The banking group, which has recently acquired the BSI business in Singapore, plans job cuts and is adding to cost reductions.

EFG International, which last month completed its acquisition of BSI in Singapore – the business that has been punished by the Asian city-state for regulatory lapses, said it plans a net cut of between 100 and 150 jobs per year globally over 2017-2019. 

Cost “synergies” from the acquisition have been increased to around SFr240 million ($238 million), a rise of SFr55 million from the previously estimated figure, it said in a statement. These phased changes will come into effect in 2019. 

The Zurich-listed firm said the new cost targets come from “additional synergies in IT/operations and from optimising booking centres and exiting non-core businesses”.  It said job cuts may include redundancies as well as natural staff turnover and retirement.

BSI Panama will be closed by the third quarter of 2017. A partial sale of BSI Bahamas client portfolios has been agreed in December 2016 and EFG’s Independent Financial Advisers business in the UK is planned to be sold, it said.

“Having conducted more detailed analysis, additional synergies have been identified which will support us in building an efficient business of substantial scale to deliver sustainable growth. Our clear ambition is to reinforce EFG International’s position as a top-tier Swiss private bank, offering broad opportunities to clients and employees and leveraging our enhanced global presence and strong Swiss hubs in Zurich, Lugano and Geneva,” said Joachim Straehle, chief executive of EFG International.

EFG International agreed to purchase BSI, which is headquartered in Lugano, Switzerland, earlier this year from Brazil’s BTG Pactual. In the summer, the Monetary Authority of Singapore, the city-state’s regulator, moved to remove the merchant banking licence from BSI’s Singapore business because of serious failings over anti-money laundering controls and related transactions. The saga involved transactions surrounding Malaysian state-run fund 1MDB. A number of other banks, including Falcon Private Bank, Standard Chartered and Coutts in Singapore, have been punished. 

The EFG-BSI transaction is an example of the flurry of M&A deals that have gone on in Asia over the past few years. Earlier this week, for example, Netherlands-headquartered ABN AMRO agreed to sell its Asian private banking operations to Liechtenstein’s LGT; ANZ, the Australia-based bank, has sold Asian retail/wealth businesses to DBS, and Barclays sold private banking businesses in Singapore and Hong Kong to OCBC. Societe Generale, the French banking group, sold its Asian private bank to DBS in 2014. 

One-off
Among other details in its announcement, EFG International said there is an estimated one-off integration cost - borne by EFG International – of about SFr250 million (versus a previously communicated figure of about SFr200 million), which is expected to be phased over 2016-2018.

There is an estimated AuM attrition rate of approximately SFr10 billion over the next three years and estimated net revenue loss of about SFr69 million (versus previously communicated figure of around SFr82 million). There are estimated post-tax net synergies (based on 17.5 per cent tax rate) of SFr141 million (versus SFr85 million, as previously said) from 2019. 

The transaction, EFG said, is expected to be accretive for its earnings per share from 2018 onwards (excluding integration costs). 

As far as the job cuts are concerned, two-thirds of them will take place in Switzerland. EFG said Zurich, Lugano and Geneva “will all remain important hubs for the governance and operation of the combined bank”. 

It added: “The phasing of job reductions over three years will allow the bank to take into account natural staff turnover and retirements. Where redundancies cannot be avoided, a social plan will be put in place in conformity with applicable rules and regulations."