Buying into the Swiss Banking Sector

Buying into the Swiss Banking Sector - at - the best of the international financial media

Lausanne is the capital of the Olympic Movement (IOC) and the chosen residence of Greek billionaires, who made their money in international sea trade. Some of these "Tanker Greeks" have impressive residences on the shores of Lac Leman, high above the lake. The legendary Tanker King Stavros Niarchos Senior (1908-1996), is even buried in Lausanne, like other tanker kings before him.

Swiss Greeks have a big say in international hedge-funds and asset-management businesses and conjure up some of the most amazing transactions, which tend to go unnoticed by the wider public.

One of the most influential financial families in Europe is the Greek-born Latsis clan. They span a far-reaching network of oil, sea transportation and banking empires from the Geneva Lake, and have contacts with the Saudi family of the late King Fahd.

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With an estimated wealth of 8 billion Swiss francs, the Latsis are undoubtedly one of the world's richest families. Paris Latsis, a family member of the younger Latsis generation, made the headlines recently on the boulevard, not so much through his business activities, but by his romance with the American hotel heiress with a similar name - Paris Hilton.

The father of the dynasty, who passed away in 2003, was Yiannis (John) S. Latsis. He was one of the most influential Greek shipping tycoons, and a special personality, counting many of the world's rich and powerful in his inner circle of friends. Among them were such names as Prince Charles and other members of the Windsor family, the family of President Bush and Colin Powell, former secretary of state and former Chairman of the US Joint Chiefs of Staff. The Latsis family are close to these people still to this day.

From 1960 onwards, Latsis expanded his area of operation, entering the property development business as well as the promising oil industry, concentrating his efforts in the Arabic world.

He built oil refineries in Greece and Saudi-Arabia, which turned out to be gold mines. With tankers he built the solid foundations of his empire, and with oil he expanded it. According to media reports, the Latsis group's effort in the real estate and oil refinery business played a key role in the comet-style rise of Saudi Arabia and its rulers, the Al-Saud family. It was during this time, the basis for a long-lasting close friendship was formed.

Why you should remember the name Latsis

In 1979, the late John Latsis acquired a bank from Aristoteles Onassis, which enabled the Latsis family to start up in the financial business. Today, the children of John Latsis are in charge of running the Latsis Group.

Their financial centrepiece is the Geneva-based EFG Group with its two-thirds stake in EFG Private Bank, an internationally active private bank for affluent private customers.

This autumn, the EFG Private Bank plans to open itself to the public via an IPO. Investors are well advised to study the conditions of this public offering in light of the previous track record of the Latsis family. As much as 25% to 30% of its shares will be placed broadly in the wake of the IPO.

EFG Private Bank currently manages more than $25 billion of client money divided over 15,000 customers. The average EFG customer therefore holds approximately $1.7 million.

According to an analyst's review dating back to April this year, the issue price is expected to be 15-20 times the estimated profit per share for 2006.

Detailed figures about the IPO are not available at the moment. But depending on the exact conditions, the EFG Private Bank looks an interesting play on the Swiss private banking sector. And with the stock market further stabilising since April, I would not rule out higher pricing in line with an IPO's profit maximisation.

EFG is already brushing up to appeal to future capital lenders and their growth fantasies. In June, EFG Private Bank announced they would take over the Dresdner Latin America Financial Advisors (DLFA). The DLFA has a customer equity volume of $1 billion and specialises in the key South America market.

In July, EFG Private Bank went on and bought the Latin American private banking activities of the Spanish Banco Sabadell. Banco Sabadell also added $1 billion in customer volume into the merger.

As you can see, EFG Private Bank is actively growing in all directions. In light of the already very international customer structure (and its focus on the rapidly growing markets in Asia and Latin America), it compares favourably to other national (and often hardly dynamic) Swiss competitors.

My recommendation is to keep a close eye on the press about the EFG-IPO and to analyze the IPO-numbers.

By Beat Ernie For The Profit Hunter Files