March 24, 2023

DealBook: Julius Baer to Buy Bank of America Unit

Boris Collardi, chief executive of Juluis BaerArnd Wiegmann/ReutersBoris Collardi, chief executive of Juluis Baer.

LONDON – The Swiss bank Julius Baer agreed on Monday to buy the private banking operations outside the United States of Bank of America Merrill Lynch, in a deal that will increase the European firm’s assets under management by 40 percent.

The acquisition is the latest consolidation move in the private banking industry, as firms look to bolster their operations to gain access to the new markets of emerging economies.

As part of this effort, Julius Baer will pay around 860 million Swiss francs ($882 million) for the American bank’s international wealth management business outside of the United States. The division has roughly $84 billion of assets under management.

Under the terms of the deal, Julius Baer will oversee up to an additional $74 billion of assets, which primarily come from wealthy clients in developing economies. The acquisition will increase Julius Baer’s assets under management to around $258 billion.

“This acquisition brings us a major step forward in our growth strategy and will considerably strengthen Julius Baer’s leading position in global private banking by adding a new dimension not only to growth markets but also to Europe,” the company’s chief executive, Boris Collardi, said in a statement.

Despite the bank’s large increase in assets under management, investors reacted negatively to the news. Shares in Julius Baer fell almost 6 percent in morning trading in Zurich on Monday.

The shareholder response to the announcement came after the Swiss bank said it would finance the acquisition through existing cash reserves and a $770 million rights offering. The bank said it would raise a further $257 million for potential future acquisitions and $206 million through hybrid bonds.

The firm also canceled a previously announced $510 million share buyback.

As part of the new share sale, Bank of America Merrill Lynch will be given around $246 million of Julius Baer stock, making the American firm a large shareholder.

Julius Baer said costs related to the acquisition would total about $320 million, while Bank of America Merrill Lynch would assume about $125 million of costs connected to the deal.

The deal is one of a number of acquisitions by Julius Baer in recent years. In 2009, it bought the private banking unit of the Dutch firm ING for around $500 million.

The deal is expected to close by early 2013. Perella Weinberg advised Julius Baer on the acquisition.

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Disruptions: In Davos, Technology Moves Center Stage

Eric E. Schmidt, executive chairman of Google, at Davos on Friday.Arnd Wiegmann/ReutersEric E. Schmidt, executive chairman of Google, at Davos on Friday.

DAVOS, Switzerland — When I set out to report at the World Economic Forum, I imagined it might be difficult to find technology-related stories. It turns out, I was a tad wrong. I would have had more luck finding a snowless Alpine mountain in the winter than finding people discussing a topic that did not involve technology.

After a year that has included the social media-fueled protests of the Arab Spring and Occupy Wall Street, global Internet privacy legislation and billions of dollars in technology stock offerings, tech and social media have not only entered the building, they are the walls holding it up.

Even the 102-page program guide for the World Economic Forum, where business, political and intellectual leaders gather each year to talk and frolic, has more references to technology and social media than any of the nerdiest Silicon Valley blogs I read daily.

Of course, tech is not a new concept at the forum. Eric E. Schmidt, the executive chairman of Google, told me he had been attending Davos for 15 years, two years before Google was even created.

But what has changed, I was told by dozens of people I spoke with, is technology’s infusion into every topic here.

Sessions on philanthropy, agriculture, social unrest, media and the economy were all full of digital banter. One attendee even told me that social media repeatedly came up during a discussion on religion.

Paulo Coelho, the best-selling Brazilian novelist, said in an interview that business and political leaders were finally accepting the power of social media. “Five years ago Davos was discussing new business models; now that has totally dropped. Now it is all about the Internet,” he told me. “They used to have answers here, and now it seems people are more comfortable with questions; the Internet has a lot of questions.”

Mr. Coelho, by the way, has more than seven million followers on Facebook and three million on Twitter.

Anna Ewing, Nasdaq’s chief information officer, said, “Technology is now framed as a core strategic and business issue.”

“It’s part of every discussion here,” she said, and “not just something that is being talked about by the technoweenies.” Those “technoweenies” are also the new celebrities of Davos. During a philanthropy plenary session I attended, Sean Parker, the Napster entrepreneur and the former president of Facebook, nearly ran out of the room after his session had finished as dozens of people tried to corner him.

Some of the most elite parties — a renowned part of the Davos experience — took place in the Swiss chalets of tech celebrities too, including Mr. Parker and Yuri Milner, the Russian billionaire who has invested in Facebook, Zynga and Groupon.

Though Silicon Valley was top of mind, there was also a growing worry about the loss of jobs that often results from new technologies. The new jobs created don’t usually fit the qualifications of the newly unemployed. When cars drive themselves, for example, what happens to the millions of jobs that will inevitably be lost?

Tech drives the economy, but it doesn’t drive employment. “We are a 100-person company and we serve 50 million people. That kind of leverage has never existed before,” said Drew Houston, co-founder of the start-up Dropbox, a service that stores and shares digital files. Mr. Schmidt of Google said, “At Davos the conversation is really about economic growth and the reality is that technological advancement benefits those who are educated but endangers jobs that are routine and automatable.”

“This has been true for two hundred years with technologies,” he added.

Next year as the wealthy and the powerful gather here again to discuss the same topics, the technoweenies among them will have moved society even further forward.

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