Julius Baer has agreed to acquire ING Bank (Switzerland) Ltd., headquartered in Geneva, a fully-owned subsidiary of ING Group NV, including its subsidiaries in Monaco and Jersey. This pure private banking business oversaw total assets under management of ca. CHF 15 billion at the end of August 2009, adding roughly 10 % to Julius Baer’s overall asset base and doubling its business in Geneva. Raymond J. Baer, Chairman of Julius Baer, said: "Julius Baer is taking advantage of current market developments in acquiring a high quality, profitable asset with a strong track record. The client base is similar to the one of Julius Baer and ING Bank’s employees share the same client-centric passion, making it a true cultural fit.”
ING Bank employs a total staff of 310, of which 80 relationship managers. It offers a comprehensive range of services and products, such as discretionary and advisory portfolio management based on open architecture as well as family office, trust and execution services. ING Bank’s roots in Switzerland date back to 1962, when Banque Bruxelles Lambert established a subsidiary in Geneva. ING Bank is strongly capitalised and has a net asset value of about CHF 380 million as of August 2009.
Goodwill / AuM 0.9% – Acquisition funded by excess capital
Julius Baer will pay a total consideration of CHF 520 million in cash, including surplus capital of approximately CHF 170 million. In terms of multiples, Julius Baer is paying 0.9% Goodwill / AuM and, adjusted for surplus capital, 2.3% for the AuM of the business. The purchase price will be fully funded by existing excess capital, leaving Julius Baer with a pro forma BIS Tier 1 ratio of about 16%, still well above its 12% target. The surplus capital of ING Bank will be allocated to Julius Baer.
The transaction is estimated to bring significant pre-tax synergies of ca. CHF 35 million p.a. primarily due to the integration of the different IT and back-office operations as well as streamlining of staff functions. Of total estimated integration costs of approximately CHF 65 million, about two thirds are expected to be booked in 2010. The integration is foreseen to be completed by mid 2010. The acquisition is expected to be EPS neutral in 2010 and strongly accretive from 2011 onward, reaching a high single-digit percentage in 2012.
Boris F.J. Collardi, CEO of Julius Baer, added: “This transaction fully matches the strategic and financial criteria which we have communicated. We are pleased to add significant scale to our domestic and European platforms while strengthening our business in Central and Eastern Europe, Russia and other growth markets. Clients will benefit from new opportunities as a result of strengthened local franchises. With our track record of successful integrations, we are looking forward to working with our new colleagues and to a smooth integration process.”
Well diversified client base – Integration into Bank Julius Baer – Strong in growth markets
While the transaction will add to Bank Julius Baer’s domestic business in the French-speaking part of Switzerland as well as to selected European core markets, it will also substantially increase its business volume in Central and Eastern Europe, Russia and other growth markets, providing an attractive base for future growth.
Julius Baer will rebrand ING Bank and merge its local operations in Switzerland (Geneva, Basel, Crans Montana, Lausanne, Lugano and Zurich) and transfer the business of its subsidiaries in Monaco and Jersey to Julius Baer’s existing operations.
Pending approval by the relevant authorities and other customary conditions, the closing of the transaction is expected to take place in the first quarter of 2010.