By Ariane Luthi and John Revill
ZURICH (Reuters) -Julius Baer said on Tuesday it had agreed to sell its Brazilian domestic wealth management business to Banco BTG Pactual, days before Stefan Bollinger takes over as chief executive after a difficult year for the Swiss bank.
Julius Baer said in a statement that the deal with BTG, which is worth 615 million Brazilian reais ($101 million), is expected to close in the first quarter of 2025. The bank said it would continue serving Brazilian clients from other locations.
Julius Baer’s Brazilian business – with offices in Sao Paulo, Belo Horizonte and Rio de Janeiro – had assets under management of 61 billion Brazilian reais as of Nov. 30.
Money raised from the sale will add 30 basis points to its CET1 capital ratio, Julius Baer said. BTG Pactual, meanwhile, noted the deal was part of its expansion strategy in the wealth segment.
Bollinger, who starts as Julius Baer CEO on Thursday, was appointed in July with a view to moving the bank on from a rough period in which large losses tied to loans to collapsed property group Signa led to his predecessor being ousted.
That was the latest damaging episode for a bank dating back to 1890, including paying $80 million in 2021 in a settlement with the U.S. Department of Justice after being implicated in a corruption probe surrounding soccer governing body FIFA.
Bank Vontobel analyst Andreas Venditti asked why Julius Baer was exiting a country that had been one of its focus markets.
“The press release mentions the need to further enhance investment capabilities and upgrade technology,” Venditti said. “It seems JB was not willing to do that.”
Luzerner Kantonalbank analyst Daniel Bosshard assessed the move more favourably, saying: “The transaction makes strategic sense and strengthens the capital ratio”.
Analysts at Zurcher Kantonalbank ZKB said that managing a key growth market from outside was brave but showed a focus on profitability. “We assume that the new CEO will have both easy successes and tougher nuts to crack,” they said.
For BTG, Citi analysts said, the acquisition is positive from a strategic standpoint. They cited the bank’s “positioning as a consolidator within the wealth management segment, particularly the high income segment or family office.”
Goldman Sachs noted that wealth management provides “an important source of recurring revenues” for BTG, saying the 61 billion reais managed by Julius Baer in Brazil represent 7% of the bank’s total wealth assets under management.
Sao Paulo-traded shares of BTG Pactual rose as much as 4.3% on Tuesday, before paring some gains. Brazil’s benchmark stock index Bovespa was up 1.2%.
($1 = 6.1152 reais)
(Reporting by John Revill and Ariane Luthi; additional reporting by Andre Romani in Sao Paulo; Editing by Miranda Murray, Tommy Reggiori Wilkes and Alexander Smith)
