SWISS BANK Julius Bär is set to move into Ireland following its acquisition of Bank of America Merrill Lynch’s (BofAML) Dublin-based wealth-management operation as part of an $880 million (€714.9 million) global deal.
Julius Bär will acquire all of BofAML’s wealth-management businesses outside of the US, apart from its Japanese joint venture. The Swiss wealth-management group first signalled its interest in Merrill Lynch International Wealth Management back in June, when a price tag of about $2 billion was talked about, but the deal was announced yesterday at a lower sale price. Julius Bär plans to raise 750 million Swiss francs (€624.3 million) through a rights offering to help fund the deal.
The deal will see $84 billion in assets under management and more than 2,000 employees transfer to Julius Bär, which will now be operational in several new markets, including Luxembourg, Spain, India and Ireland.
A spokesman for Julius Bär declined to comment on the bank’s plans for its new Dublin operation, but noted that “Dublin is now on the JB map”.
Merrill Lynch set up the Dublin-based private client business back in 2000, and it is understood to employ about 10 people.
After it opened the Dublin office, it was subsequently rolled into the Bank of America group following its acquisition of the investment bank in 2008. Customers of the Dublin operation have included aviation entrepreneur Domhnal Slattery. Typically such private wealth banks require customers, or “high net worth individuals”, to open accounts with €1 million in investable assets.
According to Boris FJ Collardi, chief executive of the Julius Bär Group, the deal brings it “a major step forward” in its growth strategy and will considerably strengthen its leading position in global private banking.
The deal comes as other global groups retrench their Irish-based financial services businesses. HSBC, for example, is set to close its Dublin private banking business on October 19th following a review of its global operations. The division employed six people.
The sale of its international wealth business also marks the latest divestment from BofAML, which is looking to shed non-core businesses and investments in a bid to boost its capital. In March, BofAML sold its Irish credit card business, MBNA, to US private-equity group Apollo Global Management. This deal is ongoing and is not expected to close until the first half of 2013.
For Julius Bär, part of the rationale for the deal was to add “presence in a number of key new locations” while also strengthening its position as the leading “pure play” Swiss private banking group.
However, it’s likely the bank is also keen to expand its business outside of Switzerland following probes by the US authorities of offshore income tax evasion.
Eleven Swiss banks, including Julius Bär and Credit Suisse, are currently under investigation in the US for allegedly aiding US citizens who are suspected of avoiding taxes.
The two countries have for years been locked in a conflict over the fact that wealthy Americans are dodging taxes by hiding money in Swiss accounts. Washington is pressuring banks in Switzerland to divulge their details.
– (Additional reporting: Reuters)
