• Julius Baer, the leading Swiss private banking group, has agreed, subject to regulatory and shareholder approvals, to acquire Merrill Lynch’s International Wealth Management business (IWM) based outside the US with USD 84 (CHF 81) billion of assets under management (AuM) as of 30 June 2012 and over 2,000 employees, including more than 500 financial advisers.

  • The transaction is a combination of legal entity acquisitions and business transfers, that by the end of the expected two-year integration period, is currently estimated to result in additional AuM of between CHF 57 billion and CHF 72 billion, of which approximately two thirds from growth markets. Assuming CHF 72 billion AuM transferred, Julius Baer’s existing AuM as of 30 June 2012 would increase by approx. 40% to CHF 251 billion and its total client assets to CHF 341 billion, both on a pro forma basis.

  • This acquisition brings Julius Baer a major step forward in its growth strategy and will considerably strengthen its leading position in global private banking by adding substantial scale and additional offices primarily in growth markets, but also in Europe.

  • As part of the transaction, Julius Baer and Bank of America Merrill Lynch (BofAML) have agreed to enter into a cooperation agreement whereby BofAML will provide certain products and services to Julius Baer, including global equity research. In addition there will be cross-referral of clients between both organisations.

  • The acquisition is expected to be earnings accretive from the third full-year following principal closing, i.e. the first full steady-state year following integration. Irrespective of the AuM transferred between CHF 57 billion and CHF 72 billion, the EPS accretion (1) target in 2015 is approx. 15%.

  • The agreed transaction price is 1.2% of AuM transferred (payable as and when AuM transfer to Julius Baer). Therefore, at CHF 72 billion AuM transferred, Julius Baer would pay approx. CHF 860 million. At that level of AuM transferred, the amount of regulatory capital required to support the incremental risk-weighted assets is expected to amount to approx. CHF 300 million, and the total restructuring, integration and retention costs in connection with the necessary transfer of the business to the Julius Baer platform are expected to amount to up to approx. CHF 400 (after tax CHF 312) million. Separately, Bank of America (BofA) will assume up to an additional CHF 121 (2) (USD 125) million of defined pre-completion restructuring and integration costs.

  • The Board of Directors of Julius Baer Group intends to put funding in place at a level that is sufficient to support the acquisition of up to CHF 72 billion AuM. At that level, the transaction is expected to be funded by a combination of up to CHF 0.53 billion from existing excess capital, CHF 0.2 billion from the issuance of new hybrid instruments, and CHF 0.74 billion of new share capital, of which CHF 0.24 billion is to be issued to BofA as part of the consideration, and CHF 500 million to be raised via a proposed rights offer. In addition, as part of the rights offer, the Board of Directors will propose to raise a further CHF 250 million in new share capital for future strategic flexibility (not related to the IWM transaction), resulting in a total CHF 750 million proposed rights offering. The proposed capital increase is subject to approval by an Extraordinary General Meeting expected to be scheduled for 19 September 2012.

  • Principal closing following major regulatory approvals and other closing conditions is expected towards the end of 2012 or in early 2013. Business transfers and full integration are expected to occur over a two-year period thereafter and to be completed by Q4 2014/Q1 2015.

  • As a consequence of the significantly enlarged business globally, the current Julius Baer management structure will be realigned as of the principal closing.

  • For the first full years after the integration (i.e. 2015 and beyond, assuming the integration is completed in Q4 2014), Julius Baer envisages targets for the new enlarged group as follows: Net new money 4-6%, cost/income ratio 65-70% and pre-tax profit margin 30-35bps.

  • In addition, given the imminent convergence of the BIS and Swiss approaches to calculating capital ratios in 2013, the minimum required BIS total capital ratio will be reduced from 14% to 12%. As a consequence, Julius Baer adjusts its BIS total capital ratio target from the current 16% to 15%, which represents a 3% (thus far 2%) buffer over the regulatory minimum requirement. The 12% BIS tier 1 target ratio will remain unchanged. In the proposed capital planning, Julius Baer’s capital ratios are expected to remain above target levels at all times throughout the integration process. The previously announced share buyback programme will be cancelled.


