Julius Baer banks on new hires to spur growth

A businessman passes the headquarters of Julius Baer Group Ltd in Zurich, Switzerland.
A businessman passes the headquarters of Julius Baer Group Ltd in Zurich, Switzerland.PHOTO: BLOOMBERG

FRANKFURT (REUTERS) - Swiss wealth manager Julius Baer added more than 100 private bankers in the first 10 months of 2016, hoping the new hires will help it hit a target for attracting new assets.

In recent years Baer has grown through a string of purchases, the largest of which was a deal to acquire Merrill Lynch's international private banking business, to catch up to larger rivals UBS and Credit Suisse.

But aside from some smaller deals, Baer this year has largely focused on hiring relationship managers (RMs), or private bankers, from peers.

As of the end of October, Baer had added a net 159 RMs for a total of 1,376, it said in a 10-month interim management statement on Thursday.

Of the new hires, 115 were via recruitment and 44 came through two acquisitions announced earlier in the year.

With a typical lag of around 18 months for a new private banker to break even, Baer said net new money by end-October on an annualised basis was "close to" 4 per cent. This is just shy of its medium-term target range of 4-6 per cent.

Chief Executive Boris Collardi had said in June he was confident Baer would reach the 4-6 per cent target this year.

The bank did not indicate on Thursday whether it would meet the goal in 2016 but struck a more optimistic tone for next year.

"Based on the relationship manager (RM) hirings and the current net inflows outlook, net new money is expected to improve well into the 4-6 percent target range in 2017," Baer said in a statement.

Net new money is viewed as a volatile but important indicator of future earnings in private banking. Shares were seen opening up 1.1 per cent in pre-market indicators.

Overall assets under management at the end of October totalled 327 billion Swiss francs (S$461.9 billion), up from 311 billion francs in the first half of the year.

Gross margin for the first 10 months fell to just over 91 basis points from just below 95 in the first half of 2016, with overall client trading volumes declining "markedly" in the four months since the end of June, Baer said.

Baer's cost/income ratio was just below the top end of its 64-68 per cent target range.