ZURICH, Aug 27 (Reuters) - Banking and finance company Valartis Group said on Tuesday it was looking to sell or merge its Swiss private banking business in coming months as it reported a fall in net profit to almost zero in the first half of the year.
Valartis, which had client assets of 7.9 billion Swiss francs ($8.6 billion) at the end of June, said its Swiss bank managed about a fifth of that total, but accounted for almost a third of its general and administrative costs.
Swiss private banks have been looking to cut costs as they grapple with low interest rates and slack client activity which have eaten into profits, as well as costly regulation like the U.S. Foreign Account Tax Compliance Act, which targets U.S. tax evaders with offshore accounts and comes into force in 2014.
Chief Executive Gustav Steinbolt said Valartis could look to merge the Swiss business with another Swiss bank, keeping a stake in the combined entity, or seek an outright sale. He said other banks had expressed interest in the unit, but declined to give further details.
For the first half of the year, net profit slumped 96 percent to 0.1 million Swiss francs from 3.9 million francs a year earlier.
The Zurich-based company, which also has private banking businesses in Austria and Liechtenstein, said in a statement the Swiss unit was unlikely to be able to grow big enough to generate sustainable profits.
Valartis, which launched its "Private Banking Plus" strategy in 2008 to focus on its wealth management business for wealthy private clients and institutional investors, said the proposed sale was part of an effort to establish "a sustainable and reasonable cost base". ($1 = 0.9231 Swiss francs) (Reporting by Martin de Sa'Pinto and Oliver Hirt; editing by Tom Pfeiffer)