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October 10, 2012updated 04 Apr 2017 3:33pm

Julius Baer to cut 1,000 jobs in Merrill merger

Julius Baer is to cut up to 1,000 jobs after its purchase of Bank of America Merrill Lynch's international wealth management business is complete.

By Elsa Buchanan

Julius Baer is to cut up to 1,000 jobs after its purchase of Bank of America Merrill Lynch’s international wealth management business is complete.

The Zurich-based bank announced a "significant reduction" "of 15% to 18% of the combined staff of around 5,700 in more than 50 locations. This is to keep up with profitability after its acquisition of the international wealth management business of Bank of America (BofA) outside the US and Japan. The bulk of the cuts, estimated to be about 880, will come from within the BofA unit.

Julius Baer said it was seeking to rein in costs and would cut BofA positions not required after the merger as well as cuts to middle and back office functions of the new group.

 

Majority of cuts after deal closes

A spokesman for the Swiss bank said the job cuts would largely hit BofA’s wealth management unit, which was expanded significantly after its purchase of Merrill Lynch & Co. in 2009 and has 2,200 staff.

He also confirmed the cuts would be spread geographically and gradually take place after the deal closes.

Before the deal was announced on 13 August, BofA had already reported it was cutting thousands of jobs and selling non-core business units as part of its efforts to cut costs and reinforce capital.

Julius Baer won the bid to acquire Merrill Lynch’s wealth management business outside the US in mid-August to strengthen its private banking position in growth markets of Asia, Latin America, the Middle East as well as Europe.

 

Cost-income of 70% by 2015

Baer said the business it is acquiring for around $1.904bn made a loss of $30.4m in H1 2012 but would have been profitable when adjusted for cost reductions expected to result from the merger.

Julius Baer said BofA’s private banking business had been scattered over many countries, making it difficult to build up the scale, and profitability, of its home market in the US.

The Swiss bank estimated the planned cost cuts could lead to a cost-income ratio of about 70% by 2015.

 

8% rise in AuMs

The Swiss bank reported that its assets under management (AuM) rose to $197.1bn at the end of August from $179bn at the end June, as well as an increase of AuM of 8% for the first eight months.

Julius Baer said it will have transferred 80% of the total AuM by the end of 2013. As of June, Merrill Lynch’s IWM had a total AuM of $84bn.

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