Falcon Private Bank, which is owned by Abu Dhabi's Aabar Investments, is to buy part of one of the most famous marques in Swiss banking with the acquisition of Clariden Leu Europe from Credit Suisse.
The deal is expected to boost the profile of Falcon, which is fully owned by Aabar Investments and formerly the private banking unit of American International Group (AIG), the insurer that was bailed out in the depths of the financial crisis of 2008.
The deal gives Falcon a lucrative foothold in London's Knightsbridge and a business with more than 2bn Swiss francs (Dh7.87bn) in assets under management in the Middle East, Russia, India and East Africa, Eduardo Leemann, the bank's chief executive, told The National. Falcon Private Bank already has about 12bn Swiss francs of assets under management, he added. Credit Suisse will retain the remainder of Clariden Leu's operations.
"This acquisition brings us one decisive step forward in our strategic ambition to become a leading Swiss private banking boutique focusing on emerging markets," Mr Leemann said.
Falcon declined to give financial details of the deal. UBS acted as advisers. A Credit Suisse spokeswoman described Clariden Leu Europe as an independent legal entity within the 250-year old Swiss bank and not a significant part of its business.
"What's important to realise at this point is that Clariden Leu's integration [with Credit Suisse] has taken place already in April," she said. "This one is really the leftovers."
The integration of Clariden Leu Europe, said by other private bankers to be among the more "entrepreneurial" and "risk-tolerant" of its parent's units, proved particularly rancorous.
Graham Stapeley, the bank's chief executive, threatened to walk out of the bank with his entire staff rather than submit to the new management at Credit Suisse.
"When they decided to integrate there were a few of the bits and pieces of the assets that were more difficult, particularly in London," Mr Leemann said. The staff "just didn't want to get integrated", he added.
The deal is expected to close in the first quarter of next year. Mr Leemann said he does not expect significant execution risks on the deal and anticipates imminent approval from the United Kingdom's Financial Services Authority.
During the past year, the Swiss private banking sector has come under pressure to consolidate, with the industry facing a challenge to its traditional business models as authorities in the United States and Germany take tough measures against potential tax evasion through Switzerland.
Dubai has seen a large proportion of its private bankers departing during the past year as parent companies withdraw operations.
The effects of the global financial crisis have also left many Arabian Gulf merchant families increasingly cash-strapped and with few assets to invest, according to a recent research report from Société Générale and Forbes Insight.
EFG-International abandoned the Middle East altogether last October, while Bank of America Merrill Lynch sold its wealth management division to Julius Baer and Bank Sarasin-Alpen was absorbed by Brazil's Safra Group. Last week, Swiss Life International and Pictet Wealth Management said they were beating a retreat from Dubai.
Falcon Private Bank has been a rare beneficiary, increasing its assets under management in the Middle East to US$1bn (Dh3.76bn) last year.