Number of private banks and M&A

Aside from the UBS’s acquisition of Credit Suisse, 2023 was uneventful in terms of M&A. There was only one other wealth management deal, which was Julius Baer’s divestment of Kairos in Italy. There were no M&A transactions to date in 2024. As a consequence, there was no real change in the number of private banks in Switzerland.

The lack of activity is primarily due to the easing of pressure on smaller banks to sell, given the boost they received from interest income, and general caution over inorganic growth. It is likely to be temporary, with M&A resuming once the interest rate wave is over - particularly against a background of flat AuM but many banks having expanded their costs bases significantly.

Christian Hintermann

Partner, Financial Services

KPMG Switzerland

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Number of Swiss private banks by AuM size

Number of Swiss private banks by assets under management (Infographic)

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M&A came to a halt in 2023

UBS’s takeover of Credit Suisse and Julius Baer’s divestment of Kairos were the only wealth management deals involving Swiss private banks last year, making 2023 the slowest year on record. There have been no deals in 2024 to date.

Outside wealth management, large banks engaged in five transactions involving asset managers, management companies or fund distributors, which are excluded from our analysis.

The number of private banks therefore remained stable at 90.

Number of announced M&A deals (buyer, target or seller is a Swiss private bank)

Number of announced M&A deals (Infographic)

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Deal fever was replaced by hiring relationship managers

Large banks looked to benefit from employee and client uncertainty in the wake of the UBS / Credit Suisse transaction by hiring dozens of relationship managers from those two banks. NNM in 2023 suggests this did not yet give rise to significant growth.

As the onboarding of new RMs takes time, it will be interesting to see if investments start to pay dividends in the form of additional NNM in 2024 and 2025.

Outlook – Pressure may grow for renewed activity

The pressure on banks to grow through M&A may intensify due to a number of challenges. AuM of the industry overall is the same as at the end of 2020 but with many banks having a significantly higher cost base. Generating consistent NNM will continue to be challenging. Transformational M&A can be used to leapfrog years of uncertain organic growth.

We expect the large private banks to capitalize on their strong positions and engage in larger scale M&A again.

Acquisition performance of Swiss private banks

Professor Tomi Laamanen and Research Associate Thomas Starck from the University of St.Gallen (HSG) looked at the acquisition performance of Swiss private banks over 14 years from 2010 to 2023. This period was marked by significant regulatory change, notably the automated exchange of information, which triggered a wave of consolidation. 280 M&A transactions involving Swiss private banks took place over those years. Private banks that combined both organic and acquisitive growth outperformed the other banks on most performance measures when compared to other growth strategies.