EFG International: New Prospects Beyond Acquisition Rumors

Grey Metal Case of Hundred Dollar Bills

For some time, speculation about Julius Bär acquiring EFG International made waves in the financial sector. However, this chatter has since quieted, and financial experts now largely dismiss the likelihood of such a deal. Nevertheless, interest in EFG International remains strong.

In recent weeks, there was considerable excitement over Julius Bär potentially buying EFG International. Yet, consensus at the Private Banking Day in Geneva on Tuesday suggested that this deal is now off the table, mainly due to the high acquisition price EFG International demanded.

Currently, EFG International, controlled by the Greek-Swiss Latsis shipping family, holds a strong position, with its stock price increasing by about 70% over the past two years. This rise makes a sale unlikely. Meanwhile, Julius Bär faces its own challenges, such as resolving the credit issues linked to Austrian investor René Benko and appointing a new CEO following Philipp Rickenbacher’s departure in February.

Emerging Interests

Despite the failed deal with Julius Bär, new potential buyers are emerging. At the Geneva event, rumors hinted at J. Safra Sarasin’s interest in EFG International. Both banks have remained silent on these industry rumors.

J. Safra Sarasin, a prominent Brazilian-Swiss financial institution, is known for its discretion and financial prudence. The Brazilian owner family retains a large portion of annual profits, bolstering the bank’s financial reserves. Jürg Haller, the president of J. Safra Sarasin, frequently mentions that the bank aims to be a consolidator in private banking, as he reiterated in an April interview with finews.ch.

Cash Deal Strategy

Recently, J. Safra Sarasin has made headlines by hiring former Credit Suisse bankers to enhance its investment banking and wealth management services, as reported by finews.ch. The bank’s most notable acquisition was over a decade ago when it took over the Basel bank Sarasin. This acquisition highlighted J. Safra’s strategy of paying in cash rather than stock, showcasing its financial strength—a method likely to appeal to the Latsis family controlling EFG International. Notably, Spiros Latsis and Jacob Safra are known to be acquainted.

Creating a Major Player

A merger between J. Safra Sarasin (managing CHF 204 billion) and EFG International (managing CHF 157.5 billion) would result in a combined entity managing approximately CHF 360 billion. This would position them ahead of Geneva’s Lombard Odier, which manages just under CHF 300 billion in client assets, but still behind Pictet, with CHF 633 billion.

Such a merger would create a significant new player in Swiss private banking, particularly strong in Zurich and Lugano, where EFG International has a notable presence. J. Safra Sarasin is traditionally dominant in Basel and Geneva.

Global Impact Potential

Internationally, this merger could make a significant mark, especially in Asia, where both institutions have strong presences. J. Safra Sarasin operates in more than 30 locations with about 2,500 employees, while EFG International has over 3,000 employees across 40 locations. A key challenge would be integrating EFG’s relatively independent advisors with J. Safra Sarasin’s more tightly controlled management structure, though overlaps are expected.

Interestingly, a merger would bring together Brazilian interests, as BTG Pactual, another Brazilian entity, holds nearly 20% of EFG International, second only to the Latsis family’s 45%. This cultural alignment could facilitate smoother integration.

By creating a new major player in the industry, a merger between J. Safra Sarasin and EFG International could redefine the landscape of Swiss private banking, offering enhanced services and greater global reach.

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