Swiss private banking giant Julius Baer is weighing options to set up a wealth management business in the US.
In addition, it is also exploring opportunities to expand presence in core Latin American markets through takeovers or partnerships.
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Wealth managers usually book transactions for Latin American HNWIs in Miami and New York.
Julius Baer is weighing if its business will also serve other types of investors, according to Bloomberg.
Julius Baer head of the Americas, Beatriz Sanchez, told the publication: “The question about a US platform is: Which type of operation do we want, and to cover what markets?
“And that is a decision that we take very seriously.”
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By GlobalDataSanchez did not divulge more detail on the matter.
Since last year, Julius Baer had shut down or sold four offices in the Americas. However, the bank is now seeking to expand its presence in Brazil, Mexico, Chile, and Colombia.
The bank is looking to make acquisitions or enter into strategic partnerships and joint ventures in these markets, Sanchez added.
The Swiss group, through this initiative, is aiming is to become one of the top five wealth managers in Latin American region.
In 2019, Julius Baer unveiled plans to expand footprint in the Americas, which Sanchez said remains unaffected in spite of the ongoing Covid-19 pandemic.
Hurdles
Earlier this year, Swiss financial regulator FINMA rebuked Julius Baer for serious failings in its anti-money laundering (AML) controls between 2009 and 2018 and barred it from making major acquisitions until it implements remedial measures.
This is seen as a key hurdle to the bank’s expansion strategy.
According to Sanchez, the practices leading to the lapse were in place before early 2018 but the bank has carried out a “tremendous remediation process” since that time.
The bank has now strengthened its codes of conduct, ensuring that it has “all the knowledge about a client” with focus on the future, Sanchez explained.
Brazil plans
Julius Baer’s largest Latin American market is Brazil, where it consolidated two local wealth-management businesses.
The merged entity manages around BRL50bn ($9bn) in assets and employs 200 people.
Julius Baer Brazil CEO Jan Karsten said that the merged group is investing in a new technological platform, which that is slated to be ready by the end of next year.
In Brazil, IPOs are unlocking liquidity for affluent customers and supporting more business for wealth managers, Karsten said in a joint interview with Sanchez.
However, the pandemic has become a major source of impediment in this regard.
In August 2019, the bank occupied two floors in a building in Sao Paulo’s financial centre that are now almost empty following the outbreak of the pandemic in March.
The bank has allowed staff to decide on whether to return to the office, including in Rio de Janeiro and Belo Horizonte.
Last year, Julius Baer picked a minority holding in Sao Paulo-based digital asset manager Magnetis Gestora de Recursos.
The aim was “to connect with the growing market of upcoming younger, tech-conscious investors in Brazil,” stated Sanchez.
Magnetis will retain its independent status, Karsten said, while Julius Baer eyes more investment in the business.
Plans for Mexico and Chile
In Mexico, Julius Baer owns a 70% stake in wealth manager NSC Asesores and also has a representative office.
According to Sanchez, plans are on to make more hires and acquisitions in the market.
Besides, Julius Baer operates in Chile, its key growth market. The bank has a staff headcount of around 20 in the region and is the largest international bank with wealth management operations, Sanchez said.
Julius Baer has an agreement with Santiago-based Banco BICE, which enables customers to leverage the latter’s platforms, products as well as expertise.
Through the partnership, Julius Baer offers training and global opportunities to Banco BICE clients and bankers.
In March, Julius Baer also secured a licence to launch a representative office in Colombia.
According to Sanchez, the bank is considering an expansion in the market as well.
Downsizing initiatives
Julius Baer has already withdrawn from Peru and Panama markets.
It also closed one of its Uruguay offices that catered to local residents. However, it has a nearly 60-member team in the market that serves only the country’s non-resident clients.
“We are actually hiring more individuals for the international aspects of our Uruguayan operation,” which is mainly market coverage for Argentina, stated Sanchez.
The bank also decided to close its booking centre in Nassau, the capital city of Bahamas.
Earlier this year, CEO Philipp Rickenbacher unveiled plans to make 300 redundancies.
However, Sanchez has assured that the bank still aims to grow its assets in the Americas by two-fold over three to five years.
The bank oversaw around CHF40bn ($43bn) for Latin American clients at the end of November, with 500 employees serving these clients.
Now, the total employee strength has increased to 550.
Sanchez noted: “We have taken a look at our Latin American footprint and decided that the focus needs to be in de-complexing and concentrating in markets where we can have an impact.
“That fit with our long-term strategy of being one of the leading wealth managers for the region.”
