Swiss bank EFG International is in talks with potential buyers to offload all or part of its French business and has earmarked its structured investment products business EFG Financial Products for an initial public offering (IPO) later this year 'subject to market conditions', according to the bank's 2011 results.
"As announced in the business review, EFG Financial Products has been earmarked for an IPO," said the bank in its 2011 results report. "The objective is to accomplish this during 2012, while recognising that timing will be subject to market conditions."
The bank, which is undergoing a comprehensive revamp under new chief executive John Williamson, said EFG Financial Products has been earmarked for an initial public share offering, with EFG International ready to reduce its stake from 57% to about 20%. The remaining 43% which is owned by partners will not be part of the IPO. "During 2011, revenues increased by close to 30%, and it generated a pre-tax profit of CHF 17.6 million," said the bank. "The business remains focused on generating business based on its existing presence in Switzerland, Europe and Asia, with a major push planned for the latter."
EFG has shut down offices in the Swiss cities of Sion and Lugano, and sold its fund administration business to Credit Agricole's CAECIS, as well as selling EFG Bank Denmark to SEB Wealth Management. According to the bank's report, EFG has also closed its Abu Dhabi office and is set to offload Dubai in June. A number of private bankers have been let go with the total figure decreasing from 675 at the end of 2010 to 567 at the end of 2011.
The bank's Canada office has also been axed while EFG Bank AB in Sweden is winding down after selling off its asset management and non-banking businesses, and closing its operations in Helsinki. EFG said it has identified numerous other closures and prospective sales of offices and businesses globally.
EFG Capital's offices in New York and Manila were closed at the end of January, and EFG International is in the process of liquidating its consulting subsidiary in Buenos Aires, as well as its business in India.
"EFG International's underlying performance during 2011 was disappointing, highlighting the importance of our detailed business review. We have taken numerous steps to reset the business, including reducing the number of locations from 50 to 32," said EFG International's chief John Williamson. "We have also moved quickly, so as to ensure that our focus in 2012 is on driving the business forward."
Williamson said that steps have been taken to ensure that EFG International is fully focused on its core business of private banking: "I believe strongly that EFG International has manifold strengths as a pure-play private bank; is well positioned in a changing private banking market; and benefits from high quality and loyal CROs. Now the focus is on demonstrating that we can convert these strengths into a level of profitability that adequately reflects EFG International's scale, revenue base and natural growth potential."
Net losses last year fell 59% to CHF294.1m, including an impairment of CHF72.5m relating to Greek sovereign exposure. The bank's share price was down 1% at CHF8.30.