The Swiss private bank slid deep into loss-making territory last year – and not just because of the dicey acquisition of Banca della Svizzera Italiana, or BSI. This year, EFG has to grow.
EFG International swung to a loss of 59.8 million Swiss francs last year, not just due to the cost of integrating Ticino-based BSI, the Swiss private bank said in a statement on Wednesday.
Zurich-based EFG completed the acquisition of troubled BSI last year after months of wrangling with its owners over the final price after the 1MDB scandal exploded midway through the purchase process. EFG said integrating BSI cost 134.1 million last year.
Insurance Hit
The net loss is the result of cleaning up a life insurance portfolio and reducing the bank's exposure, which cost 68.5 million francs. EFG had previously warned of a sizable write-down due to the insurance portfolio. A Taiwanese loan spat took another 15.8 million francs off EFG's spending, for legal costs.
EFG is trying to give shareholders an idea of what its profits will look like once it has put the scandals behind: profit would have nearly doubled to 165 million francs without the items. This means that BSI has worked as EFG argued it would, with spending 6 percent lower on the year and a full 18 percent lower than in 2015 when the two banks are combined.
More Job Cuts
One reason? EFG cut 206 jobs last year, or 6 percent of its work force, including 54 private bankers. The bank wants to cut another 300 full-time jobs by next year.
Its assets under management show that EFG practically stood still following the BSI takeover: assets stood at 142 billion francs, just 2.3 billion francs more on the year. Withdrawals related to taking over BSI totaled 11.6 billion francs, a trend which EFG said would continue this year.
The bank confirmed its target to grow net new money between 3 and 6 percent, lower its cost-income ratio to less than 70 percent (it currently stands at 85 percent), and record a gross margin of at least 85 basis points.
