UPDATE 2-Julius Baer closer to bid move on ING assets - sources

* Hires UBS to advise on possible bid for ING assets

* Baer keen on ING Private Bank's Swiss, Asia ops - analyst

* ING hopes to finalise sale by September - sources (Adds analyst quote, background on GAM)

By Saeed Azhar

SINGAPORE, Aug 13 (Reuters) - Julius Baer (BAER.VX) has hired fellow Swiss bank UBS (UBSN.VX) to advise on a possible bid for ING Groep's private banking units in Asia and Europe, signaling its seriousness about an acquisition, sources said on Thursday.

ING (ING.AS) is keen to divest its private banking operations except for those in Belgium, the Netherlands and Luxembourg, and hopes to complete the sale of the units for over $1 billion by September, sources with knowledge of the deal have told Reuters.

Julius Baer, Switzerland's third-biggest bank, has said in the past it is looking for acquisitions and a purchase of ING assets could strengthen its position in its core Swiss market and its newer emerging Asian markets.

"The addition of ING's operations in Asia would be a good and positive step for Julius Baer," said Tobias Bruetsch at Swiss bank Vontobel. "It would reduce its dependency on European clients and double its assets under management in the region."

Sources with knowledge of the deal told Reuters about UBS being hired by Julius Baer. A spokeswoman for Julius Baer in Singapore and a UBS spokesman in Hong Kong declined to comment.

Christian Stark, an analyst at European equity broker Cheuvreux, estimates ING's Swiss and Asian operations could fetch around 1.2 billion Swiss francs, based on a price tag of 3-4 percent of assets under management.

The planned divestment has, however, met with mixed response, with Barclays (BARC.L) among the banks that have dropped out of the race after showing initial interest, sources told Reuters last week. [ID:nL7427736]

Cheuvreux estimates ING's Swiss private bank currently manages about 15 billion Swiss francs in assets, while its Asian operations have about 18 billion Swiss francs.

FUNDING

Baer could use its own capital and raise funds from a likely listing of U.S. asset management unit Artio this year to fund the acquisition.

"With a Tier 1 ratio over 16 percent, they could raise about 350 million (Swiss francs) cash internally, so depending on the split of the Artio proceeds between GAM and the private bank, they should be able to generate a total of 1 to 1.2 billion internally," Vontobel analyst Bruetsch said.

Julius Baer earlier this year announced plans to split its private bank and asset management operations into two separately listed units, a move investors welcomed as shielding its cash-generating businesses from troubled hedge fund arm GAM.

Its core private banking activities would be listed under Julius Baer Group Ltd, while GAM, U.S. asset management unit Artio and Asset Management Europe would be combined into GAM Holding Ltd. [ID:nLK323613]

The planned sale of the private banking assets comes at a tough time for ING, which needed a 10 billion euro injection by the Dutch government after it was badly hit by the global financial crisis.

Private banking assets have lost the value they commanded before the financial crisis ended the last major boom for markets in 2007.

According to the annual Merrill Lynch/Capgemini World Wealth Report released in June, the world's rich lost a fifth of their wealth in 2008 and the number of people with fortunes of more than $1 million fell 15 percent as the financial crisis wiped out two years of growth.

On Wednesday ING reported a second-quarter profit that was much smaller than expectations, driven by a surprise loss in its banking business. The company reaffirmed the asset sale targets it set in April for 6 billion euros to 8 billion euros in asset sales over 3 to 5 years.

But it also said it hopes to start discussions soon with the European Commission on its restructuring plan -- which it cautioned could have an uncertain outcome. (Additional reporting by Jason Rhodes in Zurich and Ben Berkowitz in Amsterdam; Editing by Muralikumar Anantharaman)