Julius Baer Integration Chief Says Merrill Transfer on TrackGiles Broom
Julius Baer Group Ltd., the Swiss bank founded in 1890, said it’s on track to absorb as much as 72 billion francs ($78 billion) of client assets after acquiring Bank of America Corp.’s non-U.S. wealth units last year.
“We’re in that range that has been communicated, I think between 57 and 72” billion francs of managed assets, Nic Dreckmann, global head of integration at Julius Baer, said in an interview at the Euroforum Private Banking Summit in Zurich.
Dreckmann declined to comment on whether the total assets brought over from Bank of America’s Merrill Lynch international wealth units would be near the top or the bottom of that range.
Julius Baer is making acquisitions to compete with larger UBS AG and Credit Suisse AG. While Zurich-based Julius Baer has already reported 47 billion francs of funds under management from Merrill Lynch clients as of July 22, the Merrill business was unprofitable in 2011 and may increase pressure on its margin in the second half, the firm has said.
Julius Baer reiterated in July it plans to eliminate more than 1,000 jobs at the combined businesses as it seeks to boost earnings from the Merrill transaction by 2015. The amount of assets accepted from Merrill Lynch clients affects the firm’s cost-cutting plans, Dreckmann said today.
“At one point in time, if we’re only coming in at 50 billion and we all expected 70, of course, we would need to put some cost measures in place,” he said. “As of today, we’re focusing on getting all the assets in.”
Julius Baer previously said it expected to pay about 860 million francs for the units. Expenses related to the deal may be about 455 million francs, up from an estimated 400 million francs because of higher costs related to transferring clients to the Swiss bank’s systems, it said in July.
Julius Baer is unlikely to recoup its investment in the business known as IWM before 2022, Alevizos Alevizakos, an analyst with Mediobanca SpA in London, said in a Sept. 5 report.
“While we appreciate the importance of the IWM acquisition for the long-term future of Julius Baer, we question the short-term benefits for the shareholders,” Alevizakos wrote.