Swiss private banking group Julius Baer expects to bolster its sales of structured products on the back of a “strategic cooperation agreement” with Bank Leumi which includes the acquisition of the Tel Aviv-based bank’s wealth operations in Switzerland and Luxembourg in a deal which will cost about to CHF70m (€57.6m).

Under the agreement, the Leumi Group will refer existing and future clients, with private banking needs in Europe and the Far East, to Julius Baer. In addition, Julius Baer will refer existing and future clients to Leumi’s domestic banking services in Israel, said the Israeli bank.

Willi F.X. Bucher, head of sales and structuring at Julius Baer, told SRP that the acquisition of Bank Leumi’s branches in Switzerland and Luxembourg will provide a new pool of private banking clients and a wider distribution network.

“We expect our structured products sales in Switzerland to be boosted by this strategic agreement,” he said.

In addition, Leumi will exit its private banking business which is managed through the bank’s subsidiaries in Switzerland and Luxembourg, and will transfer the majority of its international private banking clients to Julius Baer.

Clients’ assets
Clients’ funds will also be transferred by early 2015 at the latest, but the bank expects the purchase to have a neutral impact on earnings per share next year.

The transfer of the client assets in Switzerland is expected to be concluded by the end of 2015. At the same time and upon the completion of the agreement, Leumi Private Bank will work to close its business operations in Switzerland.

In addition, under the terms of the agreement Julius Baer will purchase Bank Leumi Luxembourg, including its assets, clients and employees, in exchange for the capital of Leumi Luxembourg. This acquisition is expected to be completed by the end of the first quarter of 2015, subject to regulatory approvals.

According to SRP data, Julius Baer has been the fourth most active provider in Switzerland year to date with 484 products marketed, CHF1.3bn in sales and 11% market share.

Julius Baer is being investigated by US authorities for allegedly helping wealthy North Americans evade taxes.

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