Julius Baer has won the bid to buy Merrill
Lynch’s international wealth management business, with client
assets worth $84bn, from Bank of America (BofA).
The deal will make the Swiss private bank the
world’s largest ‘pure-play’ wealth manager and could increase its
total assets under management to more than CHF250bn ($256bn).
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It will also add 2,000 employees, including
more than 500 financial advisers.
Sale price at 1.2% of AUM
The sale, expected to be completed in Q4 2012
or early 2013 subject to regulatory approval, will be priced at
1.2% of assets under management, valued at the time BofA transfers
the assets to Julius Baer – currently estimated to be around
$880m.
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By GlobalDataThe payment will consist of up to $250m in new
shares with the remainder in cash.
The acquisition, with a two-year integration
period, does not include BofA’s US based business wealth management
business or its Japanese joint venture Mitsubishi UFJ Merrill
Lynch.
Julius Baer estimates that it will increase
its assets under management by around 40%, and will enter new
markets in Bahrain, the Netherlands, India, Ireland, Lebanon,
Luxembourg, Panama and Spain.
Excellent fit
Daniel J. Sauter, chairman of the Julius Baer
Group, called Merrill Lynch’s business an excellent strategic,
cultural and geographic fit for Julius Baer.
He said: “This transaction represents a rare
opportunity to acquire an international pure-play wealth management
business of significant size and will add substantial scale to our
business in Europe and in key growth markets in Asia, Latin America
and the Middle East.”
As part of the deal, Julius Baer and BofA have
agreed to enter into a cooperation agreement including the
provision of global equity research, product offerings and
structured and advisory products from BofA to Julius Baer.
Continued expansion
The acquisition is the latest move in a period
of expansion for Julius Baer, which in 2011 acquired a 30% stake in
Brazilian independent wealth manager GPS.
Last year it also bought Macquarie Private
Wealth Asia and opening a representative office in Shanghai and
launching a $100m China fund.
In July this year it signed a partnership
agreement with Bank of China (BOC) under which BOC will refer its
clients with international private banking needs outside Chinese
mainland to Julius Baer, while the Swiss bank will do the same for
its clients requiring banking services in China.
This year Julius Baer has also opened an
office in Tel Aviv and hired 20 people in Switzerland for the
Middle East market.
