EFG International may be based in Zurich and listed on the Swiss stock exchange. But the UK, where it trades as EFG Private Bank, remains its most important market in terms of revenues, operating profits and assets under management. Furthermore, it is the Swiss bank’s fastest growing market, in terms of net new asset growth.
During 2016 EFG International's UK arm generated net new money of CHF 1.6 billion to take total assets under management to CHF 19.1 billion, according to a slide included in the Swiss bank’s presentation to analysts on 15 March.
This was CHF 1 billion more than the CHF 0.6 billion of net new assets recorded by Continental Europe, the only other operating division to significant generate positive net new asset growth.
Although Switzerland, EFG’s home market recorded a marginal increase in net new assets (0.2 percent), the America’s (-CHF 0.7 billion), Asia (-CHF 1.8 billion), EFG Asset Management (-CHF 0.3 billion) and Investment Solutions (-CHF 0.4 billion) all recorded asset outflows.
With CHF 19.1 billion or 23 percent of total group assets under management the UK is also EFG’s most important market in terms of this metric. Switzerland (CHF 15.5 billion), Asia (15.4 billion), Continental Europe (CHF 17.7 billion), the Americas (CHF 11.5 billion) and EFG Asset Management accounted for the remainder with part of Investment Solutions’ CHF 11.3 billion included in the other operating divisions.
Notwithstanding the problems posed by a falling pound sterling the UK remains the Swiss bank’s most important country market in terms of (segment) revenue and operating profits, or “operating margin” as it calls them as far as private banking and wealth management is concerned.
The UK generated CHF 157.0 million of revenues during 2016 and a total operating margin of CHF 51.7 million. Asia, the next most important market, recorded CHF 129.7 million of revenues and CHF 42.9 million of operating margin; Switzerland CHF 142.7 million and CHF 26.2 million respectively ; Continental Europe CHF 118.8 million and CHF 29.1 million; and the Americas CHF 101.2 million and CHF 19.2 million.
The UK would have been EFG’s most important country market in terms of pre-tax profits, had not it taken the decision to take a CHF 53.0 million impairment charge on the goodwill and other intangible assets associated with its 2006 purchase of Harris Allday, a Birmingham-based private client investment manager and stockbroking firm.
EFG took the opportunity of making impairment charges against goodwill and other intangible assets in relation to two other acquisitions made over ten years ago.
It recorded a CHF 76.3 million charge in relation to its purchase of Banque Edouard Constant, another Swiss bank, in 2003 and a CHF 37.8 million charge associated with its 2006 purchase of PRS Group, a Florida-based investment management firm. These adversely affected the results for the Americas and Switzerland.
In addition EFG registered another unspecified CHF 40.1 million to take total charges against goodwill and other intangible assets to CHF 199.5 million, most of which again affected the Americas and Switzerland.
As thewealthnet pointed out a year ago the UK will become much less important to EFG once its purchase of Lugano-based BSI is fully integrated, which is scheduled to occur later in 2017. All of the data quoted so far related to EFG on a standalone basis, i.e excluding the impact of BSI.
BSI is substantially bigger than EFG Private Bank, at least according to the data presented to analysts following the publication of EFG International’s results.
BSI generated CHF 84.9 million of operating income for the last months of 2016, recorded a net IFRS loss of CHF 8.8 million and had CHF 62.3 billion of revenue generating assets under management.