Julius Bär eyes Asian clients after Bank of America Merrill Lynch acquisition
Chief says firm sought 'affordable' settlement with US over alleged hiding of assets from IRS
Swiss private bank Julius Bär is aiming to have a majority of its clients from Asia after it acquired Bank of America Merrill Lynch's private banking business outside the United States.
Julius Bär expects to report a loss this year in the wake of the deal in August last year. Positive returns would start to kick in next year, as the integration of the businesses picks up steam, chief executive Boris Collardi said yesterday.
The bank expects the integration to be completed in the first quarter of 2015, with a majority of assets under management to be transferred this year.
Collardi said the synergies from the acquisition would start to appear next year and be reflected in a better bottom line by 2015. The benefits of the purchase would be seen in sales of products and services, as well as cost efficiency, he said.
The deal may boost client assets by as much as 72 billion Swiss francs (HK$576 billion) by 2015, Collardi added.
The first phase of the integration began this week with the Hong Kong and Singapore businesses, which represent one-third of the acquired business. After the integration, about a quarter of the bank's total assets will be managed in Asia, making it one of the top five international wealth managers in Asia, its second home market.
The acquired unit's financial advisers, clients and related assets under management will be transferred to the Julius Bär platforms in stages.
Collardi said some jobs, such as those in information technology and front office positions, might overlap after the integration. The bank could be able to absorb some of the redundant staff, he added.
The integration process in Asia is expected to be completed in the first quarter of next year.
In Hong Kong, Julius Bär will locate its combined business in One International Finance Centre, from Two Exchange Square presently.
Singapore will remain the firm's information technology and operations hub in Asia.
Collardi said the bank sought to resolve a tax dispute with the US this year with an "affordable" settlement.
Julius Bär is one of at least 14 Swiss financial firms under investigation by the US Department of Justice for allegedly helping Americans hide money from the Internal Revenue Service.
Collardi said it was becoming more difficult to run a private bank, because regulators were requiring banks to maintain increasingly high standards.
The bank has to allocate its resources to growth areas that bring better returns, he said.
Businesses in Britain, Spain and Israel would begin to be integrated in summer. The combining of operations will add scale to its global network, especially in Britain.