Merger and acquisition activity in the German banking industry is picking up, after nearly four years of standstill. As 2004 ended, two major acquisitions were announced in private banking and wealth management – a business that generates plenty of money for banks in Germany.
Sal Oppenheim, one of Germany’s oldest and most prestigious private banks, agreed in early December to buy most of BHF-Bank for E600m from ING of the Netherlands. The deal is a major coup for Sal Oppenheim, as it is only taking over the so-called best parts of BHF-Bank – namely its private banking, asset management and securities trading businesses.
And UBS of Switzerland consolidated its position as Europe’s leading bank for the ultra-rich by acquiring German wealth manager Sauerborn Trust in December for an estimated E120m. The purchase will boost UBS’s assets under management from wealthy clients in Germany by 60% to E16bn.
Sal Oppenheim will gain 1800 new employees from the BHF transaction, doubling its size and putting it on equal footing with Germany’s largest commercial banks in the private banking business. The deal also gives it a greater presence in the traditional private banking havens of Switzerland, Austria and Luxembourg. Matthias Graf von Krockow, chief executive of Sal Oppenheim, called it a “quantum leap into the elite group of European private banks”.
ING is relieved to be mostly rid of BHF-Bank, which went from being its great hope for the German market to become a serious liability. Michel Tilmant, ING chief executive, said: “For ING, the sale will release capital from a business that no longer fits into our strategy so it can be reinvested to support the growth of ING’s core businesses.” In Germany, this means ING’s successful online retail bank DiBa.
Like the Oppenheim deal, UBS’s takeover of Sauerborn is a blow for Germany’s largest commercial banks, including Deutsche Bank, Dresdner Bank, HVB and Commerzbank.
The big banks have recently rediscovered the potential of private banking in Germany so would have been pleased to acquire any gems. Commerzbank held talks with ING regarding a takeover of BHF-Bank before Sal Oppenheim but these failed due to differences on price and strategy.
