Julius Baer buys Bank of America’s private bank ex-US

Swiss private bank Julius Baer has agreed to buy Bank of America’s Merrill Lynch (BAML) private bank business outside United States and Japan for about CHF860m.

The deal will add to Julius Baer’s assets under management between CHF 57bn to CHF72bn, about 40% of current managed assets.

The final purchase price will be dependent on assets under management of the wealth management businesses at completion of the sale, sold for an estimated 1.2% of client assets.

BAML’s private banking business has over 2,000 employees, including more than 500 financial advisers. According to a statement released by the bank, two thirds of managed assets are from clients domiciled in growth markets in Asia, Latin America and the Middle East.

The deal will be funded by a combination of up to CHF0.53bn from existing excess capital, CHF 0.2bn from the issuance of new hybrid instruments, and CHF 0.74bn billion of new share capital.

The integration is expected to be completed at the end of a two-year period, which will cost around CHF400m in restructuring, integration and retention costs, the bank added.

The transaction is expected to close in stages starting in the fourth quarter of 2012 or in early 2013 and is subject to regulatory approvals.

“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. Due to its strong presence in strategic growth markets and its business characteristics, Merrill Lynch’s International Wealth Management business is an excellent strategic, cultural and geographic fit for Julius Baer,” said Daniel J. Sauter, chairman of the Julius Baer Group.

The acquisition is the latest in a string of deals by the Swiss company. At the end of July, Julius Baer entered into a strategic partnership with the Bank of China, according to which the two companies will refer clients to each other and undertake joint marketing activities, product distribution, financial market research and joint initiatives including investment conferences.

Julius Baer has also voiced interest in Swiss BSI, a private bank owned by Generali, which the Italian bank is understood to be ready to sell.

Meanwhile, internationally Bank of America will focus its management and financial resources to build its Global banking and markets business.

Related to this, Julius Baer and Bank of America Merrill Lynch have agreed to enter into a cooperation agreement whereby Bank of America Merrill Lynch will provide certain services to Julius Baer including the provision of global equity research, product offerings, and structured and advisory products.

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