Julius Baer, a Swiss private banking group, has reached an agreement to acquire Geneva-based ING Bank (Switzerland), a subsidiary of ING Group, for CHF520 million in cash, including surplus capital of CHF170 million based on a target Tier 1 ratio of 12%.
Reportedly, ING Bank, which employs a staff of 310, will be integrated into Bank Julius Baer, creating estimated pre-tax synergies of CHF35 million per annum. The acquisition is expected to be EPS neutral in 2010, strongly accretive from 2011 onward, reaching a high single-digit percentage in 2012.
Julius Baer has said that it is paying 0.9% Goodwill/AuM and, adjusted for surplus capital, 2.3% for the AuM of the business. The purchase price will be fully funded by existing excess capital, leaving Julius Baer with a pro forma BIS Tier 1 ratio of about 16%, above its 12% target. The surplus capital of ING Bank will be allocated to Julius Baer.
Moreover, Julius Baer will rebrand ING Bank and merge its local operations in Switzerland (Geneva, Basel, Crans Montana, Lausanne, Lugano and Zurich) and transfer the business of its subsidiaries in Monaco and Jersey to Julius Baer’s existing operations.
Raymond Baer, chairman of Julius Baer, said: “Julius Baer is taking advantage of current market developments in acquiring a high quality, profitable asset with a strong track record. The client base is similar to the one of Julius Baer and ING Bank’s employees share the same client-centric passion, making it a true cultural fit.”
Boris Collardi, CEO of Julius Baer, said:“This transaction fully matches the strategic and financial criteria which we have communicated. We are pleased to add significant scale to our domestic and European platforms while strengthening our business in central and eastern Europe, Russia and other growth markets. Clients will benefit from new opportunities as a result of strengthened local franchises. With our track record of successful integrations, we are looking forward to working with our new colleagues and to a smooth integration process.”
