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Brexit fallout Julius Baer eyes UK acquisition but puts London hub on hold

Julius Baer believes Brexit will dent Britain's economic growth


Julius Baer, Switzerland’s biggest standalone private bank, sees Brexit as an opportunity to acquire a rival in the UK, according to chief executive Boris Collardi.

The bank, with a market value of CHF11.3 billion ($11.2 billion) and assets under management of CHF336 million, already has more than 200 staff in the UK. It was planning to build a European hub there before the UK voted last year to quit the EU.

“If a UK bank became a seller (of its private bank) at some stage and approached us, probably we would look at it, on the basis it would be a contrarian move at a moment when UK assets were cheap,” Collardi told the Financial Times.

“And I’m sure that in five years’ time, everybody would say, maybe it was not such a bad transaction.” Sterling has fallen 13% against the Swiss franc since the June 23 vote to quit the EU.

Julius Baer has a history of such deals, beginning with its 2005 acquisition of three private banks and an asset manager from UBS for CHF3.8 billion in cash and a 21.5% stake in the Julius Baer Group.

More recent moves include the 2009 acquisition of ING’s Swiss private bank for CHF520 million, its 2012 purchase of Merrill Lynch's non US wealth management business for CHF860 million and a 2014 deal to buy private banking assets of Israel’s Bank Leumi with CHF7 billion under management.

Second thoughts

Despite its enthusiasm for a UK acquisition, Julius Baer has paused plans for a European hub there because it believes Brexit will dent the UK’s economic growth, and that “foreigners will feel a little bit less welcome”.

“There are not that many people buying new properties, everything has slowed down a bit in terms of the bubbly, European hub,” Collardi said. “We’re a bit on hold in the UK. I continue to believe we have to be in London, but we need to carefully assess the situation . . . I think eventually everything is going to be all right.”

Collardi is more bullish about Asia, where the bank has been on a hiring spree. “Asian growth rates have slowed down – that’s no big surprise,” he said. “On the other hand, [Asian] clients are responsive to investment ideas, leverage is at very decent levels, so margins continue to be good in Asia. In relative terms, Asia continues to outperform in terms of growth any other region of the world.”

Julius Baer has been less effusive about the prospect of fintech than some of its rivals who believe advances like robo advisers will revolutionise their industry.

“There is an abuse of the word ‘fintech’,” Collardi said. “Obviously we’re looking at how we digitalise our processes.”

He believes fintech disruption “is not going to come from within our industry”, adding: “The guys can do their big projects and whatever, but the next guy who comes up with something totally revolutionary is going to be a small company somewhere.”

Copyright The Financial Times Limited 2017

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