NatWest Group has agreed to buy one of Britain's largest wealth managers, Evelyn Partners, for £2.7 billion, including debt, in a bid to expand its wealth management business, the British lender said today.
NatWest is following rivals such as HSBC and Lloyds in boosting wealth management offerings in recent years, as British lenders increasingly target the fee-based business to offset an expected decline in interest income as central bank rates fall.
The combined company will have total assets under management and administration of £127 billion.
NatWest expects the deal to generate about £100m in annual cost savings and also announced a £750m share buyback.
The deal creates Britain's largest private banking and wealth management business and transforms NatWest Group's savings and investment offering for its 20 million customers, the British lender said.
Evelyn's private equity shareholders, Permira and Warburg Pincus, kicked off a sale of the wealth manager last year, which also drew interest from Barclays, Lloyds, and the Royal Bank of Canada, Reuters reported.
"We are somewhat surprised that NWG appear to have come out on top, given how tightly the CEO holds the bank's purse strings," RBC Capital Markets analyst Benjamin Toms said in a note.
"Although we consider this to be a bolt on transaction, it would be transformational, filling the gap NWG has in its affluent wealth offering," he said.
Permira has owned Evelyn Partners, formerly known as Tilney Smith & Williamson, since 2014, funding its growth into a wealth manager overseeing £69 billion in client assets.
The transaction will be funded from existing resources and is expected to reduce NatWest's core equity tier 1 ratio by about 130 basis points, the bank said.
