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Julius Baer Buys Merrill Wealth Units in U.A.E, Bahrain

Julius Baer Offices
A sign sits outside the offices of Julius Baer Group Ltd. in Geneva, Switzerland. Photographer: Valentin Flauraud/Bloomberg

Julius Baer Group Ltd. took over Merrill Lynch businesses in Lebanon, Bahrain and the United Arab Emirates and reiterated a target for adding assets it agreed to acquire from Bank of America Corp. last year.

“Gaining new footholds in the Middle Eastern markets of Lebanon and Bahrain and strengthening our existing Dubai presence is an important step for us and will enable us to further expand our footprint in this key growth region,” Remy Bersier, a member of the Zurich-based bank’s executive board, said in an e-mailed statement today.

The employees, client relationships and majority of assets from the three units were transferred in the first days of this month and the process should be completed in the first quarter of next year, the company said.

Julius Baer, Switzerland’s third-largest wealth manager, said that it’s on track to absorb as much as 72 billion Swiss francs ($81 billion) of client assets after acquiring Bank of America’s non-U.S. wealth units last year. Julius Baer is adding to offices in Abu Dhabi, Cairo and Istanbul as the number of millionaires in the Middle East rose 8.1 percent to 490,000 in 2012, according to Capgemini SA and RBC Wealth Management.

Julius Baer rose 1.4 percent to 42.01 francs, as of 2:33 p.m. in Zurich, extending the stock’s advance this year to 30 percent. The 44-company Bloomberg Europe Banks and Financial Services Index gained 15 percent over the same period.

Asset Transfers

The bank expects to transfer 80 percent of the Merrill assets by the end of this month with 70 percent booked and paid for, Sabine Jaenecke, a spokeswoman for Julius Baer, said today by telephone, confirming the target communicated last year. She declined to comment on the quantity of Middle East assets in the Merrill deal.

Governments in the Persian Gulf region, which includes Saudi Arabia and the U.A.E, are using their oil riches to invest in infrastructure and industry, helping boost wealth in the region. Middle East banks are hiring private bankers to tap that wealth.

Falcon Private Bank, the money manager owned by an Abu Dhabi sovereign wealth fund, appointed ex-Societe Generale SA executive Annette Hoiness as head of private banking in September. Nedbank Group Ltd., the South African bank controlled by Old Mutual Plc, the same month named Andrew Bates as head of private banking in the region.

Margin Pressure

While the purchases from Bank of America may help the Swiss wealth manager compete with larger rivals, UBS AG and Credit Suisse Group AG, Julius Baer said last month that its gross margin declined as it absorbed the Merrill business, which recorded a pretax loss in 2011. Julius Baer had 249 billion francs of assets under management at the end of October.

Julius Baer said last month that 54 billion francs of Merrill client assets had been transfered, of which 34 billion francs were booked and paid for. The minimum amount absorbed will be 57 billion francs, Julius Baer has said.

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