Swiss banking group Julius Baer will buy the non-US wealth management business of Merrill Lynch from Bank of America for about $880 mn as it seeks to expand in high-growth emerging markets, the companies have announced.
The purchase of Merrill Lynch’s international wealth management business, subject to shareholder and regulatory approval, will transfer to Julius Baer $84 bn in client assets and 2,000 employees, including more than 500 financial advisers, the Swiss group says in a statement.
As part of the agreement, Bank of America Merrill Lynch (BofAML) analysts will provide global equity research, as well as structured and advisory products, to Julius Baer, the bank notes in a separate release.
BofAML employs around 500 analysts in 20 countries who cover around 2,800 companies and issue reports on macroeconomics, global emerging market strategies, global credit research, and more.
The purchase of the international wealth management business, which mostly caters to high-growth markets, means emerging markets including Asia, Latin America and the Middle East will account for half of Julius Baer’s clients after the takeover is complete, expected to be in the last quarter of 2014 or the first quarter of 2015.
The Swiss bank says it aims to pay for the purchase through a combination of a rights offer, existing excess capital, the ‘issuance of new hybrid instruments’ and new share capital. Julius Baer shares fell more than 7 percent by the close of the trading day after the announcement.
Some of the latest research produced by BofAML analysts, including reports entitled ‘Finding your way in emerging markets’ on August 10 and ‘Defining the g-zero world’ on August 3, emphasizes the growing importance of emerging markets to successful investment strategies.
BofAML has won a series of awards for its research in recent years, including number one in pan-European coverage by Institutional Investor in 2009 and number one in the US for earnings forecasts by Financial Times/StarMine, also in 2009.
