JULIUS Baer is in talks with Bank of America about buying Merrill Lynch’s non-US wealth management unit, valued at up to $2bn (£1.3bn), in what would be a massive deal for the acquisition-hungry Swiss private bank.
Consolidation in the wealth management industry has been a major theme since the 2008 financial crisis, as an increase in costs and regulation force some players to sell off units and others – like Baer – to seek to improve margins through scale.
“Given the early stage of these discussions, the outcome is entirely open,” Baer said yesterday.
A spokesman declined to say whether Baer was interested in buying the whole business or parts of it. Sources said last month it was keen on units in Europe, the Middle East, Latin America and Asia excluding Japan.
If Baer were to buy the business outright, it would increase assets under management by about 50 per cent from the SFr178bn (£119bn) that the bank reported at the end of April.
BAML put its wealth management unit outside the US up for sale in April as the business, which manages $90bn for rich clients, was not large enough to generate sufficient income.
Bank of America has been selling off non-core business units to build capital. The bank has trailed rivals in recovering from the financial crisis, largely because of losses and lawsuits tied to its 2008 acquisition of subprime mortgage lender Countrywide Financial.
City A.M. Reporter