took another turn with the announcement of a potential bid for a Swiss private bank by a Brazilian suitor.

Grupo BTG Pactual, Latin America's largest independent investment bank, is in exclusive talks to buy wealth management firm BSI from Italian insurer Generali, the latter firm said late yesterday. BSI has a footprint in several regions, including Asia.

“Generali has granted exclusivity to Banco BTG Pactual, a leading LatAm investment bank, global asset and wealth manager with a $13 billion market capitalisation and over SFr100 billion ($112 billion) assets under management, to conduct negotiations relating to the potential acquisition of the entire share capital of BSI,” Generali said in a statement on its corporate website.

“BSI is a leading Swiss private bank with a global presence and SFr90 billion of assets under management. Generali will update the market on the outcome of these negotiations when required upon further developments,” the statement added.

If the deal is signed it will put an end to a saga that has seen Generali seek a buyer for the Swiss banking business, headquartered in Lugano, for several years. Previously it had been suggested that Middle East-owned Falcon Private Bank – which is also located in Switzerland and has made acquisitions – was interested. Such a deal would also demonstrate the continued merger and acquisition activity that is affecting the Swiss banking industry, under pressure on its historic bank secrecy laws and faced with rising cost burdens.

One issue for any acquirer of BSI or similar banks is how long any due diligence process will take to ensure the bank has cleared up issues such as undisclosed assets; Swiss banks are currently deciding whether to sign up to a Swiss-US accord stating if they have, or not, any suspicions of breaking US tax laws. Such a process would have a bearing on the purchase price. In its 2013 results, BSI said it has made provision for this US programme, under which it has elected to join as a "category 2" bank - an institution which believes there is some possibility it has broken tax laws.

Last year, the bank's operations in Asia became profitable for the first time, it said in its results statement in April.

Fee income
According to a report by Reuters, Sao Paulo-based BTG Pactual, controlled by billionaire financier Andre Esteves, wants the acquisition to add more fee-related activities to the fast-growing banking empire he has built since 2009.

Such an acquisition would be another case of a Swiss banking business being bought by a Brazil-based entity; in 2011 Safra bought Sarasin, creating the Bank J Safra Sarasin business that a few days ago also bought the Swiss wealth arm of Morgan Stanley.

BSI had a net loss of SFr722 million last year as it took writedowns faster than planned because of new regulations for accounting treatment of goodwill.

Consolidated gross profit stood at SFr196.6 million, a fall of 0.2 per cent. The bank had a total capital ratio of 18 per cent last year. BSI logged total net new money of SFr2.2 billion in 2013 and had total AuM of SFr89.4 billion.
BSI's history dates back to 1871.