Swiss private bank to cut rights issue


JULIUS BAER is to cut by a third its planned rights issue to finance the purchase of the non-US wealth management operations of Merrill Lynch – including those in the IFSC – after the proposal unnerved the Swiss private bank’s shareholders.

Shares in Julius Baer fell 7.4 per cent on August 13th, and a further 3.8 per cent the next day, after the bank said it would fund the deal by launching a 750 million Swiss franc rights issue and redeploying SFr530 million of excess capital previously earmarked for share buybacks. The acquisition will cost as much as SFr860 million.

However, having reflected “on shareholders’ feedback”, Julius Baer will instead raise just SFr500 million. The extra SFr250 million had been intended to provide fire-power for future acquisitions and was not needed to fund the Merrill Lynch deal, the Swiss bank said.

Shareholders gave the change of plan a tepid welcome, with Julius Baer’s stock rising 2.3 per cent to SFr32.10 in early afternoon trading in Zürich, still some way short of the SFr35.37 for which shares were changing hands on the last day of trading before the deal was announced. – Copyright The Financial Times Limited 2012