Julius Bär targets 1,000 job cuts after acquisition

Julius Bär, the Zurich-based private bank, is planning to slash its staff by as much 1,000 people in a bid to improve profitability.

Julius Bär targets 1,000 job cuts after acquisition
Photo: Sporst (File)

The bank announced the plan on Tuesday in the wake of its planned acquisition of Bank of America Merrill Lynch’s wealth management business outside the US and Japan.

The targeted reductions amount to between 15 and 18 percent of its workforce of around 5,700 people in more than 50 locations.

In August, when the deal was announced, Julius Bär said it expected to pay a total of about 1.47 billion francs ($1.57 billion), including integration costs, to acquire the wealth management business of the American bank.

The business involves managing more than 57 billion francs in assets from clients in Europe, Asia, Latin America and the Middle East.

Julius Bär, which describes itself as Switzerland’s leading private bank, said it expects the acquisition, which aims to tap into emerging markets, will boost earnings per share 15 percent by 2015, not including restructuring costs.

The bank said it planned "a significant reduction of former Bank of America corporate overhead and other allocations not required going forward in the Julius Bär structure."
It expects the deal to close in the first quarter next year.

About 80 percent of the total assets it is acquiring will be reported at Julius Bär by the end of 2013, the bank said.

It said it had managed to raise 250 million francs in non-core tier 1 capital in September to help finance the acquisition.
It is also planning a rights issue to help with the financing and said on Monday it expects to sell 20 million new shares to rake in around 492 million francs during the October 10th-16th operation.

The bank, specialized in wealth management, said it would present more details of the acquisition to analysts and investors in London later on Tuesday.

In its statement, Julius Bär said the planned job cuts and other cost-cutting measures were expected to lead to an implied cost-income ratio of about 70 percent and a pre-tax profit margin of around 25 basis points for the acquired business in 2015.

The Swiss bank also said it expected the deal to be at least earnings per share-neutral by 2014.

On a separate note, the company reported that the assets it currently has under management increased to a new record high of 184 billion francs, which is 14 billion francs, or eight percent higher than at the end of 2011.

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UBS ‘ordered’ to give out data in US tax probe

Swiss banking giant UBS on Thursday denied it had directly handed files to US authorities detailing which of its rivals had taken on its American clients following a tax evasion probe.

The Handelszeitung newspaper reported that officials leading a crackdown on suspected tax cheats received documents from UBS with information on which banks its US clients’ accounts were transferred to after it was subjected to sanctions in 2009.

In a statement, UBS said it had been ordered to hand over to Swiss financial regulator Finma client data including, in some cases, instructions relating to the closure of accounts.

The bank acted according to Swiss law and the orders of the Swiss authorities, it said.

“UBS did not hand over any information on clients or banks directly to the US,” the statement said.

UBS was the first Swiss bank to feel the force of Washington’s clampdown on tax evasion in 2009.

The bank was forced to hand over about 4,000 files of suspected tax cheats and pay a fine of $780 million.

Bern is negotiating a tax agreement with Washington to address the issue of US nationals hiding money in Swiss accounts.

An ongoing US probe reportedly focuses on 11 Swiss banks, among them Credit Suisse, Julius Bär and Wegelin.