Brazil’s wealthy Safra family is the second-most prolific dealmaker of the decade in Switzerland’s wealth management industry. A booming 2020 underpins its firepower to keep gorging on what it views as «better than the U.S. Treasury».

«We’re hungry for deals»: J. Safra Sarasin has repeated a variation of this statement in every annual report since 2014, two years after wrapping the landmark 1.13 billion Swiss francs ($1.3 billion) deal by which it was formed.

It has quietly made good on the promise: J. Safra Sarasin is second only to Julius Baer as the Swiss industry’s most active consolidator, according to data made available to finews.com by consulting firm KPMG in Switzerland.

The Brazilian-Swiss private bank, which added assets in Asia this week, has hoovered up more than 105 billion francs in assets since 2010 – not including deals where assets weren’t publicly disclosed. By contrast, Julius Baer gobbled up at least 115 billion francs in assets via 13 deals. 

Disposal Gain vs. Reserve

Controlled by Brazil’s ultra-rich Safra family, the bank can easily keep going from petty cash: its profit in the first six months of last year rose nearly five percent to 191.5 million francs, according to unaudited figures made available to finews.com (the bank only publicly reports full-year financial results). A trading boom during the pandemic underpinned the rise.

J. Safra Sarasin has the firepower, even after stowing 109 million francs in the first half of last year for undisclosed general risks – it is involved in Brazil's «Lava Jato» money-laundering probe, for example.

The bank didn’t detail the reserve, saying only that it had taken «a conservative approach and in line with past practice» in padding its cushion last summer. A 103 million franc gross profit – from selling real estate on Geneva's ritzy rue de Rhone banking mile last January – countered the massive reserve.

Fighting Financial Shape

Every indication is that the next Safra generation – Jacob Safra, following the death last month of his father and family patriarch Joseph Safra – will stick to the course. J. Safra Sarasin, in fighting shape with a cost-income ratio of 55 percent in the first half of 2020, is diversified enough to do so.

Besides banking, the family controls a number of other investments including Chiquita, the banana distributor, and major real estate like the «Gherkin», one of London's most distinctive skyscrapers. Joseph Safra was worth $23.2 billion when he died, according to «Forbes».

The Swiss private bank has snapped up activities in Switzerland (from Morgan Stanley in 2014 and from Hapoalim last year), Luxembourg (Leumi in 2015), Gibraltar and Monaco (Credit Suisse in 2016 and Lombard Odier last year) since its 2011 formation. It has largely written off goodwill from these deals.

Safer Than U.S. Lockbox

The purchase of Basel's Bank Sarasin, which traces its roots back to the early 19th century, was a pricey, strategic risk for the Safras at the time. Joseph Safra called it «the best place for my money to be, even better than the U.S. Treasury,» according to «Folha de Sao Paolo» (in Portuguese).

J. Safra Sarasin brought in ex-UBS heavyweight Juerg Haller as chairman 15 months ago, then substituted Brazilian trading executive Daniel Belfer as CEO for Edmond Michaan, who was tasked with strategy at the family’s holding company. Joseph Safra presided over the Swiss holding company for the bank until his death, at 82; Jacob, his son, replaced him.

Equally Hungry Genevans

Union Bancaire Privée, controlled by the wealthy de Picciotto family, tallies more acquisitions (seven), but J. Safra Sarasin’s six deals in the same period represent nearly double the asset volume of the Genevan rival, according to KPMG.

In J. Safra Sarasin’s buying spree in Switzerland and across Europe and in Asia, the U.S. market is conspicuously absent. A separate arm New York-based private bank owned by the family, Safra National Bank, manages $23 billion in assets.

The German market represents a prominent misstep from J. Safra Sarasin: a foray into the onshore market foundered, with the bank exiting four years ago. A long-running skirmish over so-called cum-ex products used by some German clients as tax loopholes represents a legacy issue.