Julius Baer, the leading Swiss private banking group, has agreed, subject to the regulatory and shareholder approvals, to acquire Merrill Lynch’s International Wealth Management business (IWM) based outside the US and Japan from Bank of America (BofA) with USD 84 (CHF 81) billion of assets under management (AuM) as of 30 June 2012 and over 2,000 employees, including more than 500 financial advisers. Approximately two thirds of IWM AuM are from clients domiciled in growth markets in Asia (more than half), Latin America and the Middle East. The transaction is a combination of legal entity acquisitions and business transfers and, by the end of the expected two-year integration period, is currently estimated to result in additional AuM of between CHF 57 billion and CHF 72 billion, of which approximately two thirds from growth markets.

At CHF 72 billion AuM transferred, this would increase Julius Baer’s existing AuM by approx. 40% to CHF 251 billion and its total client assets to CHF 341 billion at the end of the two-year integration period, both on a pro forma basis. While the bulk of IWM’s business is in locations where Julius Baer is already present, such as Geneva, London, Hong Kong, Singapore, Dubai and Montevideo, the acquisition would add new locations in Bahrain, the Netherlands, India, Ireland, Lebanon, Luxembourg, Panama and Spain (3) to Julius Baer’s existing network. Post integration, Julius Baer will be present in more than 25 countries and 50 locations globally. At CHF 72 billion transferred, the proportion of AuM derived from growth markets is expected to increase from over a third today to almost half, on a pro forma basis.

Excellent strategic, cultural and geographic fit – strengthening of leading position

Daniel J. Sauter, Chairman of the Julius Baer Group, said: “This transaction represents a rare opportunity to acquire an international pure-play wealth management business of significant size and will add substantial scale to our business in Europe and in key growth markets in Asia, Latin America and the Middle East. Due to its strong presence in strategic growth markets and its business characteristics, Merrill Lynch’s International Wealth Management business is an excellent strategic, cultural and geographic fit for Julius Baer.”

Boris F.J. Collardi, CEO of the Julius Baer Group, added: “This acquisition brings us a major step forward in our growth strategy and will considerably strengthen Julius Baer’s leading position in global private banking by adding a new dimension not only to growth markets but also to Europe. The compatibility and complementarity of the two business models, once integrated, will create a new reference in private banking and a powerful offering for all clients of the combined businesses. In addition, it will reinforce Julius Baer’s attractiveness as an employer of choice in the private banking industry. We very much look forward to working with our new colleagues who will undoubtedly enrich our corporate culture.”

The strong IWM franchise has been present in international key markets for decades. The compatibility with Julius Baer’s business is evidenced, among others, by the similar asset allocation composition or similar average AuM per client. Furthermore, close to half of the financial advisors at IWM have been servicing clients at their company for more than ten years.

As part of the integration, the acquired legal entities will operate under the brand Julius Baer.

Julius Baer’s client-centric approach and open-product platform will be enhanced through the complementary service models and cultures of the two businesses that will promote valuable cross-fertilisation of skills and experience. Clients and employees will benefit from new opportunities as a result of strengthened local franchises.

Strong EPS accretion (1) expected from 2015

The agreed transaction price is 1.2% on AuM transferred (payable as and when AuM transfer to Julius Baer). Therefore, assuming CHF 72 billion AuM transferred, Julius Baer’s existing AuM as of 30 June 2012 would increase by approx. 40% to CHF 251 billion on a pro forma basis and its total client assets to CHF 341 billion. At that level of AuM transferred, the amount of regulatory capital required to support the incremental risk-weighted assets is expected to amount to approx. CHF 300 million.

Total transaction, restructuring, integration and retention costs in connection with the necessary transfer of the business to the Julius Baer platform are expected to amount to up to approx. CHF 400 (after tax CHF 312) million. Major components of these costs include IT costs (e.g. maintaining IWM and Julius Baer platforms in parallel throughout the transfer process, as well as platform enhancements, infrastructure and migration costs), retention costs required to incentivise and retain financial advisors and other key personnel, costs for temporary staff as well as other restructuring and integration expenses. Separately, BofA will assume up to an additional CHF 121 (USD 125) million of defined pre-completion restructuring and integration costs.

