Julius Baer to take over Macquarie's Asia pvt wealth portfolio

Swiss private bank Julius Baer agreed to buy the $1 billion Asian private wealth portfolio of Australia’s top investment bank Macquarie Group, in a sign of consolidation in Asia’s wealth management industry.

Macquarie’s retreat from private wealth management business underscores the challenges faced by smaller players and points to the impending consolidation in the fast-growing, yet fragmented industry in Asia.

Macquarie, which has private wealth offices in Singapore and Hong Kong, is a small player in Asia’s wealth management market, where industry leaders UBS and Citigroup collectively manage about $400 billion.

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The move comes at a time when the market turmoil dampens growth and rising regulatory and staffing costs threaten the survival of smaller players in the industry.

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The shake-up is likely to begin in the offshore banking centres of Singapore and Hong Kong, where European boutique banks and international players have made a beeline to challenge established leaders.

Under the agreement, Macquarie will provide investment banking services to Julius Baer. Macquarie will refer its clients to Baer for private banking services, the firms said in a statement.

“What it’s saying is Macquarie Bank’s probably the better investment banker and Julius Baer are a better asset manager. But it’s a very, very small business for Macquarie,” a Sydney-based analyst said.

“Julius Baer are a more logical owner of the private wealth management opportunity.”

The Swiss bank will pay a nominal amount for Macquarie’s private wealth business, said Angela Watkins, a Hong Kong-based spokeswoman for Julius Baer. She declined to disclose the amount.

Macquarie employs seven bankers at its private wealth offices in Singapore and Hong Kong, Watkins said, adding “there is every intention to retain staff”.

In Asia, Julius Baer has large operations in Singapore and Hong Kong that caters to both domestic and offshore clients, as well as an onshore presence in Jakarta for Indonesia’s wealthy.

The firm, which obtained the Qualified Foreign Institutional Investor (QFII) licence in China last December, has been granted a representative office licence in Shanghai. QFII licence allows foreign investors to buy domestic Chinese stocks, or China “A” shares.

It is considering starting an onshore office to target rich clients in India, part of a plan to expand in Asia’s top-two wealth markets by number of wealthy.

Julius Baer calls itself a pure-play wealth manager and unlike UBS or Credit Suisse, does not have an in-house investment bank.

But in Asia, investment banking is key for growth for wealth managers as more than 60 percent of the rich clients are business executives and they regularly seek corporate finance advice.

Many entrepreneurs are at an age when they are ready to transfer their businesses to their Western-educated children, who were more inclined to list the companies or partially sell them.

Reuters