Shares of Morgan Stanley (MS) rose 1% on the day following its announcement of entering a deal to sell its Swiss private banking unit to Bank J. Safra Sarasin AG, the Swiss unit of J. Safra Sarasin Group on April 30. With this deal, the NY-based financial services provider will be completely exiting from the European wealth management business.
Bank J. Safra Sarasin is a pioneer in sustainable investment and offers investment advisory and asset management services to both the private and institutional clients. It has offices in Basel, Berne, Geneva, Lucerne, Lugano and Zurich.
As a matter of fact, Morgan Stanley had been contemplating the closure or divestiture of its Swiss private banking unit, Bank Morgan Stanley AG, for quite a while. It finally found Bank J. Safra Sarasin AG as the buyer. The Basel-Switzerland-based bank was looking to consolidate its presence in the Swiss private banking market. Though Safra Group’s Swiss unit has not disclosed the terms of the deal, the transaction will likely be completed by the second half of 2015.
The aforementioned deal will help J. Safra Sarasin, which already has private banking business in Europe, the Middle East and Africa (:EMEA) and Latin America, to strengthen its overall private banking business. For Morgan Stanley, the transaction forms part of its strategy of shedding overseas non-core operations to improve efficiency.
This is not the first time Morgan Stanley is engaged in closing its wealth management operations. Last year, the bank sold its failing Indian wealth management unit to London-based Standard Chartered Plc. The bank also sold its private wealth management in Europe and the Middle East to Credit Suisse Group AG (CS).
We believe that Morgan Stanley’s initiatives to reduce its overseas wealth management operations will aid in meeting regulatory requirements.
Currently, Morgan Stanley carries a Zacks Rank #3 (Hold).
Some better-ranked banks include Wells Fargo & Company (WFC) and KeyCorp. (KEY). All of these stocks carry a Zacks Rank #2 (Buy).