Julius Baer and Milan-based Kairos Investment Management today announced they have reached an agreement to jointly create “a leading onshore wealth management player in Italy”, adding to a run of strategic moves by the Swiss private bank.

Julius Baer and Milan-based Kairos Investment Management today announced they have reached an agreement to jointly create “a leading onshore wealth management player in Italy”, adding to a run of strategic moves by the Swiss private bank.

Julius Baer’s Italian SIM business will be integrated into Kairos and, simultaneously, Julius Baer will acquire 19.9 per cent of Kairos. The transaction is subject to regulatory approval and is expected to close in the first half of 2013.

Secondly, subject to regulatory approval, the parties have also agreed to set up a new private bank in Italy by separately applying for a banking licence after the closing of this transaction. All Italian wealth management activities of the two groups will be run under the name Kairos Julius Baer. The transaction, the terms of which have not been disclosed, will significantly strengthen Julius Baer’s long-term position in Italy, the joint statement said.

Zurich-listed Julius Baer has been expanding its business through merger and acquisition and through joint venture activity. In late summer, it bought the non-US wealth management arm of Bank of America Merrill Lynch. At the end of August, it had client assets of SFr276 billion ($290.9 billion) and the BoA Merrill deal was expected to boost assets eventually by up to 40 per cent. Meanwhile, in July, the bank and Bank of China entered into a strategic agreement whereby they will mutually cross-refer clients and collaborate on marketing activities. Further back, it also forged a similar deal with Australia’s Macquarie.

Italian job

According to the statement today, Kairos has around €4.5 billion of assets under management; it has 115 staff and was set up as a partnership in 1999. It specialises in discretionary portfolio management with a focus on high net worth individuals.

“It has enjoyed a very strong development over the last twelve years and has become one of the most important independent brands for wealth management in Italy,” the statement said.

Both parties together will decide on a future increase of Julius Baer’s strategic participation after a few years, the statement said.

Julius Baer Fiduciaria business is not part of this transaction and will remain a wholly-owned subsidiary of Julius Baer, the statement said.

Paolo Basilico, president and chief executive of Kairos, and his partners will run the business of Kairos Julius Baer with the same team. Julius Baer will be represented on the board of directors with two designated members, Fabrizio Rindi, chairman of Julius Baer SIM, and Loris Vallone, head of business development for Italy.

Julius Baer SIM's staff will be transferred to the new entity. Giovanni Flury, head of the Italian region and Ticino, and Marco Mazzucchelli, senior advisor, will represent Julius Baer on the board of Kairos Investment Management, the holding company.

"Thanks to our strategic participation, we will increase our presence in the domestic Italian wealth management market. We believe Kairos will bring know-how and reputation to our ambitious plans in the Italian private banking environment. This move underlines our commitment to further grow and develop our business in Italy," Boris Collardi, Julius Baer's CEO, said.