UPDATE 1-Julius Baer to buy 20 pct of Italy's Kairos

Mon Nov 12, 2012 1:28am EST

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* Baer, Kairos to create a leading onshore wealth manager in Italy

* Parties have also agreed to set up a new private bank in Italy (Adds Baer CEO comment, details, background)

ZURICH Nov 12 (Reuters) - Swiss wealth manager Julius Baer said on Monday it will buy 19.9 percent of Italy's Kairos Investment Management as part of a deal between the two firms to create a leading onshore wealth management group in Italy.

Following regulatory approval, expected in the first half of 2013, the parties have also agreed to set up a new private bank in Italy by separately applying for a banking licence after the closing of the transaction.

"Thanks to our strategic participation, we will increase our presence in the domestic Italian wealth management market," said Baer CEO Boris Collardi in a statement. "This move underlines our commitment to further grow and develop our business in Italy."

Baer said the parties will decide whether Julius Baer will increase its strategic participation in Kairos after a few years.

Kairos manages around 4.5 billion euros ($5.7 billion) and employs around 115 staff. Baer managed assets of 184 billion Swiss francs ($194 billion) at the end of August 2012.

Last month Baer said it planned a "significant reduction" of overlapping positions after buying Bank of America Merrill Lynch's international wealth management business, reducing the combined staff of about 5,700 by 15-18 percent. ($1 = 0.7868 euros) ($1 = 0.9489 Swiss francs) (Reporting by Martin de Sa'Pinto; Editing by Richard Pullin)

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