Falcon Private Bank, the Zurich-based lender owned by Abu Dhabi’s Aabar Investments, has bought part of rival Hyposwiss Private Bank, a unit owned by regional Swiss bank St Galler Kantonalbank.
Banks in Switzerland whose client base is high-net-worth individuals have been hit hard in recent years by a global clampdown on tax evasion with many smaller players which depend on offshore business struggling to survive.
Shares in SGKB have fallen sharply over the past few weeks after the Swiss government said US prosecutors might indict another Swiss bank for helping wealthy Americans avoid paying tax.
"SGKB reacts with these strategic adjustments to the changing conditions in the wealth management business and sets the basis for sustained growth in its core markets," it said in a statement. "This focusing reduces business risks."
"Dampened growth prospects, lower margins and rising costs due to increased regulations require a higher volume in the different offshore markets to make a profitable business," it said.
Switzerland's oldest private bank, Wegelin & Co, broke itself up last year after a US indictment.
A spokesman for SGKB said there was no link between US investigations and the Hyposwiss move, adding it was a strategic decision planned for months. He said the bank had decided to withdraw from the United States in 2011.
Hyposwiss manages assets of 2.66 billion Swiss francs ($2.82bn), below what some industry experts say private banks need to hold in order to thrive.
SGKB said it was selling the Hyposwiss Geneva subsidiary to Mirelis InvestTrust, the Latin America business to Banque Privee Espirito Santo, and the eastern European part to Falcon Private Bank in Zurich.
Banque Privee Espirito Santo and Falcon Private Bank said the acquisitions would help them strengthen their businesses in strategic markets.
Falcon Private Bank, which is owned by Abu Dhabi’s Aabar Investments and has more than $15bn in assets under management, completed the acquisition of Clariden Leu's London-based business in April and has been eyeing more acquisition opportunities of boutique firms.
Majority-owned by the Swiss canton of St Gallen, SGKB said it would not disclose the purchase price.
The rest of Hyposwiss will be integrated into SGKB in Zurich.
SGKB also said its gross profit increased 7 percent in the first five months of the year and it expects a solid business performance in 2013. The structural adjustment will result in one-off charges of approximately 7 million francs.For all the latest banking and finance news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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