Julius Baer to buy ING Swiss private bank
Written on October 8, 2009
Julius Baer, bulking up in its home market, has agreed to buy the Swiss private banking assets of Dutch financial services group ING for 520 million Swiss francs ($507 million), the two said on Wednesday.
As part of its global restructuring, ING is selling its Asian and Swiss private banking units in what would be the biggest deal in the wealth management industry since the credit crisis began.
Julius Baer is paying for the deal with cash, and expects the deal to generate 35 million francs in cost savings and add to earnings from 2011.
Sources familiar with talks earlier confirmed the widely-expected deal.
Julius Baer, which recently build its war chest by listing its U.S. asset management arm Artio, has said it is on the lookout for acquisitions with Europe its key strategic market. Ranked after UBS and Credit Suisse as the third biggest wealth manager in Switzerland, Julius Baer is also seeking to build Asia as a second major market.
With the deal, expected to be closed early in 2010, Julius Baer said it will have 160 billion Swiss francs under management.
ING, which is selling off its private banking business outside of its home Benelux market, said the deal will deliver 150 million euros of profit and free up 250 million euros of capital.
ASIA SALE WEEKS AWAY
The sale of the Swiss assets came more than a month after most bids for the private banking units went in on September 3. The sale of the Asian assets could take more time because of regulatory issues, sources said.
“The Asian sale is a few weeks away,” said one of the sources, adding regulatory approvals from the Monetary Authority of Singapore, the city-state’s central bank, could take time.
HSBC is seen as a front-runner for these assets, while Singapore’s DBS Group had also bid for the Asian assets, sources have said.
“This signals that the consolidation phase has just begun in the industry and we are of the opinion that going forward we will see many such deals coming through in the Asia Pacific market,” said Ravi Nawal, a senior analyst for wealth management at consultant Celent.
HSBC’s CEO of global private banking Chris Meares told the Reuters Wealth Management Summit the bank has looked at ING assets and described the proposed sale by the Dutch bank as a rare opportunity in Asia.
The sale process of the private banking units is part of ING’s restructuring drive to sell 6-8 billion euros in assets and exit 10 of the 48 countries where it does business.
It is also involved in negotiations with the European Union over its 10 billion euro state aid package from last October and its 22 billion euro asset guarantee program from last January.
Filed in: technology.