UPDATE 2-Baer H1 assets under management fall, pressure shares

(Releads on AUM, adds more details, analysts, share price)

By Sam Cage

ZURICH, July 23 (Reuters) - Swiss bank Julius Baer's (BAER.VX) assets under management fell 10 percent in the first half, hurt by financial market turmoil, missing expectations and hitting shares.

Baer, Switzerland's third-biggest bank for the rich, said its assets under management declined to 364 billion Swiss francs ($358.3 billion) at the end of June, when compared to the end of 2007.

Baer said it did not experience any losses related to the credit and liquidity crisis, though tough equity and debt market conditions and the strong franc hurt its asset base.

Shares fell 2.8 percent to 65.15 francs by 0806 GMT, underperforming a 3.1 percent rise in the DJ Stoxx European banking sector .SX7P.

Net new money at Baer halved from a year ago, hit by market turmoil and the strong franc, though it comfortably beat forecasts. First-half net profit fell 2 percent to 510 million francs, also beating forecasts.

"Although the profit was convicing, the results have to be viewed rather critically," Wegelin analysts said in a note.

Savers entrusted Baer with 10 billion francs ($9.84 billion) in the first half, more new money than expected, suggesting it is benefiting from wealthy clients leaving bigger rivals such as UBS (UBSN.VX).

The net new money was outweighed by a negative market performance of 32 billion and a negative currency impact of 19 billion, the bank said.

"Although AUM and operating income are retreating more than expected, the bottom-line is within our/consensus expectations. As we expect a difficult H2, we keep our Reduce rating," Landsbanki Kepler analyst Mathias Bueeler said.

DE GIER TO GO

Baer also said Johannes de Gier would retire as group chief executive but continue as executive chairman of its GAM hedge fund.

The role of group CEO would be eliminated and its three units -- Bank Julius Baer, GAM and Artio Global -- would continue to operate as independently managed companies.

Baer is seen by many conservative savers as a safe alternative to larger banks like UBS AG (UBSN.VX), Europe's hardest-hit victim of the global financial crisis, and Credit Suisse Group AG (CSGN.VX), which has suffered in the fallout.

Baer said it intends to list its U.S. asset management business Artio Global when market conditions allow, ideally within six months.

Baer trades at about 14 times forecast 2009 earnings, a premium to an average of 7 for the European banking sector .SX7P thanks to its strength in wealth management, which is not as exposed to subprime mortgage debt.

The bank had been expected to post first-half net profit of 488 million francs and assets under management of 380 billion, according to a Reuters survey. (Additional reporting by Oliver Hirt; Editing by Louise Ireland)