* To pay around 520 million Swiss francs for ING assets
* Purchase price seen in line with expectations
* Doubles Julius Baer Geneva presence; 10 pct client boost
* Asia sale "a few weeks away" - sources
* Baer shares rise 2 pct, ING shares up 2.8 pct
(Adds analyst comment, updates share prices)
By Saeed Azhar and Ben Berkowitz
SINGAPORE/GENEVA, Oct 7 Julius Baer BAER1.VX
will buy ING's ING.AS Swiss private banking assets for 520
million Swiss francs ($507 million), the European wealth
management industry's biggest deal since the crisis began.
Baer is paying about 2.3 percent of assets under management
(AUM) for the business excluding surplus capital, and about 3
percent including the surplus, roughly in line with expected
valuations. Before the financial crisis, similar deals attracted
prices above 5 percent of AUM.
"The Baer/ING deal was already expected. Strategically it
makes sense," a Zurich-based trader said. "They are paying 3
percent of assets, which is fairly attractive."
Baer shares were up 2 percent at 40 francs at 0743 GMT,
while shares in Dutch financial services group ING were up 2.8
percent at 11.995 euros. Last week the stock hit a year high
above 12 euros a share as anticipation of a deal with Baer grew.
Julius Baer is paying cash and expects the deal to generate
35 million francs in cost savings and to add to earnings from
2011. The ING unit has about 15 billion francs in assets under
management, including surplus capital of 170 million francs.
Baer recently built its war chest by listing its U.S. asset
management arm Artio ART.N. Last week it separated off asset
management arm GAM Holdings GAMH.VX in a bid to free itself up
for dealmaking. [ID:nN23405844]
Baer Chief Executive Boris Collardi had told the Reuters
Global Wealth Management Summit on Monday he was "hopeful" on
the outcome of the ING sale. [ID:nL5152640]
He also said he had turned down five to 10 deals over the
last year, indicating a cautious attitude to available assets.
Ranked after UBS UBSN.VX and Credit Suisse CSGN.VX as
the third biggest wealth manager in Switzerland, Baer is also
seeking to build Asia as a second major market.
With the deal, expected to close early in 2010, Julius Baer
said it would have 160 billion Swiss francs under management.
ASIA SALE WEEKS AWAY
ING said the deal would deliver 150 million euros of profit
and free up 250 million euros of capital. A source close to the
company's sale programme has said it expects the total package
of private banking assets to be sold, including its Asian wealth
management operations, to fetch nearly $2 billion.
"We are not very optimistic about the price of ING's Swiss
private banking activities, but expect better multiples for
ING's Asian private banking arm," SNS Securities analysts said
in a research note.
The sale of the Swiss assets came more than a month after
most bids for the private banking units were made on Sept. 3.
The sale of the Asian assets could take more time because of
regulatory issues, sources said.
"The Asian sale is a few weeks away," said one of the
sources, adding regulatory approvals from the Monetary Authority
of Singapore, the city-state's central bank, could take time.
HSBC is seen as a front-runner for these assets, while
Singapore's DBS Group (DBSM.SI) has also bid for the Asian
assets, sources have said.
"This signals that the consolidation phase has just begun in
the industry, and we are of the opinion that going forward we
will see many such deals coming through in the Asia Pacific
market," said Ravi Nawal, a senior analyst for wealth management
at consultant Celent.
HSBC's CEO of global private banking Chris Meares told the
Reuters Wealth Management Summit the bank had looked at ING
assets and described the proposed sale by the Dutch bank as a
rare opportunity in Asia. [ID:nSIN481800]
The sale process of the private banking units is part of
ING's restructuring drive to sell 6-8 billion euros in assets
and exit 10 of the 48 countries where it does business.
ING was advised on the deal by J.P. Morgan, while UBS
advised Julius Baer.
($1=1.025 Swiss Franc)
(Additional reporting by Jason Rhodes in Geneva and Nishant
Kumar in Mumbai; Editing by Lincoln Feast and Will Waterman)