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August 13, 2012updated 04 Apr 2017 3:36pm

Julius Baer acquires Merrill Lynch IWM business

Julius Baer has won the bid to buy Merrill Lynchs international wealth management business, with client assets worth $84bn, from Bank of America (BofA). The deal will make the Swiss private bank the worlds largest pure-play wealth manager and could increase its total assets under management to more than CHF250bn ($256bn).

By Peter Johnstone

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).

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.

The 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.

 

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