Swiss private bank EFG International sees more chances to make acquisitions during current tough market conditions, its chairman told Reuters on May 16. Jean Pierre Cuoni said the bank would stick to its previous acquisitions target for 2008, which called for buys worth between 10 billion Swiss francs ($9.5 billion) and 15 billion in terms of assets under management.
-- Weaker markets open up M&A opportunities
-- Happy about client inflows, weaker dollar a problem
"We believe the difficult markets will lead to more opportunities on the acquisition front," Cuoni said in an interview. "We have a number of things in the pipeline".
EFG is a rare example of a private bank whose growth comes mainly from acquisitions, in strong contrast with mid-sized rivals in Switzerland such as Vontobel and Sarasin, whose growth is largely organic.
Cuoni said EFG was happy about client inflows but said the weaker US dollar was a concern. "The biggest problem for us is the dollar decline. We have at least more than half of our business in dollars," he said. "But this is also a temporary phenomenon."
Concerns about EFG's rapid growth strategy has hammered its stock, which has lost more than a third of its value from a peak above 60 Swiss francs in June 2007, and is now trading around its 38 franc issue price at its IPO late in 2005.
The drop was largely due to weakness in third-quarter numbers, Cuoni said, and general equity market weakness. "Some analysts came out and were saying maybe EFG will not be able to perform the same way as they have done in the past because of the weak market in 2008," he said.
Specialised mid-sized wealth managers such as EFG are poised to benefit from turmoil among larger rivals such as UBS AG and Credit Suisse, whose investment banks have been damaged by subprime losses.
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