Julius Baer Buys ING Swiss Private Bank For CHF520 Million; CHF15 Billion Assets

Swiss bank Julius Baer Holding AG (BAER.VX) said Wednesday it will buy Dutch ING Groep NV's (ING) private bank in Switzerland to strengthen its position at home and in growth markets, adding 15 billion Swiss francs ($14.56 billion) in client assets.

Zurich-based Julius Baer said it will pay CHF520 million ($504.9 million) in cash for the assets, including CHF170 million in surplus capital. The bank expects the acquisition to begin adding "strongly" to earnings-per-share from 2011 onwards. The Swiss bank flagged CHF65 million in integration costs - two-thirds of which are to be booked against 2010 earnings - and expects CHF35 million yearly in synergies before taxes from combining information technology and back-office activities, as well as cutting some staff.

"We are pleased to add significant scale to our domestic and European platforms while strengthening our business in Central and Eastern Europe, Russia and other growth markets," Julius Baer Chief Executive Boris Collardi said in a statement.

For Julius Baer, which has weathered the financial crisis better and with a far more comfortable capital cushion than larger, more diversified rivals such as UBS AG (UBS), the purchase represents the fulfillment of a strategy to bulk-up through acquisitions.

For ING, the deal - which according to people familiar with the matter was far more hotly contested than expected - is a further step towards freeing up capital in order to cut government ties after a financial lifeline last October.

Two weeks ago, ING sold a 51% stake in a joint venture for wealth management and life insurance in Australia and New Zealand for EUR1.1 billion.

ING CEO Jan Hommen said at the company's second-quarter earnings that ING intends to sell EUR6 billion to EUR8 billion euros in assets to help pay down EUR10 billion it received from the Dutch government last October to underpin its core capital.

Julius Baer sees the deal closing in the first quarter.

Company Web sites: http://www.juliusbaer.com

http://www.ing.com

-By Katharina Bart, Dow Jones Newswires; [phone]; [e-mail]

(Anna Marij van der Meulen in Amsterdam contributed to this report.)