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WealthBriefing Research: Wealth Management Acquisitions Rise Steeply in 2005
Acquisitions in the wealth management sector rose by 58 per cent in the first five months of 2005, compared with the same period a year ago,...
Acquisitions in the wealth management sector rose by 58 per cent in the first five months of 2005, compared with the same period a year ago, according to a survey by WealthBriefing. So far this year there have been 41 acquisitions in the wealth management sector, compared with 26 in the first six months of 2004 (see Table).
Fifteen of these acquisitions were in the US; another five were in the UK, and only two were purely Swiss deals. Many of the acquisitions in Europe were cross-border, representing 16 of the deals, which shows the popularity of cross-border deals in the wealth management sector.
“Appetite for acquisitions is very buoyant,” said Ray Soudah, director of Millenium Associates, the wealth management mergers & acquisitions specialist.
He added: “With the scarcity of organic growth opportunities and the continuing need for financial firms, specialised private and institutional asset managers to improve cost/income ratios, activity in M&A transactions is fast increasing and national borders are playing a decreasing role. I see activity remaining high for 2005 and beyond.”
The appetite for acquisitions has grown significantly during the last six months. Senior management from at least 15 financial firms have made public pronouncements about their desire to buy a private bank/wealth manager.
In the last six months, the following firms have made public their ambitions to acquire wealth management firms: ABN Amro, Barclays, BNP Paribas, Citigroup, Deutsche Bank, Eaton Vance Investment, EFG, ING, JP Morgan, Julius Baer, London & Capital, Mellon, Merrill Lynch, Rathbones, UBS.
Organic growth appears to be becoming increasingly difficult for many firms. Profitability has improved for a great many wealth managers, but this is due to improved asset performance and exchange rate movements, said Mr Soudah. “Very few firms are growing by adding net new money.”
Mr Soudah said this will increase the move towards consolidation in the sector. “There will eventually come a day when many wealth management firms can’t hide behind the artificial growth of profits when their assets are actually shrinking. Many will be forced to sell.”
The consolidation argument is also a major tenet of the annual PricewaterhouseCoopers Global Private Banking/Wealth Management survey for 2005. “More and more, size will matter as international banks go on an acquisition trial and local/national banks look to achieve scale through less costly growth strategies,” said the survey, released today.
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| Wealth Management M&A Activity First Half 2005 | |||
| Acquiring Firm | Firm Acquired | Location | Private Client Assets under Management of new entity |
| Barclays | ING Securities Bank (wealth management operations: ING Private Bank & ING Ferri) | France/UK | €2.8 billion |
|
Fortune Management |
Dr Höller Vermögensverwaltung und Anlageberatung |
Switzerland | N/A |
|
Lombard Odier Darier Hentsch |
DekaBank(Swiss) private bank (20% stake) |
Switzerland | N/A |
|
Webster Financial Corporation |
J. Bush & Co |
US | N/A |
|
Sanders Morris Harris Group |
Edelman Financial Center |
US | $10 billion |
|
Bank Sarasin |
Colombo | Switzerland/Italy | Colombo adds AUMs of around $600 million |
|
Encore Bank |
Linscomb & Williams |
US | $2 billion |
|
Kaupthing
Bunardarbanki |
Singer & Friedlander |
Iceland/UK | N/A |
|
Banco
Monte dei Paschi de Siena |
TrinityCapM |
Italy/UK | N/A |
|
Kredietbank Luxembourgeoise |
Effectenbank Sroeve |
Holland/Luxembourg | $9.7 billion |
|
Garrison Financial Corp |
Tahoe Advisers |
US | N/A |
|
ABN Amro |
Nachenius, Tjeenk & Co |
Holland |
Nachenius had around €1.3 billion of AUMs. |
|
Boston Private Financial Holdings |
Gibraltar Financial |
US | N/A |
| Spanish private investors |
Banco Privado Portugues (17% stake) |
Spain/Portugal | N/A |
|
UBS |
Dresdner Bank Lateinamerika (private banking division) |
Switzerland/US/Latin America | N/A |
|
PrivateBancorp |
Bloomfield Hills Bancorp |
US | Bloomfield had around $330 million of AUMs |
| Management Buy-Out |
Ernst & Young Investment Advisers |
Canada | N/A |
|
NewAlliance Bancshares |
Cornerstone Bancorp |
US | Cornerstone had around $217 million of AUMs |
| New Alliance Bancshares |
Trust Co. of Connecticut |
US | N/A |
|
Liechtensteinische Landesbank |
Swisspartners Investment Network (bought a majority stake after earlier purchase) |
Liechtenstein/Switzerland | $3.7 billion |
|
Silvercrest Asset Management |
Heritage Financial Management |
US | Heritage had around $400 million of AUMs |
|
Washington Trust |
Weston Financial Group |
US | Weston had around $1.2 billion of AUMs |
|
WestLB |
Weberbank |
Germany | Weberbank had around $3.79 billion of AUMs |
|
Investec |
HSBC's private client & wealth management business in South Africa | UK/South Africa | HSBC's wealth management business in SA had around $514 million of AUMs |
|
ABN Amro |
Bank Corluy |
Holland/Belgium | |
|
Sal Oppenheim |
Montgomery Oppenheim (full control of, compared with a minority stake beforehand) |
Germany/Ireland | N/A |
|
Janney Montgomery Scott |
Parker/Hunter Inc. |
US | Parker had around $492 million of AUMs |
|
Duncan Lawrie |
Douglas Deakin Young |
UK |
Douglas had around $473.5 million of AUMs |
|
BB& T Group |
Sterling Capital Management |
US | N/A |
|
Yorkshire Investment Group |
Manor Management Services |
UK | $565 million |
|
Charles Stanley |
Rowan Dartington |
UK | Rowan had around £300 million of AUMs |
|
Bank Hapoalim |
Bank of New York-Inter Maritime Bank |
Israel/Switzerland | N/A |
|
BNP Paribas |
Turk Ekonomi Bankasý (50% stake) |
France/Turkey | N/A |
|
Kredietbank Luxembourg |
Aurel Leven Gestion |
Luxembourg/France | Aurel had $1.3 billion of AUMs |
|
Bank Leumi |
Riggs Bank & Trust (Channel Islands) |
Israel/UK | N/A |
|
Merriman Curhan Ford & Co |
Catalyst Financial Planning & Investment Management |
US | N/A |
|
Arrow Partners |
Landmark Investors |
US | N/A |
|
UBS |
Property division of Siemens Kapitalanlagegesellschaft |
Switzerland/Germany | N/A |
|
Compass Bancshares |
Stavis, Margolis Advisory Services |
US | Stavis had around $500 million of AUMs |
|
UBS |
Etra |
Switzerland/Italy | Etra had around $653 million of AUMs |
| Invectec (Car Sheppards Crosthwaite) |
Rensburg (Investec will own 47% of the merged Rensburg and Carr Sheppards Crosthwaite) |
UK | N/A |
|
EFG Bank |
Dresdner Lateinamerika Financial Advisors |
Switzerland/Germany/Latin America | N/A |