The acquisition is expected to be earnings accretive from the third full-year following principal closing, i.e. the first full steady-state year following integration. Irrespective of the AuM transferred between CHF 57 billion and CHF 72 billion, the EPS accretion (1) target in 2015 is approx. 15%.

Dieter A. Enkelmann, CFO of Julius Baer, said: “For our shareholders the acquisition represents a substantial investment in our future growth. We have a number of experienced teams available which will be responsible for achieving a smooth global integration. These teams have already been successful in integrating several banks over the last years. Furthermore, the resulting geographic diversification is expected to significantly reduce Julius Baer’s net currency exposure to the Swiss franc.”

For the first full years after the two-year integration (i.e. 2015 and beyond assuming the integration is completed in Q4 2014), Julius Baer envisages targets for the new enlarged group as follows: Net new money 4-6%, cost/income ratio 65-70% and pre-tax profit margin 30-35bps.

In addition, given the imminent convergence of the BIS and Swiss approaches to calculating capital ratios in 2013, the minimum required BIS total capital ratio will be reduced from 14% to 12%. As a consequence, Julius Baer adjusts its BIS total capital ratio target from currently 16% to 15%, which represents a 3% (thus far 2%) buffer over the regulatory minimum requirement. The 12% BIS tier 1 ratio target remains unchanged. In the proposed capital planning, Julius Baer’s capital ratios are expected to remain above target levels at all times throughout the integration process. The previously announced share buyback programme will be cancelled.

Funding includes use of existing excess capital, hybrid issuance and a capital increase – Bank of America (BofA) as shareholder

The Board of Directors of Julius Baer Group intends to put funding in place at a level that is sufficient to support the acquisition of up to CHF 72 billion AuM. At that level, the transaction is expected to be funded by a combination of up to CHF 0.53 billion from existing excess capital, CHF 0.2 billion from the issuance of new hybrid instruments, and CHF 0.74 billion new share capital, of which CHF 0.24 billion is to be issued to BofA as part of the consideration, and CHF 500 million to be raised via a proposed rights offering. In addition, as part of the rights offering, the Board of Directors will propose to raise a further CHF 250 million in new share capital for future strategic flexibility (not related to the IWM transaction), resulting in a total CHF 750 million proposed rights offering. The proposed capital increase is subject to approval by an Extraordinary General Meeting expected to be scheduled for the 19 September 2012.

While the principal closing following major regulatory and shareholder approvals and other closing conditions is expected towards the end of 2012 or in early 2013, the business transfers and integration are expected to occur over a two-year period thereafter and to be completed in Q4 2014/Q1 2015. The parties will work closely together to develop a detailed plan for the transfer and separation of the acquired business for each jurisdiction.

Management structure realignment – cooperation with BofAML

As a consequence of the significantly enlarged business globally and to reflect the increased importance of growth markets, the current Julius Baer management structure will be realigned as of principal closing (see organisational charts attached).

As part of the transaction, Julius Baer and BofAML have agreed to enter into a cooperation agreement whereby BofAML will provide certain products and services to Julius Baer, including the provision of global equity research, product offerings, as well as structured and advisory products. In addition there will be cross-referral of clients between both organisations.

Perella Weinberg Partners acted as exclusive financial advisor to Julius Baer Group on this transaction.

More information on the acquisition will be provided today at a presentation for media representatives, analysts and investors, which will take place at 9.00 a.m. at the Widder Hotel, Rennweg 7, in Zurich. The presentation will be webcast live on the internet via www.juliusbaer.com/webcast. The presentations held at the conference will also be available on our website, www.juliusbaer.com.

Please note the disclaimer in the media release PDF attached on the right-hand side.


(1) Based on adjusted net profit, i.e. excluding integration and restructuring costs and amortisation of intangible assets
(2) USD amounts have been translated into CHF at an exchange rate of CHF 0.97 per USD 1.00
(3) The acquisition excludes some small IWM locations