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Swiss Bank Baer Seen Close to Deal for Merrill Non-U.S. Wealth Units

By Marlene Y. Satter

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Swiss money manager Julius Baer Group, which has been in talks since June or earlier with Bank of America Corp to buy its Merrill Lynch non-U.S. wealth management units, was reported to be close to a deal that could be announced as early as Monday.

Merrill Lynch LogoBloomberg reported Friday that the units could be worth as much as $1.5 billion to $2 billion, according to sources with knowledge of the arrangements. However, negotiations are still ongoing and may still fail, the sources said.

Baer has been looking for assets to take the place of repatriated Swiss account funds as a worldwide crackdown on tax evasion prompts clients to move their money. The firm would like to increase its 178.8 billion francs ($183 billion) of managed assets, and the Merrill units manage approximately $80 billion.

The client base for the Merrill units ranges from Europe and the Middle East to Africa, in addition to high-net-worth clients in Latin America and Asia outside Japan.

Baer has made other acquisitions, including in 2009 the Geneva-based wealth business of ING Groep, a 30% stake in the Brazilian wealth manager GPS Investimentos Financeiros e Participacoes and last year the Asian private client business of Macquarie Group. According to a Wall Street Journal report, however, it failed to win a controlling stake in Basel, Switzerland-based Bank Sarasin & Cie., which was instead bought by Safra Group in November for 1.04 billion francs from from Dutch banking cooperative Rabobank.

If it is successful in acquiring the Merrill units, Baer will have nearly doubled its assets under management from 129.1 billion francs at the end of 2008.

Baer, which is under investigation along with 10 other Swiss banks by U.S. authorities on allegations that it helped U.S. customers evade taxes, had previously said that it wants to expand and become a consolidator within the industry to enable it to take advantage of scale in beating increasingly tight margins.

Lower appetite for risk among investors, as well as less client activity, have contributed to what the firm says are declining profits and thinner private banking margins.

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