Bank Sarasin Upgrades Stake In NZB, Pressured By Mgr Exits

Bank Sarasin & Cie AG (BSAN.EB) said Tuesday it plans to increase its stake in Neue Zuercher Bank in a move intended to calm client worries surrounding the bank following the exit of top managers and amid ongoing scrutiny from Swiss and U.S. authorities.

Sarasin said it will increase its stake in NZB to between 51% and 60% from 40% currently. The price wasn't disclosed.

The move, which requires the approval of market regulators and shareholders.

"NZB continues to be a financial, not a strategic investment. Once the situation stabilizes, we may sell the stake again," Sarasin spokesman Benedikt Gratzl said.

NZB Tuesday said its co-founder and Chief Executive Martin Eberhard is leaving the bank in connection with a Swiss regulatory probe centering on the bank's role in transactions involving shares of industrial company Sulzer AG (SUN.EB).

Eberhard will be replaced by Frank Gut, currently NZB's chief financial officer.

The CEO's exit was ordered by Swiss financial market watchdog FINMA, which earlier Tuesday said NZB, alongside Zuercher Kantonalbank and the Zurich branch of Deutsche Bank AG (DBK.XE), breached its duties in connection with a buildup of a 31% stake in Sulzer by foreign investors two years ago.

The stake is today held by Renova, an investment vehicle of Russian investor Victor Vekselberg.

NZB, founded nine years ago, took over Sarasin's brokerage in 2007 while Basel-based Sarasin acquired a 40% stake. NZB management and employees own 60% of the bank's capital.

Lately, NZB's fortunes have begun to deteriorate.

In August, a senior NZB banker stepped down with immediate effect after the Zurich firm learned of his indictment in Florida for allegedly urging wealthy Americans to hide their money in Switzerland.

NZB Tuesday said it is withdrawing completely from private banking, one of its main business areas besides asset management and brokerage.

On 1135 GMT on the Swiss bourse, Sarasin shares were down CHF0.85, or 2.1% lower at CHF40.40, in a lower general market. Sarasin is majority-owned by Rabobank of the Netherlands.

-By Martin Gelnar, Dow Jones Newswires, [phone]; [e-mail]