Asset management boost for Generali

Assicurazioni Generali’s expansion strategy in asset management
took a decisive step forward in November, with the announcement
that it would acquire Swiss Life’s wholly owned Swiss private
banking subsidiary, Banca del Gottardo (BDG), for €1.069 billion
($1.59 billion).

On completion of the transaction BDG will be merged with BSI,
Generali’s Switzerland-based private bank, to create what the
Italian insurer termed “one of the leading Swiss pure private
banks”. The acquisition is due for completion in the first quarter
of 2008.

BDG will bring with it assets under management (AUM) of €22 billion
and an annualised net profit contribution of €104 million, based on
results for the first half of 2007.

BSI, which Generali acquired in 1998, has AUM of €39 billion and
achieved an annualised net profit of €52 million in the first half
of 2007.

Generali explained that the BSI/BDG merger would enable it to
achieve “significant asset mass in international private banking, a
highly profitable sector”. Of BDG’s AUM, 65 percent are in
Switzerland, 9 percent in Italy, 16 percent in the rest of Europe
and 10 percent in the rest of the world. Generali noted that in
recent years BSI has built an “international presence” in Monte
Carlo, Paris, Hong Kong, Singapore, Buenos Aires and
Montevideo.

Compatibility

Generali added that the merger had a low risk, as there was “high
compatibility” between BSI and BTG. In addition, BTG has outsourced
its IT and back-office functions to BSI since 2005. Generali
estimates that the merger will result in cost savings of about €73
million.

From Swiss Life’s perspective, group CEO Rolf Dörig said: “Together
with the bank,  we came to the conclusion that Swiss Life is
not the best owner for the next stage of development, as we intend
to focus our investments on our life and pensions business and
enhance our respective market positions.” The sale of BDG is
expected to yield Swiss Life an after-tax profit of €366
million.