* "It adds a bit of colour to the financial arena" -BTG's
* Generali to book net loss of 100 mln euros from disposal
* Italian insurer completes disposal of non-core assets
(Adds comments from BTG Pactual CEO)
By Lisa Jucca
MILAN, July 14 Brazilian investment bank Grupo
BTG Pactual is buying Swiss private bank BSI for a
knock-down 1.5 billion Swiss francs ($1.7 billion), extending an
overseas push by the Sao Paulo-based lender.
The deal, the second biggest in the bank sector this year,
brings to an end a long-running attempt to sell the unit by
Italian insurer Generali.
BTG, controlled by billionaire financier André Esteves, said
the Swiss unit would become its global wealth management
business, increasing its wealth and asset management assets to
more than $200 billion and giving it a big presence in
Switzerland, the world's biggest financial offshore market.
It marks the boldest move by BTG to diversify away from
Latin America, and Esteves said he planned further international
growth in the next five years.
"It's good for the world to have a global investment company
like us headquartered in an emerging market. It adds a little
bit of colour to the financial arena," Esteves, also chief
executive, told reporters on a conference call.
"We are entrepreneurs. We have capital, reputation,
motivation and ambition to continue to grow," said Esteves, who
has an estimated net worth of $4.2 billion, according to Forbes.
The deal brings to an end Generali's more-than-three year
search for a suitable buyer for an asset that had lost appeal in
the face of relentless pressure by the United States and other
western nations on Swiss banking secrecy.
The sale will lift the insurer's Solvency I ratio, a measure
of financial strength, by 9 percentage points to more than 160
percent. That will allow Europe's third-largest insurer to meet
a key target of Chief Executive Mario Greco's business plan a
Generali said the sale price could be reduced if BSI is
fined by U.S. authorities in relation to a tax amnesty
programme, in which American taxpayers can voluntarily declare
assets held secretly offshore.
The Italian insurer had hoped to fetch an amount similar to
the 1.9 billion francs it paid for the business in 1998 but was
forced to lower the price and will suffer a net loss of 100
million euros ($136.4 million) on the disposal.
It had written down the value of its BSI holding by more
than 200 million euros earlier this year.
BTG Pactual is run as a partnership and was formed in 2009
when Esteves' Bank and Trading Group (BTG) acquired UBS Pactual,
a brokerage with a 30-year history that had been bought by Swiss
bank UBS in 2006. In 2012, the business listed on the
stock market, where it is valued at about $14 billion.
It has a strong private banking business in Brazil but
little beyond its home market. BSI, which was founded in Lugano
in 1873, has more than 2,000 staff in 20 locations, including in
Singapore and Hong Kong.
BTG has been expanding in Europe and Asia, and the deal will
leave it with about half its staff based outside Latin America.
The Swiss private banking industry is going through a period
of upheaval after a long-running U.S. tax evasion probe and
crackdowns in Germany, France and elsewhere, which have led to
the number of Swiss banks shrinking by around a fifth to just
under 300 between 2000 and 2012.
Smaller, independent players in particular have been under
pressure to sell up or close down, and even majors such as UBS
and Credit Suisse have been hit with
multi-million dollar fines.
"It is a changing landscape, and banks are moving away from
a focus on confidentiality and much more on performance and
transparency, and we're going to run the business very much in
that vein," said Steve Jacobs, one of BTG's managing partners
and head of its international asset management.
"We felt this was the right time and right platform to take
advantage of that," Jacobs said, adding the bank could look at
more wealth management deals, but probably not for another 18 to
With the sale, Generali completes a disposal plan in which
it has sold 3.7 billion euros of non-insurance assets in about
18 months, just shy of its 4 billion euros target.
Assets already sold include a minority stake in a Mexican
insurer and reinsurance activities in the United States.
Under the terms of the deal, Generali will receive 1.2
billion francs in cash and the equivalent of 300 million francs
in Banco BTG Pactual ordinary and preference shares.
The transaction, subject to regulatory approval, is expected
to be completed in the first half of 2015.
JP Morgan and Mediobanca assisted Generali as financial
advisers on the deal.
($1 = 0.8903 Swiss Francs)
($1 = 0.7331 Euros)
(Additional reporting by Gianluca Semeraro, Steve Slater and
Katharina Bart; Editing by David Holmes and Jane Baird)