Bank Julius Bär profit dips after acquisition

Swiss private bank Julius Bär 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.

Bank Julius Bär profit dips after acquisition
Photo: Sporst

Based on IFRS international accounting standards, net profit was 188 million francs ($207 million), Julius Bär 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 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 Bär will continue until the start of 2015, the bank said.
It noted that based on current expectations, by early 2015 Julius Bär will have achieved an asset transfer target from Merrill Lynch at the "lower end" of the 57 to 72 billion franc range.
Julius Bär'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 departure of some clients.
The bank has also excluded some clients due to regulatory concerns — Julius Bär 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 Bär said that its board would propose a dividend of 0.60 francs per share, unchanged from 2012.

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Reader question: Can a foreign national obtain a loan in Switzerland and under what conditions?

When it comes to borrowing money from a Swiss bank, nationality may play a role in some cases, but not in others. This is what you should know about this process.

Reader question: Can a foreign national obtain a loan in Switzerland and under what conditions?
Getting a losn in Switzerland is subject to many conditions. Photo by Claudio Schwarz/Unsplash

Like almost everything in Switzerland, consumer loans are regulated by legislation, in this case the Consumer Credit Act.

It defines a loan as between 550 and 80,000 francs, “offered by commercial providers of financial services”. Lower or higher amounts are not subject to the Consumer Credit Act.

As is the case in many other countries, Swiss banks have strict criteria about who they lend money to. After all, no financial institution wants to deal with people who are not creditworthy.

Whether or not a foreign national can borrow money from a bank depends on their permanent place of residence and permit status.

As a rule, Swiss lenders don’t give loans to non-residents. So if you reside abroad, there is practically no chance that a bank in Switzerland will lend you money.

However, some financial institutions make exceptions for cross-border workers. If you fall under this category, you can use this interactive tool, select “ Permit G” under “Residence Permit” and see what, if any, options, there are.

READ MORE: EXPLAINED: What cross-border workers should know about taxation in Switzerland

If you are a foreign national but have a permanent residence status (Permit C), your chances of getting a loan are practically the same as those of Swiss citizens — provided, of course, that you meet all the requirements set by lenders (see below).

What about other permit holders?

If you have a B Permit, you might be approved for a loan, depending on how long you have had this permit — obviously, the longer the better.

However, “you may be offered a higher interest rate or a limited loan amount. This is because of the statistically higher probability that you will return to your home country. Some lenders require the loan to be repaid by the time the B permit expires”, according to consumer comparison site 

Holders of other, temporary or conditional permits are not accepted.

READ MORE: ‘A feeling of belonging’: What it’s like to become Swiss

What conditions — other than residence permit — should you fill to be considered for a loan?

You must be at least 18 years of age, though additional restrictions may apply to applicants under 25 — for instance, a higher interest rate or a limited loan amount. That’s because “lenders are generally more cautious with young applicants as their financial circumstances are usually less settled and the risk of default is deemed to be higher,” Comparis noted.

The same cautious approach applies to pensioners, especially those who have no regular income. The social security payments (AHV/AVS) do not count as income for the purpose of the loan.

There is also other eligibility criteria, based on employment status and salary. People with a regular income have a higher chance of obtaining a loan than those who are self-employed, temporarily employed, work on hourly basis or, logically, unemployed.

Other factors, including your existing debts, are also taken into account in the decision process.

Basically, lenders favour applicants with a stable income and good financial standing, in much the same way as supplemental health insurance carriers prefer young and healthy people.

Keep in mind that if your loan application is rejected, this will be recorded in the database of the  Central Office for Credit Information, making it more difficult, though not impossible, to get a loan in the future.

The same rules do not apply to American citizens

That’s because Swiss and European banks are subjected to US demands to disclose the assets of Americans overseas in order to prevent tax evasion.

As adherence to these requirements is a major headache for the banks and in some cases also violates their country’s privacy laws, financial institutions prefer not to deal with Americans at all, even those who are permanent residents.

If you are a US citizen who also has Swiss nationality, you may have an easier time of it, but could still face hurdles in obtaining loans and other banking services.

There is no immediate relief in sight, although many organisations representing Americans abroad are lobbying in Washington to change the existing legislation.