Morgan Stanley Sells Its Swiss Private Bank to Safra Group
(Updates with chairman’s comments from second paragraph.)
April 30 (Bloomberg) — Safra Group’s Swiss unit agreed to buy Morgan Stanley’s private banking business in Switzerland, adding to the exodus of foreign banks since the country gave ground on its bank secrecy rules.
J. Safra Sarasin acquired Morgan Stanley’s private banking business in Geneva and Zurich which manages about $10 billion, Ilan Hayim, chairman of J. Safra Sarasin, said in a telephone interview today from Geneva. The price of the transaction, expected to be completed in the first half of 2015, depends on how much of the money flows to the Swiss bank, he said.
Profitability at private banks in Switzerland has come under pressure amid U.S. and European probes into their use by foreigners seeking to avoid taxes in home countries. UBS AG paid $780 million and avoided prosecution in 2009 by saying it fostered tax evasion and delivering data on thousands of American accounts in Switzerland. Credit Suisse Group AG is the largest of 14 Swiss banks facing Justice Department criminal probes.
Morgan Stanley’s unit is among Swiss banks taking part in the U.S. Department of Justice’s voluntary program to identify undeclared assets, three people with knowledge of the matter said earlier this week.
The business J. Safra Sarasin agreed to buy today does not include any U.S. customers, the bank said today.
J. Safra Sarasin plans to take advantage of the “reshuffling” in Swiss private banking, Hayim said. It will probably add less than 100 people to its payroll because of the deal, he said.
Avoiding Tax
There are 106 Swiss banks participating in a U.S. disclosure program, which requires banks to disclose data on undeclared accounts by Americans and pay penalties in exchange for a non-prosecution agreement.
Switzerland has about 120 foreign-owned banks, Martin Maurer, director of the Association of Foreign Banks in Switzerland, said by telephone. There were 145 such firms at the start of 2012, according to data from the industry group.
Switzerland is among about 60 countries that support a new treaty on exchanging banking data for tax reasons. Tax evasion is not a criminal offense in Switzerland, unlike in many countries.
To contact the reporter on this story: Jeffrey Vögeli in Zurich at jvogeli@bloomberg.net To contact the editors responsible for this story: Frank Connelly at fconnelly@bloomberg.net Mark Bentley, James Kraus
