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May 1, 2008

News Digest

BrazilStrong private banking growth forecastAn average annual growth of 24 percent for private banking in Brazil is forecast for the next three years, according to chief executives in a poll of local wealth managers.The survey, by Pricewaterhouse-Coopers (PwC), suggests Brazilian growth will be a little off the pace of international wealth expansion, which a recent PwC survey suggests could hit 30 percent annually in the next few years.While global private banking CEOs anticipate that revenues will grow at an annual rate of 26 percent over the next three years, their Brazilian counterparts are forecasting a 31 percent increase

By Verdict Staff

Brazil

Strong private banking growth forecast

An average annual growth of 24 percent for private banking in Brazil is forecast for the next three years, according to chief executives in a poll of local wealth managers.

The survey, by Pricewaterhouse-Coopers (PwC), suggests Brazilian growth will be a little off the pace of international wealth expansion, which a recent PwC survey suggests could hit 30 percent annually in the next few years.

While global private banking CEOs anticipate that revenues will grow at an annual rate of 26 percent over the next three years, their Brazilian counterparts are forecasting a 31 percent increase. Only their Asia-Pacific colleagues have a more positive view of their future revenues, expecting 37 percent growth.

More than one-half of the private banks in Brazil hold between 21 and 40 percent of their clients’ assets, while one-third hold between 41 percent and 60 percent. The survey suggests that private bankers expect more clients to turn to their services in the near future: 44 percent forecast that they will hold between 61 and 100 percent of their clients’ assets in three years time. Currently, none can boast of such penetration.

The Brazilian investment banking association, which presented the findings, estimates that the private banking market locally totals $172 billion in assets under management.

Switzerland

EFG moves into structured products

EFG International is to launch a structured products business in order to widen its suite of products to clients. EFG Financial Products, which will create structured products internally, will be made up of a Swiss securities dealer and a Guernsey issuing entity and will be fully operational in December. It will initially focus on the Swiss market.

The new unit will issue instruments in the EFG name, with a strong orientation towards listed products. It will be open to the market at large, not just existing clients.

The management team includes Lukas Ruflin, the general manager of EFG Financial Products (Guernsey); Jan Schoch, with responsibility for distribution and financial engineering; and Michael Hartweg, who will be responsible for structuring and trading.

Lonnie Howell, EFG’s chief executive, said: “To us, the thinking that goes into structured investment products is central to wealth management, and we are seeing strong appetite among our clients for us to provide practical solutions in some of the more complex product areas.”

EFG is estimated to be one of the industry leaders in maintaining a relatively small proportion of client assets held in own-funds. In EFG’s case, the proportion is a slim 6 percent; 20 percent was held in third-party funds as of this June.

Switzerland

Clariden Leu CEO leaves

Bernard Stalder, chief executive of Clariden Leu, owned by Credit Suisse Group, is to leave the bank, in the most recent sign of upheaval after a 2006 merger. Stalder, whom the bank said is retiring for personal reasons, is being replaced by the man appointed in August as his deputy, Hans Nuetzi.

The interim successor to Nuetzi as head of investment products and wealth management services will be Stefan Krauchi, who was recently appointed head of investment funds and alternative investment products.

For the past seven years, Krauchi has worked at AIG as chief executive of AIG Fund Management (Switzerland) and as a member of the executive board of AIG Private Bank. Since 2006, he has also acted as head of international fund business development in AIG Investments.

Clariden Leu has made a number of senior executive changes in recent months after investments chief Beat Wittmann left, along with a number of colleagues, for a similar role at Julius Baer earlier this year. The group, which was formed last year from several independently operated Credit Suisse banks – Clariden Bank, Bank Leu, Bank Hofmann and BGP Banca di Gestione Patrimoniale – has found growth difficult to achieve. Its first-half net profit fell 6 percent to CHF317 million ($281 million) because of merger costs.

Credit Suisse continues to reject speculation it will dispose of the unit. “Our strategy with Clariden Leu hasn’t changed, and it remains an important part of our private bank,” Credit Suisse chief financial officer Renato Fassbind said.

France

UBS buys French asset manager

UBS is buying Commerzbank’s French asset management arm, Caisse Centrale de Réescompte (CCR), for about €435 million ($620 million). The deal adds about €17 billion in invested assets to UBS, which oversaw more than $2.8 trillion at the end of June.

“The combined entity further strengthens the presence of UBS in France and underlines its strong commitment to the European market,” said John Fraser, head of global asset management.

CCR is UBS’s first acquisition of a wealth manager in more than a year. The French firm has about 190 employees and units for banking services, equity funds, fixed income and private clients, which will be integrated into the asset management and wealth management business of UBS in France.

This is Commerzbank’s second disposal of an asset management firm this year, after agreeing in March to sell its UK-based Jupiter Fund division to TA Associates and the unit’s management for £740 million ($1.5 billion). Jupiter had about £19.2 billion in assets.

“Commerzbank has completed its stated goal of fully refocusing its asset management activities on its German subsidiary, Cominvest,” the German bank said.

Commerzbank has also reinforced its efforts in the real estate sector for high net worth and institutional investors. It has combined Commerz Grundbesitz Gruppe and CommerzLeasing und Immobilien, two of its real estate divisions, into a single entity called Commerz Real. The resulting unit creates a real estate asset management manager and provider of leasing and investment services with around €42 billion under management.

Switzerland

Geneva banks positive on profits

Geneva-based private banks expect profits to rise by 15 percent in 2007 compared with last year, the Geneva Financial Centre reported in a survey. This upgrades an earlier survey that foresaw only a 10 percent gain in earnings growth.

Ivan Pictet, president of the centre, said the positive view chiefly reflected a strong first-half performance by Geneva banks. It will “prove to be an excellent year, especially as it has exceeded 2006 which had already surpassed all expectations”, he said.

Banks expect assets under management to grow 10 percent on average this year versus the 15 percent in 2006. European countries will be responsible for more than one-half of new inflows.

Michel Dérobert, the executive manager of the Geneva Private Bankers Association, called for tax changes and other improvements that could help the Swiss marketplace remain competitive against rival centres.

A total of 133 companies was surveyed – 54 banks and 79 independent wealth managers.

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