Private matters
GROUP NEWS
In a ground-breaking move, Rabobank has acquired a 28 percent stake in one of the best
known Swiss private banks, Bank Sarasin, with a seven-year call option to take majority
control. Dubbed a 'strategie alliance', the move is unique because Rabobank is the first 'foreign'
bank to acquire a Swiss player. What is the strategy behind the acquisition? The Word finds out.
Creative foresight
Retained earnings
Rik van Slingelandt - aiming for the top league
Rabobank has had its own Interna
tional Private Banking (IPB) arm
for close to a decade, integrating
Robeco's private and personal banking
clients in the late 1990s. Operations in
Switzerland, Luxembourg, Singapore
and Hong Kong, and Guernsey handled
just over €11 billion in assets under
management. 'But,' says Rik van Slinge
landt, 'we realized Rabobank and Rabo
Robeco were not the strongest names in
private banking. In increasingly chang-
ing market environments, we did not
have the kind of critical mass needed to
generate major growth in this part of
our business.' It was this strategie recog-
nition that formed the point of depar-
ture for discussions with Bank Sarasin
and, potentially, other acquisitions in
the future. Rabobank's aim is to posi-
tion itself in the top league of European
private banks. The strategie alliance
with Sarasin, whose brand and image in
the private banking business is excel
lent, will promote that aim. 'The al
liance represents an opportunity to
combine their good name with our
Triple-A rating,' Van Slingelandt says.
Bank Sarasin was founded in 184 I and
is the oldest member of Basel's Stock
Exchange, where it is headquartered. At
closure with Rabobank, it had €27 bil
lion assets under management for a pri-
marily Swiss private banking clientele.
Although Swiss private banks per-
formed extremely well in the 1990s, the
market, especially in equities, has since
turned. European legislation is increas
ingly driving former 'offshore' clients
and their assets 'onshore'. In addition,
growth in the private banking business
is generally recognized as coming front
markets outside Switzerland. Says
Guido van Berkel, who was head of
Rabobank IPB and is now a member of
Bank Sarasin's Group Executive Board,
'Bank Sarasin has shown considerable
foresight and creativity in seeking what
is generally perceived as a unique
opportunity to pursue growth interna-
tionally and increase critical mass.'
Until the alliance was formalized on I
July 2002, Bank Sarasin was a private
limited partnership with 10 partners
owning a 25 percent stake in the bank
and holding 63 percent of voting rights.
The remaining 75 percent was publicly
held. In the new alliance structure, the
partnership has become a joint stock
company, issuing 171,553 new B shares.
Rabobank has 28 percent of share capi-
tal, equivalent to 16.3 percent voting
rights; the call option covers the former
partners' stake and can be exercised any
time in the next seven years. As a cooper-
ative organization, it has been policy for
Rabobank to seek alliances with publicly
listed companies. Rabobank's own coop-
erative status means it is unlisted and
cannot raise capital on the stock market,
as other institutions do. It must build re
tained earnings in order to make acquisi
tions. In the late 1990s, it used a similar
call-option structure to fully acquire the
Robeco Group over a period of five
years, finalizing the acquisition in 2001.
24 I Rl The Word I
