Julius Baer to shed 1,000 jobs following takeover

Wed, Oct 10, 2012, 01:00

JULIUS BAER will shed 1,000 jobs as it moves to integrate its recent takeover of Bank of America Merrill Lynch’s non-US wealth management business.

The Swiss private bank said it would shrink its combined workforce of 5,700 by 15-18 per cent by slashing costs at the former BofA business and slimming down middle and back-office functions.

The former BofA business, which employs 2,100 people and will boost Julius Baer’s assets under management by up to two-fifths, is expected to be hardest hit by the job losses.

Julius Baer agreed to acquire the unit two months ago in a transaction that will cost 1.47 billion Swiss francs.

It has since moved to allay analysts’ fears that a long integration process – it aims fully to complete the transfer in the first quarter of 2015 – could trigger larger outflows of client money than forecast.

Yesterday the bank said it estimated that about 80 per cent of the assets under management it hopes to acquire would be transferred from the BofA business to its own platform by the end of next year.

It expects between SFr57 billion and SFr 72 billion of assets under management to be acquired, depending on how many financial advisers and clients leave.

Boris Collardi, chief executive, said the cost-cutting would address investors’ major question of whether the bank would be able to bring the acquired business on to the same profitability level as Julius Baer’s. “I think it [the answer] is a very clear: yes we can.”

In the first half of this year BofA’s international wealth management business reported a net loss of $30 million and spent $1.10 for every dollar of revenues, according to a presentation by Julius Baer. This compares to a cost-income ratio of 70 per cent and a net profit of SFr176 million at Julius Baer in the first six months.

The deal marks a big push for Julius Baer into Asia, Latin America and the Middle East.

It comes at a time when many foreign clients are considering a move out of Swiss offshore accounts amid an international crackdown on tax evasion. – (Copyright The Financial Times Limited 2012)