Switzerland's UBP to buy RBS's Coutts International

[March 27, 2015]  By Joshua Franklin and Steve Slater

ZURICH/LONDON (Reuters) - Switzerland's Union Bancaire Privee (UBP) is buying the international business of 300-year-old British wealth manager Coutts, the latest deal by a Swiss private bank aimed at branching out from its struggling home market.

The purchase of Switzerland-based Coutts International from Britain's Royal Bank of Scotland (RBS) also marks another retreat by a foreign bank from the Swiss wealth management industry amid a string of investigations into tax avoidance.

State-controlled RBS will keep Coutts' UK arm, which counts Britain's royal family among its customers.

The deal will boost UBP's client-base in Asia, a particular focus for wealth managers as the region is the fastest production line for multi-millionaires and billionaires.

It will add around 30 billion Swiss francs ($31 billion) to UBP's assets under management, lifting Asia to account for up to a quarter of the total from less than 10 percent now.

"The cherry on the cake of the whole deal is certainly the Asia business," Zuercher Kantonalbank analyst Andreas Brun said.

The price of the deal will be depend on the level of assets under management at completion, expected in the first half of next year.

Two sources familiar with the matter said it was likely to be less than newspaper reports of $600 million to $800 million, with the typical price for such deals around 1.5-2.0 percent of total assets.

The deal is UBP's first major acquisition since it bought Lloyds Banking Group's international private banking arm in May 2013, and is another step in rebuilding its asset base which almost halved through the financial crisis.

UBP had 98.7 billion francs in assets under management at the end of 2014 versus a peak of 135 billion in 2007.

Under the deal, UBP will not take on liability for Coutts International's ongoing litigation issues.

For RBS, the sale is part of a drive to pull back from foreign markets and focus on UK retail and commercial banking.

The bank, 80-percent owned by the UK government after a bailout during the financial crisis, sold another $3.7 billion of shares in U.S. arm Citizens this week and is expected to slash the size of its investment bank by three-quarters in the next five years.

RBS said the deal would include 15,000 to 20,000 customers, but it would keep about 3,000 international clients with close links to Britain.

(Editing Thomas Atkins and Mark Potter)

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