Private Swiss bank Julius Baer is buying Merrill Lynch’s international wealth management business for 1.2% of assets under management, which is expected to amount to about 860 million Swiss francs (US$876 million).
The deal, which remains subject to regulatory and shareholder approvals, will see Julius Baer acquire Merrill Lynch’s wealth management businesses based outside the United states, representing US$84 billion of assets under management (AUM), and over 2,000 employees, including more than 500 financial advisors.
The transaction is a combination of acquisitions and business transfers, that is expected to boost Julius Baer’s AUM by about 40%. It also furthers the bank’s growth strategy and strengthens its position in global private banking by adding scale and additional offices primarily in growth markets, but also in Europe.
As part of the deal, Julius Baer and Bank of America Merrill Lynch have also agreed to enter into a cooperation agreement that will see Merrill 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 first full year following integration, although the integration is expected to take about two years. Principal closing following major regulatory approvals is expected towards the end of 2012 or in early 2013. Business transfers and full integration are expected to be completed by the end of 2014 or early 2015. Total restructuring, integration and retention costs are expected to amount to approximately CHF 400; and, Bank of America will assume up to an additional US$125 million of integration costs.
“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,” said Daniel Sauter, chairman of the Julius Baer Group.