506 Mio USD Deal: Julius Baer Buys ING Private Banking Unit In Switzerland

Julius Baer Group Ltd., a 120-year-old Swiss private bank, has decided to buy the Geneva-based private banking unit of ING Groep N.V., the largest financial corporation in The Netherlands, for 520 million CHF (506 million USD) in cash. While some analysts believe that the price is reasonable for both parties, other deem it too low.

Julius Baer is expecting the planned acquisition to generate savings of some 35 million CHF and estimates that the new business will become profitable in 2011. The deal is expected to be finalized in the first months of 2010 and to increase the value of the assets managed by Julius Baer by nearly 10 per cent to 160 billion CHF. The business unit subject to this transaction has branches in Basel, Lausanne, Lugano, Zurich, Crans Montana, Monaco and Jersey, operated by 310 employees in total.

Julius Baer separated asset management operations as of 1 October and announced plans to secure further investments and hire more staff. According to Julius Baer CEO Boris Collardi, the ING deal is expected to consolidate Julius Baer operations in Central and Eastern Europe, as well as in Russia.

Julius Baer is building a larger network of branches in Europe while continuing its expansion in Asia, as Switzerland comes under pressure from the U.S., France and Germany to loosen its privacy protection for customers.

ING Groep announced that the deal would generate net earnings of some 150 million EUR. ING Groep in October 2008 received some 10 billion EUR in aid from the Dutch Government and is currently trying to increase capital by selling 8 billion EUR worth of assets. The sale of its private banking units in Asia, which is home to two of the fastest growing economies in the world, could interest buyers trying to expand their operations in the region.