UPDATE 3-J.Baer expects to woo more client money in H2

* First-half net new money 3.3 bln Swiss francs

* Assets under management 166 bln francs

* No material exposure to Greece, Spain

* Tier 1 ratio 22.8 percent, gross margin up to 107 bp

* Shares up 4.6 percent

(Adds comments on Greece, details on excess capital)

By Lisa Jucca

ZURICH, July 21 (BestGrowthStock) – Swiss private bank Julius Baer
(BAER.VX: ) sees continued new assets from wealthy clients in the
second half and is gearing up for new buys less than a year
after taking on some of ING’s (INS.AS: ) assets.

Baer said on Wednesday net new money, the key benchmark to
measure a private bank’s performance, was 3.3 billion Swiss
francs ($3.14 billion) despite an Italian tax amnesty and an
exit from U.S client business earlier this year.

This represented an annualised increase of 4.3 percent of
assets for Switzerland’s largest dedicated wealth manager, in
line with its target of a 4-6 percent rise.

“We should be able to keep the pace (in the second half),”
Chief Executive Officer Boris Collardi told a conference call,
even though he noted that activity was subdued in July as the
holiday season kicked in.

The bank also managed to improve its gross margins on assets
to 107 basis points thanks to improved client activity.

Baer’s chief said the trend in net new money improved in the
second quarter once the tax amnesty ended and as the ING
integration started to produce results.

Assets under management however fell to 166 billion Swiss
francs from 175 billion francs at the end of April, with assets
declining in June after a sharp drop in the euro, which resulted
in a hit of 4 billion francs.

Baer said the bank had no material exposure to Greece, Spain
and manageable exposure to Italy.

“The gross margin was the biggest surprise in these figures
considering the decline in client activity in the second
quarter,” said Helvea analyst Peter Thorne. “Net new money was
better than expected and just over the lower end of the 4-6
percent target range thanks to growth markets and with outflows
continuing in the traditional offshore business.”

Shares were up 4.6 percent at 0940 GMT, outperforming a 1.8
percent rise in the STOXX 600 European banking index (.SX7P: ).

“They are slightly ahead of consensus on most items,” said
Matthew Clark, an analyst with Keefe, Bruyette and Woods who had
expected net new inflows to reach 2.75 billion francs.


Baer, which completed in May the integration of ING’s
(ING.AS: ) Swiss private banking assets it bought last year, said
it was still optimistic about finding a new target, with a
preference for its core market Switzerland.

The private bank can rely on a healthy Tier 1 ratio of 22.8
percent, which shows the bank has a very stable capital position
and cash to spare.

“The easiest thing for us would be to find (a target) in
Switzerland,” Collardi said, adding that the bank would also
consider acquisitions in some of its key markets such as
Germany, Italy or Asia.

Julius Baer, which says it currently has excess capital of
1.3 billion francs that it could use for acquisitions, is
targeting at Tier 1 ratio of 12 percent. But it could raise it
if a proposal by Swiss regulator FINMA on a bank capital buffer
of at least 13 percent comes into force later this year.

Although clients remained overall conservative in their
investment approach, customers are starting to move out of cash.

“Clients are bored of sitting only on cash,” he said. “They
are not going in a big and sustainable way into new asset
classes, but we have seen a little bit of action.”

Baer split its core private bank and asset management
operations into two separately listed companies in 2009.

Investment Tools

(Additional reporting by Rupert Pretterklieber; Editing by
Sharon Lindores and Louise Heavens)
($1 = 1.052 Swiss francs)

UPDATE 3-J.Baer expects to woo more client money in H2