Julius Baer is to acquire the three private banks Ehinger & Armand von Ernst, Ferrier Lullin and Banco di Lugano as well as GAM Holding from...

Julius Baer is to acquire the three private banks Ehinger & Armand von Ernst, Ferrier Lullin and Banco di Lugano as well as GAM Holding from UBS. The deal will give UBS a 21.5 per cent stake in Julius Baer.

Julius Baer said in a statement: “With this acquisition Julius Baer will become Switzerland's largest wealth manager focused purely on private banking and asset management. The new Group will have approximately SFr270 billion of client assets and would have had a combined net profit of SFr587 million for the last twelve months ending 30 June 2005.”

Hans de Gier, currently chairman of SBC Wealth Management, the holding company of the three private banks and GAM, will be appointed chief executive of Julius Baer. Alex Widmer, the current chief executive, will become head of private banking in the newly formed group.

The new group executive board will be Johannes de Gier, who will be chief executive and president, Alex Widmer (head of private banking), and from UBS David Solo (head of asset management) and Rolf Aeberli (chief financial officer).

The group will be re-branded Juluis Baer, although GAM will continue to trade as an independent brand.

"This acquisition is the next logical step within our growth strategy and a further milestone in the history of Julius Baer, said Raymond Baer, chairman of Julius Baer.

“It paves the way for sustainable independence and further profitable growth of our Group by giving it a distinct position in the financial industry as Switzerland's largest pure-play wealth manager. Our clients, as well as our employees and shareholders, will equally benefit from this new set-up.”

Julius Baer will mostly fund the SFr3.8 billion acquisition through a rights issue. UBS’s 21.5 per cent stake in Julius Baer will be non-strategic and the world’s largest wealth manager will not take a seat on Baer’s board. Despite this, there is considerable speculation that this might be the precursor to an eventual acquisition of Baer by UBS, although both firms deny this.

Interestingly, our Weekly poll question: Which private bank do you think is likely to be taken over next?, led to 38 per cent of respondents saying Julius Baer was likely to be the next acquisition, compared with 25 per cent opting for Bank Sarasin, and only 15 per cent voting for Vontobel. (See: Poll: Julius Baer Voted as the Next Takeover Target.)

Julius Baer has around $123 billion of assets under management, of which about $50 billion is under management within private banking.