Julius Baer and EFG International today spelled out plans to raise capital and hold an IPO for a business arm, respectively, at a time of more vigorous corporate activity in the Swiss wealth management industry.

Julius Baer today set out the details of the SFr492 million (around $527 million) rights offering it has embarked upon to help pay for its purchase of Bank of America Merrill Lynch’s non-US wealth management business, as announced on 13 August. Meanwhile, fellow Swiss firm EFG International announced plans for an IPO of one of its businesses.

Shareholders of Julius Baer will receive one subscription right for every registered share they hold on 9 October 2012 (after market close). Twenty nine subscription rights will grant to the holder of such share the right to subscribe for three new shares at a price of SFr24.20 per share, subject to the selling restrictions that apply to the rights offering, it said in a statement today.

The acquisition of the Bank of America Merrill Lynch business is one of a number of deals in the wealth management sector in recent months. A few weeks ago, Deutsche Bank sold its BHF Bank business; last week, Falcon Private Bank agreed to buy Clariden Leu (Europe) from Credit Suisse for an undisclosed sum. In an environment where margins have been squeezed by wafer-thin interest rates, a squeeze on Swiss bank secrecy laws and global regulatory burdens, more of such industry consolidation is expected.

The subscription rights, Julius Baer said, can be traded via the SIX Swiss Exchange from 10 October to 16 October and the subscription rights will be exercisable from 10 October until 17 October, 12:00 noon CET.

The Swiss private bank said it will raise gross proceeds of SFr492 million through the offering. Julius Baer said it will issue further details on 9 October.

EFG International

Meanwhile, EFG International’s Zurich-based integrated structured investment service provider, EFG Financial Products Holding, launched its initial public offering on the SIX Swiss Exchange. This move has also been previously announced.

The price range per registered share being offered in the IPO will be SFr40 to SFr50. Listing and commencement of trading is expected on 19 October 2012, the bank said.

EFG International will, after the IPO has been held, hold not less than 20 per cent of EFG Financial Products, compared with 58 per cent at the present time. The Swiss firm has been spinning off non-core assets and business in a bid to restore profits and margins in recent months.

In its statement, EFG International said the proceeds from the sale of the shares in the offering will have no impact on EFG International’s reported consolidated profit, given that it will continue to consolidate EFG Financial Products. However, there will be a positive impact on capital, with EFG International’s pro forma total BIS capital ratio improving to approximately 17 per cent, based on risk weighted assets as of 30 June 2012.