Swissfirst stock falls on news of possible sale

Swissfirst has its headquarters at Küsnacht near Zurich Keystone

Shares in the private bank Swissfirst took a tumble on Friday after the management said it was prepared to resign and the group might be up for sale.

The management move comes after heavy criticism by a shareholder and the media of last year’s merger with rival bank Bellevue.

The bank’s shares fell more than 18 per cent at one point on Friday but ended the day 11.91 per cent down from Thursday’s close at SFr82.80 ($67.11).

Swissfirst’s merger with Bellevue is being investigated by a number of federal and cantonal authorities on suspicion of illegal insider dealing. It has triggered intense media coverage in recent weeks.

The probes are investigating why pension funds sold stock ahead of the merger, thereby depriving themselves of substantial gains.

Swissfirst said its management continued to judge their actions in the context of the Bellevue transaction as completely correct. But the criticism that it said was led by one “militant shareholder” made ongoing operations difficult.

A company statement said that the group’s board of directors and executive management had decided to instruct an international investment bank to test all strategic options without delay, particularly the sale of the entire group or of individual operating units.

Tighten rules

Swiss Finance Minister Hans-Rudolf Merz said the case highlighted the need to tighten insider knowledge rules, which the Swiss Bankers Association has also criticised for being too lenient.

“The current debate about Swissfirst shows the [insider] law must rapidly be tightened… I will table a proposal this autumn. Something has to happen quickly,” Merz told the mass-circulation Blick newspaper.

Swissfirst shares more than doubled in value after the Bellevue deal, after a number of shareholders sold part of their stakes to the bank. The structure of the deal has been criticised widely by the Swiss media.

The Federal Banking Commission has declined to comment on the case. A Zurich prosecutor recently told Reuters he did not expect an outcome of his investigation before autumn, but that his office was working on the case “under high pressure”.

Executive management and the board of directors were prepared to resign once a new structure for the company was found, Swissfirst said.

Swissfirst is one of Switzerland’s few small, private banks listed on the stock exchange. Assets under management were SFr11.9 billion at the end of March.

swissinfo with agencies

Key facts

The Swissfirst and Bellevue banks announced their merger on September 12, 2005.
Trading in Swissfirst shares increased dramatically at the end of last August and before the merger announcement.
Under the terms of the merger, Bellevue’s staff, which owned the bank, would acquire up to a 50% stake in Swissfirst, with Swissfirst in turn acquiring Bellevue’s operating business.
Shares in Swissfirst soared by almost 50% after the merger announcement.