--Julius Baer, BoC will mutually cross-refer clients
--Julius Baer expanding aggressively in Asia
--First half net profit up on cost cuts as revenue falls
(Adds detail, background throughout.)
By Anita Greil
ZURICH--Julius Baer Group AG (BAER.VX) Monday said it entered a
strategic partnership with Bank of China Ltd. (3988.HK) to mutually
cross-refer clients, allowing the Swiss wealth management firm to
gain access to one of the world's fastest growing markets when many
countries closer to home are reeling from the euro zone debt
crisis.
The Zurich-based bank has been expanding aggressively in Asia
over the past six years, hiring client advisors, opening a
representative office in Shanghai last year and entering
partnerships with local players in markets it considers strategic
for growth, such as Indonesia. This focus on Asia also shows on the
product side through the launch of a range of renminbi products,
which it is offering to all clients worldwide after a successful
roll-out in a handful of markets.
The strategic partnership with Bank of China marks a milestone
in the Swiss bank's expansion in Asia.
Within the agreement, Bank of China will refer its existing and
potential clients outside mainland China who require comprehensive
private banking services to Julius Baer. The Swiss bank, meanwhile,
will refer existing and potential clients who require banking
services or specific non-private banking products and services to
the Chinese bank.
"In addition, in future the partnership offers the potential for
Julius Baer to gain further access to Chinese Mainland, one of the
world's most important and fastest-growing wealth markets," said
Julius Baer Chief Executive Bolris Collardi.
Regarding possible expansion elsewhere, the bank said it was
still in talks with Bank of America Corp. (BAC) on buying the
non-U.S. wealth management operations of Merrill Lynch, but that
the outcome of these discussions was still open.
The Bank of China deal comes at a tough time for private
banks.
Economic and political uncertainty, dominated by the euro zone
crisis, frames the market environment and renders clients cautious,
prompting them to refrain from trading in securities and
currencies.
Julius Baer's operating income consequently fell 3.9% to 863.1
million Swiss francs ($877.7 million) in the six months to June 30,
the Swiss bank said Monday. Cost cuts and the absence of big
payments last year related to a tax dispute with Germany, meant
that expenses fell at a an even steeper pace and allowed Julius
Baer to report a 19% increase in net profit to CHF175.5
million.
These results were better than expected, said Teresa Nielsen,
analyst in Zurich with local broker Vontobel. But she cautioned
that markets will remain difficult in the second half. The
partnership with Bank of China is positive but will take time to
translate into business growth, she added.
Julius Baer attracted CHF5.5 billion in net new assets from
clients, which came from growing markets in Asia and the
Middle-East, but also from Julius Baer's local private banking
business in Germany.
-Write to Anita Greil at anita.greil@dowjones.com
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