EFG International's profits edged lower, weighed by the cost of its Banca della Svizzera Italiana acquisition. The Swiss private bank also saw net outflows linked to the deal as well as to a scandal in Italy.
Zurich-based EFG said its net profit slipped nearly 14 percent to 19.2 million Swiss francs in the first six months, hit by hefty fees after buying BSI last year as well as a hit from life insurance products and legal costs.
The Swiss private bank is attempting to swallow BSI after the Ticino-based private bank was ensnared in the 1MDB scandal mid-way through the acquisition process. At the same time, EFG is dealing with the fallout from a serious scandal of its own in Italy.
BSI, Italy Fallout
EFG wants to make the deal work by joining up to share costs: the bank targets a total of 240 million francs by 2019. It is well on track to hit 50 million of the total this year, the bank said, as well as to achieve another 130 million francs targeted for next year already in the first quarter, after it migrates its information technology in Switzerland.
Before that happens, EFG still has to grapple with the deal fallout and scandal of its own: clients pulled a total of 5.5 billion francs from the bank in the first half. This was due to integrating BSI – and presumably kicking some clients out – as well as a skirmish with Italian investigators which may see the bank withdraw from Como and Milan.
Stanching the Bleed
The bank said the asset bleed slowed in the second quarter as the BSI deal closing drew nearer, and that it expects to have stanched the bleeding by next year.
«After the positive trends over the last few months, we are confident that the acquired business will further stabilize in the second half of the year,» Chief Executive Joachim Straehle said in a statement.
EFG backed its mid-term targets, including growth in net new assets of up to 6 percent, a cost-income ratio of less than 70 percent from 92.2 percent currently and a revenue margin of at least 85 basis points, which is has already hit
