Julius Baer, bulking up in its home market, has agreed to buy the Swiss private banking assets of Dutch financial services group ING for 520 million Swiss francs (US$507 million), the two said yesterday.
As part of its global restructuring, ING is selling its Asian and Swiss private banking units in what would be the biggest deal in the wealth management industry since the credit crisis began.
Julius Baer is paying for the deal with cash, and expects the deal to generate SF35 million in cost savings and add to earnings from 2011.
Julius Baer said it would take on Geneva-based ING Bank Switzerland’s 310 employees and expects to recoup the cost of the takeover next year as well as save 35 million francs from combining back-office operations.
Julius Baer, which recently build its war chest by listing its US asset management arm Artio, has said it is on the lookout for acquisitions with Europe its key strategic market.
Ranked after UBS and Credit Suisse as the third-biggest wealth manager in Switzerland, Julius Baer is also seeking to build Asia as a second major market.
The two banks together managed some SF160 billion for wealthy private clients at the end of August, of which ING accounted for about SF15 billion.
The takeover still requires regulatory approval but it is expected to close early next year.
ING, which is selling off its private banking business outside of its home Benelux market, said the deal would deliver 150 million euros (US$221 million) of profit and free up 250 million euros of capital.
The sale of the Swiss assets came more than a month after most bids for the private banking units went in on Sept. 3.
The sale of the Asian assets could take more time because of regulatory issues, sources said.
“The Asian sale is a few weeks away,” said one of the sources, adding regulatory approvals from the Monetary Authority of Singapore, the city-state’s central bank, could take time.
HSBC is seen as a front-runner for these assets, while Singapore’s DBS Group had also bid for the Asian assets, sources have said.
HSBC’s CEO of global private banking Chris Meares told the Reuters Wealth Management Summit the bank has looked at ING assets and described the proposed sale by the Dutch bank as a rare opportunity in Asia.
The sale process of the private banking units is part of ING’s restructuring drive to sell between 6 billion euros and 8 billion euros in assets and exit 10 of the 48 countries where it does business.
It is also involved in negotiations with the EU over its 10 billion euro state aid package from last October and its 22 billion euro asset guarantee program from last January.
Analysts at Bank Vontobel welcomed the deal, noting that the purchase price for the ING unit was “attractive.”
Shares in Julius Baer rose 2.4 percent to SF40.14 on the Zurich exchange in early trading yesterday.
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