By John Letzing
ZURICH--Julius Baer Group AG (BAER.VX) said Wednesday that
assets under management rose 16% from the end of 2012 but cautioned
investors that growth in new funds is being pressured by a
crackdown on suspected tax evaders in Europe.
In an interim report released Wednesday, Julius Baer said its
AUM figure rose sharply because of the acquisition of Bank of
America Corp.'s (BAC) Merrill Lynch wealth-management business
outside of the U.S. The acquisition, estimated to cost 860 million
Swiss francs ($889 million), was announced last August and is
expected to take about two years to complete.
But the Zurich-based bank, which is vying to compete with bigger
rivals UBS AG (UBS) and Credit Suisse Group AG (CS) in the wealth
management business, also cautioned that net inflows have been
"volatile" in recent months and Europe's ongoing crackdown on
suspected tax evaders will continue to pressure new money flowing
into the bank.
On Tuesday, Austria and Luxembourg removed objections to a
proposal for the European Union's executive body to negotiate
agreements with Switzerland and other non-EU countries seeking more
data on client bank accounts.
As a result of the uncertain environment, Julius Baer guided
investors to the lower end of its target range for net new money
this year, a closely watched measure of the funds a bank is able to
garner and wring fees from. Julius Baer had set a growth rate
target of between 4% and 6% for net new money in 2013.
Julius Baer said that in the four months to April 30 assets
under management totaled CHF220 billion. Of that figure, roughly
CHF24 billion came from the Merrill Lynch business.
The bank, which releases detailed financial results twice a year
but provides interim reports like Wednesday's in between, said
total client assets rose 12% in the first four months to CHF309
billion. Gross margin for the period was 98 basis points, while its
cost-to-income ratio was below 70%--compared to 71.6% in the second
half of last year.
Julius Baer hopes to obtain between CHF57 billion and CHF72
billion in assets under management from the Merrill Lynch business,
where clients are being presented with the option of sticking with
Julius Baer or opting to take their money elsewhere following the
merger.
At the beginning of February, Julius Baer obtained CHF11 billion
in assets under management from Merrill Lynch's business in Geneva.
At the beginning of April the bank acquired roughly CHF13 billion
in assets under management from the Merrill businesses in Uruguay,
Chile, Luxembourg and Monaco.
Like other Swiss banks, Julius Baer is affected by aggressive
efforts by tax authorities in a number of countries to track down
undeclared assets. Julius Baer is one of a number of banks in
Switzerland under investigation by the U.S. Justice Department as
the authority tracks down wealthy Americans suspected of evading
taxes.
Write to john.letzing@wsj.com
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