Falcon Private Bank Eyes Acquisitions As Industry Consolidates

Falcon Private Bank is open to buying rivals as it expects a wave of consolidation in the industry due to more onerous regulations, its global head of private banking said on Wednesday.

Swiss-based but Abu Dhabi-owned Falcon would be open to deals covering its core target markets of the Gulf, Eastern Europe, Africa and South East Asia, according to Erich Pfister, who took up the role in January.

It would be interested in banks managing between 200 million francs and 2 billion francs ($208 million-$2.08 billion) in assets, he added.

“It needs to serve our focus, meaning we wouldn’t compromise on our strategy and any target would need to fit our core markets. If that’s the case, we’re interested,” Pfister told Reuters in an interview in Dubai, declining to comment on whether the bank was working on anything currently.

The last major acquisition by Falcon, which manages around 16 billion francs of assets, was the October 2012 deal for a London-based unit of boutique Clariden Leu from Credit Suisse, including some 2 billion francs in assets.

Driving acquisitions now would be the need for consolidation in the private banking industry, as higher compliance costs and pressure on margins from increased transparency over prices would be too much for some players, Pfister said.

Private banking transparency has again been in focus in recent weeks, with HSBC admitting failings at its Swiss private bank after allegations it helped clients conceal millions of dollars of assets from tax authorities.

RUSSIA FLOWS

Eastern Europe is one focus for the bank, and Pfister noted there had been a pick-up in fund flows into its Dubai office from the region which would have previously gone to Western Europe.

“They have risen last year double-digit numbers, nice double digit numbers,” Pfister said, declining to elaborate.

Pfister said Falcon set up a Dubai-based team to target Eastern European clients just over a year ago to take advantage of Russians already doing business with the Gulf, which is only an hour ahead of Moscow and is perceived as a safe place, but that it had benefited from additional fund flows due to the crisis in Ukraine.

Its board of directors would decide next week whether to approve plans to upgrade its representative office in Dubai to include advisory capabilities, Pfister said, although it would still not book funds in the emirate.

Falcon is owned by Abu Dhabi fund Aabar Investments, which in turn is majority-owned by International Petroleum Investment Company, a quasi-sovereign entity controlled by the Abu Dhabi government. Falcon was the private banking unit of American International Group (AIG) before Aabar bought it in April 2009.