Swiss private bank Julius Baer plans to cut nearly every fifth job in the wake of its acquisition of the wealth management business Bank of America Merrill Lynch.This content was published on October 9, 2012 - 15:23
Baer plans to reduce between 850 and 1,030 jobs in more than 50 Bank of America Merrill Lynch locations outside the US. The reduction of the combined staff of about 5,700 will primarily affect middle and back office functions such as information technology, accounting or legal employees.
Baer announced in August that it plans to buy the International Wealth Management business (IWM) of Bank of America for up to SFr860 million ($879 million) to increase its assets in growing markets.
Bank of America's private banking business outside the US has been scattered over many countries, making it difficult to build up its scale and profits.
The job cuts would take place gradually after the deal closes, currently expected in the first quarter of 2013. The cuts would primarily affect the Bank of America unit with its 2,100 employees.
Bank of America’s IWM business overlaps with Baer’s activities in Geneva, Paris, London, Milano, Monaco, Grand Cayman, Santiago de Chile, Montevideo, Tel Aviv, Dubai, Singapore and Hong Kong, according to Baer chief executive Boris Collardi.
Merrill Lynch employs about 220 people in Geneva. Some jobs will be moved from Geneva to Zurich, Collardi told the Swiss paper SonntagsZeitung at the end of August.
Baer also said that its assets under management jumped to SFr184 billion ($196.8 billion) at the end of August from SFr179 billion at the end of June. It said in August that it expects the transaction to result in additional assets of between SFr57 and SFr72 billion.
The Swiss bank said the business it is acquiring lost $30.4 million in the first half of the year but would have been profitable if adjusted for cost cuts expected from the merger.
Baar expects the transaction to be at least neutral to earnings per share in 2014 and to lift earnings by 15 per cent from 2015.
Baer has said it needs a total of Sfr1.47 billion to pay for the deal, including some Sfr312 million for transaction, restructuring and integration costs. The Swiss bank is selling shares in a rights issue to help cover the costs, seeking to raise Sfr492 million.
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