EFG and BSI: Will It Be Enough to Thrive?

The merger of EFG International and BSI is producing a new player primed to upset the pecking order in Swiss private banking. The biggest institutions however would seem to be in no need to worry.

The restructuring in the Swiss private-banking industry is redefining the balance of power – proof of which being today's merger between EFG International and BSI.

The buyer, EFG, said the new company, which will operate under both brands, will have combined assets under management of 170 billion Swiss francs, making it the fifth-biggest private bank in Switzerland.

Two Dominating Forces

The ranking of the main competitors shows that the new Zurich-Ticino powerhouse is leaving Bank J. Safra Sarasin in its wake. EFG Chief Executive Joachim Straehle will likely rejoice because he had been in charge of Sarasin private bank when Bank Safra acquired the Basel-based institute.

A ranking by finews.ch shows the biggest players remain unruffled by Straehle's coup. Credit Suisse (CS) and UBS are still dominating the market by some margin.

1. UBS: 1,982 billion francs (invested assets at the end of 2015)

2. CS: 1,214 billion francs (assets under management at the end of 2015)

3. Pictet: 437 billion francs

4. Julius Baer: 300 billion francs

5. EFG & BSI: 170 billion francs (after merger)

6. J. Safra Sarasin: 147 billion francs (at the end of 2014)

7. Vontobel: 144 billion francs

8. LGT: 126 billion francs

9. Lombard Odier: 209 billion francs, of which 115 billion asset under management (at the end of first half 2015)

10. UBP: 110 billion francs (at the end of 2015)

Julius Baer and Pictet, the two pure private-banking players ahead of EFG & BSI seem to have an unassailable lead of the new No. 5.

In Asia, the most important growth market, the new bank has about 30 billion francs in assets under management, unlikely to be enough to propel the company into the top 10 any time soon, according to an overview of the industry by the end of 2014.

The 170 billion are too much to die and too little to live. The combination will either have to acquire further rivals or rigorously cut costs to reach a sustainable profitability. Straehle's next moves will be equally interested to see following today's move.

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