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INTERVIEW: Strategic Hires, M&A, Organic Growth Driving EMMEA Strategy - Julius Baer

Tom Burroughes

4 December 2014

has had a busy year digesting the non-US wealth management arm of Bank of America Merrill Lynch. But that doesn’t mean the firm isn’t keeping an eye out for more acquisitions if they look in the right places, one of its top managers overseeing the Middle East market says.

The Zurich-listed bank, which now boasts total assets under management of SFr285 billion (around $292 billion), says organic growth, strategic hires and acquisitions are the three prongs of its approach to growing in the EMMEA region (eastern Mediterranean, Middle East and Africa).

While predictions of a “wave of consolidation” in global private banking have sometimes proven a false dawn, Julius Baer’s Merrill Lynch IWM deal has been one of the examples most-cited of a large-scale transaction that appears to have gone relatively smoothly. To cap that, it has managed to keep its cost-income ratio inside its 65-70 per cent target range, which is pretty impressive after such a large M&A deal and the associated hassles and costs.

In the Middle East, a market which has seen gyrating fortunes in recent years (Dubai’s debt woes, the ascent of countries such as Qatar and now the issue of a falling oil price), private bank strategy is not always easy to get right. One often hears from practitioners on the ground that the Gulf region, for example, is “over-banked”. This begs the question of how a non-domestic player like a Swiss bank competes against such firms as Emirates NBD or NBAD.

"We are in a very competitive environment; the Middle East and GCC region is also a very cosmopolitan one," Daniel Savary, who has been head of East Mediterranean, Middle East and Africa for over two years, told this publication in a recent interview. He previously worked at Clariden Leu, another Swiss firm, for over 15 years.

The bank, he said, has a defined strategy for the region's markets out to 2018. Asked about acquisitions, while he declined to identify names of any firms he had in mind, Savary said that any M&A-related growth will be "opportunistic", dependent on the type and size of deal. "We constantly screen markets for any opportunities for strategic partnerships," he continued.

Already, the Merrill Lynch IWM acquisition has given Julius Baer two additional centres in Beirut and Bahrain. These add to its presence in Dubai, Abu Dhabi, Cairo and Istanbul. In Dubai, for example, it has 70 staff alone, highlighting the scale of this operation.

Savary said one advantage Julius Baer has is that it cannot be dismissed by local Middle East rivals as a newly-established arrival; it has been in the DIFC for over a decade and was, he says, the first international bank to be licensed there.

And given the sharp competition, any bank will want to stress core strengths such as its financial robustness, which Savary was more than happy to do in reminding this publication of its numbers and status. Its business model of a standalone private bank, and its listed nature and strong balance sheet (22.6 per cent of BIS Tier 1 ratio), is a plus for clients.

Such qualities matter a lot given that in the region, many clients are cosmopolitan in nature with requirements that a bank can serve them efficiently over a wide territory. And these sorts of demands will only mount as the younger generation comes along.

"The younger generation is more and more in charge; many of them have been educated abroad. Their financial requirements are much more sophisticated so that we constantly have to adapt to provide the best possible service,” Savary said.

Recent numbers have come out looking pretty good for this bank and in the EMMEA region; assets have more than doubled in the past four years, with the firm logging double-digit rates of growth. (Savary did not give an exact figure.) It is temping, and quite right, to always be cautious about how the future will turn out given the uncertainties ahead, but there seems to be little doubt that at least for the moment, Julius Baer looks to be building an impressive footprint in the EMMEA region.