Julius Baer to buy Commerzbank's private bank in Luxembourg

LONDON • Julius Baer Group has agreed to buy Commerzbank's private bank in Luxembourg, adding about €3 billion (S$4.6 billion) in assets under management.

The Swiss wealth manager will pay about €68 million, assuming that €25 million of regulatory capital is transferred as part of the transaction, Julius Baer said in a statement yesterday.

The Zurich-based bank expects restructuring and integration costs of about €20 million for the deal, which is seen closing by the middle of next year.

Swiss banks, including the likes of Credit Suisse Group, are stepping up their operations in Luxembourg to help them comply with new European Union financial regulations as tighter regulations in Switzerland erode banking secrecy rules.

Pictet and Lombard Odier, Geneva's two largest private banks, are among at least a dozen Swiss firms operating in the country, according to financial regulator CSSF.

"We are pleased to add significant scale to our local franchise in the important international financial centre of Luxembourg and look forward to leveraging the business opportunities provided by the full bank licence," said Mr Gian A. Rossi, head of northern, central and eastern Europe for Julius Baer, in the statement.

The transaction will boost the assets under management of the Luxembourg business to about five billion Swiss francs (S$7.1 billion) on a pro-forma basis.

The acquisition is expected to add to adjusted earnings once complete, Julius Baer said in the statement.

Julius Baer chief executive officer Boris Collardi has been expanding the firm through acquisitions such as that of Swiss asset manager Fransad Gestion.

The company said last month that its gross margin narrowed as of the end of October and net client inflows missed the firm's 4 per cent to 6 per cent medium-term annualised growth target.

Julius Baer Group's shares have slipped about 3 per cent this year.

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A version of this article appeared in the print edition of The Straits Times on December 17, 2015, with the headline 'Julius Baer to buy Commerzbank's private bank in Luxembourg'. Print Edition | Subscribe