Reports
Julius Baer To Elaborate Job Cuts After BoA Merrill Deal; Says AuM Up
Julius Baer was preparing today to set out cost reduction plans and other targets connected to its recent acquisition of the non-US wealth management arm of Bank of America Merrill Lynch, saying it is aiming to cut the pro-forma combined staff base of around 5,700 people by 15 to 18 per cent.
Also, in an update on trading performance to the end of August, the Zurich-listed bank said its group assets under management reached a new record high of SFr184 billion (around $196 billion), up 8 per cent, since the end of last year, with total client assets at SFr276 billion, up 7 per cent.
The firm said cost reductions will lead to a “standalone implied cost-income ratio of approximately 70 per cent and a stand-alone implied pre-tax profit margin on an adjusted profit basis of approximately 25 basis points for the IWM [international wealth management] business on Julius Baer’s platform in 2015”.
The presentation to analysts is designed to give more detail on the transfer of financial advisors and assets under management from BoA Merrill Lynch to Julius Baer, according to a statement from the firm.
The acquisition of the US's firm's international wealth management business comes at a time when a number of European firms have been involved in merger and acquisition deals, most recently with Credit Suisse selling its Clariden Leu (Europe) business in London to Falcon Private Bank, while Deutsche Bank has sold its BHF banking business.
Yesterday, Julius Baer announced it is partly financing its BoA Merrill Lynch acquisition by raising SFr492 million through a rights offering, as previously announced.
Earnings impact
Julius Baer said it expects the purchase of the BoA Merrill Lynch business will be at least earnings-per-share neutral in 2014; it is targeting EPS accretion of 15 per cent in 2015.
At the end of August, Julius Baer’s BIS total capital ratio was 24.8 per cent and its BIS tier 1 ratio was 22.4 per cent. In September, Julius Baer raised SFr250 million in additional non-core tier 1 capital, as part of its financing of the IWM acquisition.
