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March 3, 2014


Standard Chartered Seeks Buyer for Swiss Private Bank

With the recent global crackdown on tax evasion in full swing, Standard Chartered PLC is seeking a buyer for its Swiss private bank put on the block by Italian insurance giant Assicrazioni Generali SpA.

While Standard Chartered still has plans to grow its private banking in other financial hubs including Singapore, Hong Kong and London, the small Swiss unit decided it was no longer crucial to develop a dominant force in trade financing, investment and wealth management across Asia, Africa and the Middle East. However, it will continue to run a commercial bank in Switzerland.

Simultaneously, investment companies Cinven and Investindustrial have their eyes on BSI, a Swiss-based bank that Generali put up for sale more than a year and half ago in an attempt to strengthen its financial position and refocus on core businesses. Portuguese lender Banco Espirito Santo is rumored to have an interest in buying BSI as well, but has decided to put those plans on hold due to the asset quality review the European Central Bank is carrying out on euro-zone banks.

The moves come as both companies cut noncore operations and refocus on financial health. Following Mario Greco gaining control of Generali in 2012, the company has rid itself of a number of businesses or stakes in companies, including a portion of its shares in Banca Generali. Peter Sands, Chief Executive of Standard Chartered, directed the company to get out of businesses with limited appeal in order to counteract a slowdown in some of its significant markets.

In the meantime, Swiss private banking has been less than stellar following intense legal pressure from U.S. and European authorities aiming to track down undeclared assets hidden in Swiss accounts, sending many clients running for the hills. It’s this sort of pressure that has complicated the sale of BSI and led Italian authorities to prepare for a fresh crackdown on Italian money stashed in Switzerland.

More than a third of the country’s 300 banks have succumbed to international pressure and have signed up for a U.S. Justice Department program unveiled last year that enables lenders to exchange information about U.S. accounts so that these banks might avoid prosecution.

Standard Chartered has yet to disclose whether it will join the DOJ program, but the bank is under extra pressure after signing two-year deferred prosecution agreements with the DOJ and New York attorney general in December 2012 over transactions with Iranian clients.

A spokesman said the decision to sell the Swiss unit was made after a “comprehensive review” and declined to comment on any potential buyers.

A person familiar with the matter believes that the bank will be lucky to get more than $1.7 billion, slightly less than two-thirds of its book value, due to the recent global crackdown on tax evasion.

Source: Patrick, Margot & Legorano, Giovanni, & Letzing, John, “Standard Chartered Plans to Sell Swiss Private Bank,” The Wall Street Journal, February 12th, 2014

Offshore Accounts/International Tax Disputes