The Bührle Bank is at the end

Switzerland has one less bank. On Thursday evening it was announced that the IHAG private bank in Zurich is transferring its customers and assets totaling over 3 billion Swiss francs to the Vontobel bank. The financial institution belongs to the heirs of the Anda and Bührle families, who now want to return the banking license. Business activities will be discontinued in the medium term, according to a press release.

The reason is the “lack of critical size” and “lack of inorganic growth opportunities”. The transaction is expected to be completed in the first half of 2025 at the latest and will be led by IHAG board member Sascha Hostettler. The previous bank boss Martin Keller is leaving the company.

Vontobel wants to finance the takeover from existing capital; the purchase price is confidential. A Vontobel spokesperson was unable to answer how many of the 76 employees would be taken on. However, the majority are likely to lose their jobs; a social plan is being worked on.

Loss-making Benko loans

With assets under management of around 3 billion Swiss francs, IHAG is one of the smallest Swiss private banks. Business has not been “developing as desired” for some time, according to the bank. Various scenarios, cooperations and strategies were examined, but did not lead to the desired results. But the bank also had to contend with home-grown problems.

For example, it had granted real estate entrepreneur René Benko a loan of 30 million euros. The collapse of the Benko Group resulted in a write-down of 17 million francs and a loss almost as large for the private bank in 2023.

IHAG has had problems with compliance before: in 2021, the bank’s then deputy head, Peter Rüegg, was arrested in Mallorca. He is said to have helped American clients hide assets amounting to 65 million dollars from the tax authorities. The bank had already had to pay fines to the USA for tax offenses in 2015.

The bank took on a relatively large credit risk with the Benko loans, thereby revealing a poor risk management system. Compliance errors are particularly threatening for small banks. The bank’s ample capital resources did not help.

House bank of the arms manufacturer Emil Bührle

Gratian Anda, who heads the family holding company to which the private bank belongs, is likely to have played a decisive role in the sale. He is the grandson of the German industrialist Emil Georg Bührle, who founded the bank in 1949 as an industrial and commercial bank.

Its original purpose was to support the export activities of the Oerlikon-Bührle Group, one of the largest Swiss corporations of the post-war period. Oerlikon-Bührle was primarily known for anti-aircraft guns, but the company’s activities also included electrical engineering, textiles, real estate and the hotel industry.

The Bührle Bank steadily expanded its services over the years and was soon active in the areas of lending, stock exchange trading and asset management. After Emil Bührle’s death in 1956, the bank passed into the ownership of his wife and descendants. At the turn of the millennium, the bank specialized in private banking, but it never managed to grow consistently.

For the heirs, the bank is just one of many commitments. IHAG Holding is also a major shareholder in the Pilatus aircraft factory, the IT company Adnovum and the data analytics company Evalueserve. The portfolio also includes properties such as the Stockerhof and hotels such as the “Widder” and the “Storchen” in Zurich. The holding also manages the commitment to the art sector with the Emil Bührle collection.

Small addition for Vontobel

For Vontobel, which is also family-run, the takeover of IHAG’s clients is only a small addition. The acquired client assets of around 3 billion Swiss francs correspond to only about 3 percent of the total assets under management.

Nevertheless, Vontobel’s co-CEOs Christel Rendu de Lint and Georg Schubiger say that the acquisition of the client portfolio strengthens Vontobel’s position in the regions of Germany, Austria and Switzerland. The acquired business is expected to contribute to profits from the first day after the transaction is completed.

ZKB analysts estimate that IHAG could contribute around 26 million francs to Vontobel’s earnings. This is little compared to the total earnings in 2023 (around 1.3 billion francs). The parties have agreed not to disclose the purchase price, but according to ZKB it is likely to be between 50 and 100 million francs.

Consolidation continues

The market environment remains difficult for small private banks such as IHAG. The transaction is the first bank takeover this year. Other small Swiss private banks such as Kaleido are also currently said to be up for sale. Although there were no major transactions last year other than the CS takeover, the Swiss private banking sector has been in a consolidation phase for years. According to an analysis by KPMG, the number of private banks has fallen from 161 to 90 since 2010, with small institutions in particular disappearing.

Vontobel apparently wants to play a role in this consolidation. There will probably still be plenty of takeover candidates, as Swiss private banks form a two-class society: medium-sized and large banks with client assets of at least 10 billion francs have been able to comfortably attract client funds in recent years and thus have a solid earnings base. Small institutions with less than 10 billion francs are finding it increasingly difficult to be sufficiently efficient and operate profitably due to high fixed costs for compliance and operations. IHAG will not be the last small Swiss private bank to go under.