Merrill Lynch purchase hits Julius Baer's profit

February 03, 2014 - 2:49:46 pm

ZURICH: Swiss private bank Julius Baer on Monday said net profit fell by 30 percent in 2013 owing to costs related to its takeover of Merrill Lynch's global wealth management business.

Based on IFRS international accounting standards, net profit was 188 million Swiss francs (154 million euros, $207 million), Julius Baer said.

It noted that an improvement in operating results was more than offset by the impact of the international wealth management (IWM)deal with US group Merrill Lynch, the costs of which had been expected.

Operating income, meanwhile, rose by 26 percent to 2.2 billion Swiss francs, and adjusted net profit, reflecting the underlying operating performance, went up by 19 percent to 480 million francs.

"After a period of intense preparations, the implementation of the IWM integration process paid off in 2013, resulting in an impressive transfer of clients, assets and highly-rated IWM professionals to Julius Baer," the group's chief executive Boris Collardi said in a statement.

"In 2014, our focus will shift to improving the cost efficiency of the rapidly grown business," he said.

Julius Baer's assets under management rose by 34 percent to 254 billion francs last year, it said.

The Merrill Lynch deal accounted for 53 billion francs of the 65 billion of new assets under management in 2013.

Net new money into the bank rose by 4.0 percent to 7.6 billion Swiss francs.

The integration of the former Merrill Lynch operations into Julius Baer will continue until the start of 2015, the bank said.

It noted that based on current expectations, by early 2015 Julius Baer will have achieved an asset transfer target from Merril Lynch at the "lower end" of the 57 to 72 billion Swiss franc range.

Julius Baer's financial director Dieter Enkelmann said that that was down to unfavourable exchange rates since the deal was announced in August 2012, as well as the depasture of some clients.

The bank has also excluded some clients to regulatory concerns -- Julius Baer is among 14 Swiss banks under investigation by Washington for allegedly allowing Americans to put undeclared money out of sight of US tax authorities.

Julius Baer said that its board would propose a dividend of 0.60 Swiss francs per share, unchanged from 2012. (AFP)

 

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