Dealtalk: Sale of Rabobank's Sarasin an all-Swiss affair

ZURICH/LONDON (Reuters) - The struggle for control of Swiss bank Sarasin (BSAN.S) is becoming a three-way tussle as Chief Executive Joachim Straehle and the heads of would-be acquirers Julius Baer (BAER.VX) and Raiffeisen jockey for position.

The smart money is on Boris Collardi, Switzerland's youngest chief executive since he took the helm of Baer at 35 in 2009. But the deep pockets of Swiss cooperative lender Raiffeisen could still give the bank's Pierin Vincenz an ace up his sleeve.

The two private banks have an advantage over larger international rivals because their businesses are similar to that of Sarasin, enabling them to cut costs more aggressively after a merger, and pay a higher price.

Unlisted Rabobank RABO.UL, which owns a majority of Sarasin, will hold out for a stiff price to be paid in cash, a source familiar with the situation said.

"They are not desperate sellers. If you're the only bank in the world with a triple-A rating ... if you don't get the price you want, you're not going to sell because that is what the whole deal is about," the source said.

A sale would buttress the Dutch bank's cherished triple-A credit rating -- which it has clung to throughout the credit crisis -- in the face of tougher global capital rules, which are causing a spate of asset disposals among banks.

Sarasin, a bank for rich clients, has assets under management of some 100 billion Swiss francs ($111 billion), offering a rare chance of making a substantial jump in Switzerland's fragmented private banking market.

Baer, a bigger bank with 166 billion Swiss francs of client assets, has been circling a number of private banks this year, and has recently teamed up with Australia's Macquarie Group (MQG.AX) to expand its Asian business.

"On paper, the combination of the two banks is a match made in heaven. It is understood to achieve 20-25 percent cost savings due to the vast geographical overlap," said Kepler analyst Dirk Becker in a research note.

Sarasin is worth some $1.9 billion in the stock market and Rabobank would expect a "significant premium" to that price, the source familiar with the situation said.

The company has shareholder equity of 1.22 billion francs and Rabo, a cooperative bank, would expect a percentage of assets under management on top of that, the source said.

MODERATE MULTIPLE

Belgium's KBC (KBC.BR) raised 1.1 billion euros ($1.5 billion) from the sale of its KBL private banking unit to a Qatari-backed fund this month, which the source said suggested a moderate multiple of assets under management.

At a premium of 1.5 to 2 percent -- considered a more average price for such companies -- Sarasin could fetch a deal price of between $2.8 billion and $3.4 billion.

Straehle in May launched the idea of a management buy-out in an interview in the Financial Times, and the newspaper at that time mentioned a price of $3.4 billion.

Chief Executives Collardi and Straehle know each other from when they worked at Credit Suisse (CSGN.VX), both spending some time at the private banking arm.

The two men are not considered close.

Collardi would be favorite for the top job in a combined group, analysts say. Cost synergies could mean the axing of several top Sarasin executives, who are therefore hostile to a deal with Baer, according to analysts.

Cooperative bank Rabo may favor the similarly-structured Raiffeisen which, with 9.6 billion Swiss francs ($10 billion) in equity could easily absorb the acquisition.

Some analysts said this could in turn favor a Sarasin tie-up with rival Vontobel, 12.5 percent owned by Raiffeisen, which would create a group with similar mass.

Others say such proposal would meet with fierce opposition from the Vontobel family, the main shareholders of the group, which has said it wants to remain independent.

Britain's H.I.G. Private Equity, a subsidiary of H.I.G. Capital, denied it has linked up with Raiffeissen to fund the bid, something that was reported by Swiss newspaper TagesAnzeiger on October 14.

A Swiss newspaper reported this month that Sarasin was holding talks with the Government of Singapore Investment Corp. Such rich sovereign wealth funds, and large banking groups in Brazil and China, are the jokers in the pack.

"Sovereign wealth funds and emerging market banks are interested in this type of asset and would keep Sarasin leadership," said Cheuvreux analyst Christian Stark.

($1 = 0.898 Swiss Francs)

($1 = 0.730 Euros)

(Additional reporting by Simon Meads; Editing by David Cowell)