Bank Sarasin & Cie. AG (BSAN) wants Safra Group to inject capital into the Swiss wealth manager after agreeing in November to pay more than 1 billion Swiss francs ($1.1 billion) for a controlling stake.
“Safra has capital to help us to grow the business,” Chief Executive Officer Joachim Straehle said in an interview at Sarasin’s headquarters in Basel, Switzerland. Sarasin would like to build networks in Germany, India, the Middle East and Asia, and look at synergies with Safra in Latin America, he said.
Safra, founded in the Syrian city of Aleppo in the 19th century, operated one of the most profitable Swiss private banks before agreeing to buy Rabobank Groep’s Sarasin stake, according to Vontobel Holding AG. (VONN) The gross margin on the assets managed for wealthy customers at Safra’s Zurich-based business was more than twice as high as that at Sarasin, which last week reported second-half withdrawals by clients and a slump in earnings.
“Safra has the highest confidence in the long-term potential of Sarasin and is committed to working with Sarasin to realize this potential, including capital and other resources,” said Robert Siegfried, a New York-based spokesman for Safra, which already manages about $109 billion across a network spanning Switzerland, Brazil and the U.S.
Sarasin is adding more branches in Germany and expanding in emerging markets as the erosion of Swiss banking secrecy crimps profit margins and some clients repatriate money to their home countries.
The bank’s assets under management fell 5 percent to 96.4 billion francs in the six months through December 2011, contributing to a 60 percent drop in second-half profit. Sarasin is targeting 150 billion francs of assets by 2015.
J. Safra Holding AG, the Zurich-registered business that owns family companies in Geneva, Gibraltar, Luxembourg and Monaco, had a gross margin of 177 basis points in 2010, according to data compiled by Vontobel. Sarasin’s gross margin declined to 68 basis points in 2011 from 70 basis points the previous year. A basis point is one hundredth of a percentage point.
The purchase of Rabobank’s stake will give Safra 68.6 percent of the voting rights and a 46 percent equity interest in Sarasin. Safra is obliged under Swiss takeover regulations to make an offer to minority shareholders.
“Safra has been in wealth management for a long time and the family has an interest in taking the expansion plans further,” said Christian Stark, a Zurich-based analyst at Credit Agricole Cheuvreux, who has an “outperform” rating on Sarasin’s shares. “It’s possible that Safra might look to increase its stake in Sarasin and integrate its European operations.”
The two firms may share an information-technology platform that would reduce costs and make regulation easier for the Swiss Financial Market Supervisory Authority, said Straehle, who earlier this year toured Sarasin’s Asian offices with Jacob Safra, vice chairman of the family’s Swiss holding company.
“We’re here for the next 100 years -- we want to grow this bank,” Safra said during the trip, according to Straehle. Safra fully supports Sarasin’s business model and intends to keep the management in place, he said.
Sarasin wants its new owner to be more “open,” said Straehle, who will report to both Jacob and Joseph Safra, head of Safra Group and the world’s 68th richest person according to Forbes magazine.
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