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* Commerzbank sells UK Kleinwort Benson for $360 million
* RHJ shares rally 8.5 percent, Commerzbank up 1 percent
* Deal marks RHJ push into financials, could do more deals
* Deal expected to close in Q1 2010, subject to approval
* EU had demanded sale of Commerzbank unit
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By Jonathan Gould and Chris Vellacott
FRANKFURT/LONDON, Oct 15 (Reuters) - RHJ International is to buy UK wealth management unit Kleinwort Benson from Commerzbank for 225 million pounds ($359.5 million), the latest in a flurry of private banking sales.
The transformational deal, which lifted RHJ shares 8.5 percent, comes on the heels of the sale by Dutch bank ING of private banking units in Asia to Singapore's OCBC and in Switzerland to Julius Baer..
Brussels-listed RHJ, a diversified investment company and spin-off from U.S. private equity group Ripplewood Holdings LLC, aims to push into financial services through the purchase, and is looking for more acquisitions, bank executives said.
"RHJI wants Kleinwort Benson for the long term. They want to be active in the wealth management space and actually plan to build up Kleinwort Benson as a merchant bank and try to put some other financial services companies under its ownership," Robert Taylor chief executive of Kleinwort Benson told Reuters.
RHJ's push into financial services is the main strategic focus of chief Executive Leonhard Fischer, who was a Dresdner Bank executive when it bought Kleinwort Benson in 1995 and joined the firm in May 2007.
He brought with him a senior team from former employer Winterthur Group including Martha Boeckenfeld and Heinrich Karl Linz, who are managing directors at RHJ's Swiss arm dedicated to financial services acquisitions.
RHJ board member Gerd Haeusler was chairman of Dresdner from 1997 to 2000.
RHJ failed to buy General Motors car unit Opel last month and a source at the company said it now plans to divest its mostly Japanese industrial holdings.
The Kleinwort Benson acquisition is RHJ's first major purchase since 2006 and adds a venerable banking brand to its holdings. The private bank traces its origins to the foundation of Robert Benson & Co in 1852.
Wealth management operations are attractive buys for banking groups thanks to steady income streams that can offset more volatile capital markets units.
A number of private banking units have also come up for sale as banks restructure following state bailouts and meet competition requirements attached to mergers.
KBC Securities said the deal, the biggest since RHJ's flotation in 2005, was the transformation purchase the market had been waiting for, and was fixed at a fair price of some 4.2 percent of end-2008 assets under management.
RHJ will buy both Kleinwort Benson Channel Islands Holding Ltd and Kleinwort Benson Private Bank Ltd, with combined wealth assets under management of 5.4 billion pounds and fiduciary assets under administration totalling 15.7 billion pounds.
They employed around 650 staff at the end of last year.
The deal with RHJ is expected to close in the first quarter of 2010, subject to approval by regulators.
Taylor also said RHJ had beaten a private equity-backed management buyout bid and bids from five trade buyers.
"They (RHJ) came into the second round but it became clear they were probably the best option and our ambitions dovetailed very well with what RHJ wanted to do," he said.
RHJ shares were up 8.7 percent at 5.27 euros at 0946 GMT while Commerzbank's were 1.2 percent higher at 8.79 euros. The DJ Stoxx European banking index was 0.6 percent higher.
Bank Degroof raised RHJ to 'buy' from 'accumulate' and said the deal should lead to significant cost synergies.
The European Commission had demanded the sale of the unit as a condition for approving aid to Commerzbank from German bank rescue fund Soffin. Commerzbank has also sold wealth management operations in Belgium and Switzerland..
Soffin has granted 18.2 billion euros ($27.12 billion) worth of assistance to the lender, which was hit by the financial crisis and its takeover of Dresdner Bank.
Commerzbank said its investment banking business remained unaffected by the transaction.
(For a Factbox on the deal, click)
($1=.6710 Euro) ($1=1.017 Swiss Franc) (Reporting by Chris Vellacott, Jonathan Gould, Philip Blenkinsop, Chris Wickham; editing by Simon Jessop)