Julius Bär rejects takeover talk

Julius Bär wants to go it alone Keystone

Private bank Julius Bär brushed off takeover rumours as it announced a 28 per cent rise in net profits in the first half of 2007.

Speculation mounted in May when Swiss banking giant UBS sold its 20.7 per cent stake in the wealth manager, but no single institution gained control from the sale. Julius Bär said on Friday it did not want to become part of a “financial empire”.

The group recorded net profits of SFr518 million ($427 million) while attracting SFr20 billion in new money. Total assets under management were boosted 12 per cent to SFr406 billion.

After announcing a SFr2 billion share buy-back programme, chief executive Hans de Gier ruled out the possibility of the bank being swallowed up by a larger rival.

“We are not contemplating any different configuration. Nor do we feel that Bär has to be part of a financial empire,” he said.

But, with Julius Bär performing so well, Bank Vontobel analyst Claudia Meier believes that the rumours may well resurface in the future.

“I feel for the time being the pressure has certainly eased. It may come back later, but it is not at the top of the list at the moment. Being the biggest Swiss wealth manager in private banking makes Julius Bär an attractive target,” she told swissinfo.

UBS sold its SBC Wealth Management division, comprising three small banks and a fund manager, to Julius Bär in 2005, making the Bär group the country’s largest institution concentrating solely on asset management and private banking.

Profiting from expansion

The deal has allowed Julius Bär to expand into the lucrative Asian markets.

Analyst Meier believes the acquisition is partly responsible for the impressive inflow of new money to the bank in the first six months of this year.

“The arrival of new management has helped to wake up the organisation. One effect [of the new cash inflow] is the improved market conditions that have been enjoyed by all banks, but this has been accelerated by the arrival of new management,” she said.

Earlier this month Beat Wittmann, chief executive of investment products at Swiss rival Clariden Leu bank, and a team of six private bankers defected to Julius Bär. But this had no bearing on the Bär group first half performance.

Julius Bär CEO de Gier said he was happy with the latest financial results that included an improved cost-to-income ratio of 57 per cent despite a 13 per cent rise in operational expenses largely as a result of expansion.

“The Julius Bär Group has maintained its considerable momentum during the first six months of 2007 and achieved solid results in a good market environment,” he said.

“We have further improved the overall profitability of the group in spite of our accelerated growth initiatives.”

swissinfo, Matthew Allen with agencies

Key facts

Julius Bär 2007 first half results:
Net profit up 28% to SFr518 million (SFr404 million in 2006).
Assets under management: SFr406 billion (up 12%). Net new money: SFr15 billion asset management, SFr5 billion private banking.
Operating income: SFr1.63 billion (SFr1.39 billion).
Operating expenses: SFr959.8 million (SFr853 million).
The group employs 3,869 staff (full time equivalents) compared with 3,560 at the end of June last year.

Swiss National Bank results

The Swiss National Bank announced a SFr2.23 billion ($1.84 billion) interim result for the first half of 2007 – up from SFr1.96 billion from the same period last year.

The Bank stated that the rise was largely down to a slight increase in gold prices and favourable exchange rate movements.

As stipulated by a 2002 agreement between the Swiss government and the SNB, the profit to be distributed to the government and the cantons amounts to SFr1.86 billion.

The Bank will set aside the remaining SFr376 million to maintain reserves. This amount is set to rise to SFr751 million by the end of the year.