Leumi to Sell European Private Banking Business to Julius Baer

Zurich-based private banking business said goodwill payable on deal is 10 million francs, but that additional spending will add to the total cost.

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Bank Leumi private banking in Geneva, Switzerland.
Bank Leumi private banking in Geneva, Switzerland.Credit: Bloomberg

REUTERS - Zurich-based private bank Julius Baer said on Monday that it will buy the private banking activities of Bank Leumi in Luxembourg and Switzerland, in a deal which will cost up to 70 million Swiss francs ($78 million).

Julius Baer said goodwill payable on the deal is 10 million francs, but that restructuring, integration and other spending will add to the total cost.

The deal will add a low single-digit percentage to earnings per share from 2016, Baer said, if three quarters of Leumi's clients transfer their funds, the majority of which are to be transferred by early 2015 at the latest. The bank expects the purchase to have a neutral impact on earnings per share next year.

Julius Baer is being investigated by U.S. authorities for helping wealthy Americans evade taxes and the bank's chief executive told journalists on a call following first-half earnings it believes it will find a "fair and equitable" solution to the U.S. criminal probe.

Baer has previously said it had not made a provision for any potential fine as it could not adequately estimate the ultimate amount. In its 2013 results, Baer budgeted 15 million francs for legal fees relating to the U.S. tax evasion case.

Baer posted a 10 percent rise in adjusted net profit to 288 million francs for the first six months of the year, beating an estimate of 265 million francs in a poll of analysts surveyed by Reuters

The bank's cost-income ratio, a key efficiency measure for banks, was 70.8 percent, slightly higher than its target range of 65-70 percent from 2015.

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