Tom Burroughes
Group Editor
13 August 2012
Daily News Analysis
Purchase price
The agreed transaction price is 1.2 per cent of AuM transferred. At SFr72 billion AuM transferred, Julius Baer would pay about SFr860 million.
Julius Baer said its board of directors intends to put funding in place at a level that is sufficient to support the acquisition of up to SFr72 billion AuM. At that level, the transaction is expected to be funded by a combination of up to SFr530 million from existing excess capital, SFr200 million from the issuance of new hybrid instruments, and SR740 million billion of new share capital.
The proposed capital increase is subject to approval by an extraordinary general meeting expected to be scheduled for September 19 this year.
For the first full years after the integration (2015 and beyond), Julius Baer said it expects to set the following targets for the new enlarged group: net new money 4-6 per cent, cost/income ratio 65-70 per cent and pre-tax profit margin 30-35 basis points.
Also, due to the convergence of the Bank for International Settlements (BIS) and Swiss approaches to calculating capital ratios next year, the minimum required BIS total capital ratio will be reduced from 14 per cent to 12 per cent.
Julius Baer has been expanding its business in recent months. For example, in July, the bank and Bank of China entered into a strategic agreement whereby they will mutually cross-refer clients and collaborate on marketing activities. It has also forged a similar deal with Australia’s Macquarie.
