RBC, Credit Suisse among bidders for BofA wealth units: sources

Thu May 17, 2012 6:47am EDT
 
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By Saeed Azhar and Denny Thomas

SINGAPORE/HONG KONG (Reuters) - Royal Bank of Canada and Credit Suisse are among suitors who have put in initial bids to buy the non-U.S. wealth management business of Bank of America in a deal that could be worth about $2 billion, sources said.

Swiss bank Julius Baer was also keen to bid for some of BofA's units in Europe, the Middle East, Latin America and Asia excluding Japan, the sources, who had knowledge of the matter, told Reuters. It was not clear whether Switzerland's third-biggest bank had submitted an initial bid.

The deal would be the biggest in the wealth management industry since ING Group sold its private banking assets in Europe and Asia in 2010 to Julius Baer and Singapore's Oversea-Chinese Banking Corp, respectively, for a total of about $1.9 billion.

Bank of America, which the sources said has already received non-binding bids, is auctioning off the businesses, Reuters reported last month, as its non-U.S. wealth division is too small to produce meaningful profits.

The units manage about $90 billion of an estimated $2 trillion that the wealth division oversees at the second-largest U.S. bank by total assets.

Some earlier estimates put the deal value at as much as $3 billion but sources said the units up for sale could realistically fetch $1.5-$2 billion based on a multiple of about 2 percent of client assets under management. Emerging market assets could command higher multiples.

CONSOLIDATION THEME

Consolidation in the wealth management industry has been a major theme in the banking sector since the 2008 financial crisis, as an increase in costs and regulation forces players to sell off the units that serve the rich.   Continued...

 
A Bank of America Merrill Lynch sign is seen on a building that houses its offices in Singapore May 17, 2012. Royal Bank of Canada and Credit Suisse are among the suitors seeking to bid for the non-U.S. wealth management businesses of Bank of America Merrill Lynch, sources told Reuters, in a deal that could be worth around $2 billion. REUTERS/Tim Chong