Study says deals M&A deals among wealth managers increase this year

December 16
11:49 PM 2013

London-based consultancy Scorpio Partnership said mergers and acquisitions involving wealth managers increased this year, with client assets traded amounting to nearly $760 billion, Bloomberg reported. A study done by the firm said over 60 deals happened in 2013 as purchase prices plunged from 3.7% in 2008 to 1.22% of managed assets.

The report quoted Scorpio Partnership Managing Partner Sebastian Dovey, who said in an emailed statement to Bloomberg,"The M&A tempo has reached a new level. The question these findings raise is: how much further can M&A valuations actually fall?"

Scorpio analyzed 236 deals for the study, which showed that over 405 of the assets which were purchased in the past five years changed hands this year. Since December 31, more than $8 billion were spent by the buyers as they absorbed businesses that manage money for wealthy individuals and families.

The third largest wealth manager in Switzerland, Julius Baer Group Ltd, is integrating up to CHF 72 billion or $81 billion of the Merrill Lynch assets it said it would purchase from Bank of America Corp in 2012, the report said. Credit Suisse Group also said it would acquire the private banking operations of Morgan Stanley in Italy, the UK and Dubai even as it divested its German private bank to ABN Amro Group NV. Geneva-based wealth manager Union Bancaire Privee also acquired international private banking units from Lloyds Banking Group, the report said.

Citing a June report published by PricewaterhouseCoopers, the report said some companies are prompted to lower costs or sell operations due to lack of client activity, the removal of commission paid to fund distributors and the increasing expense of implementing rules or paying penalties.

JPMorgan Chase & Co's UK wealth unit Chief Executive Officer Tracey Reddings said the flood of deals this year foretells more consolidation in private banking next year, the report said.

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