UPDATE 3-J.Baer inflows slow as tax clampdowns bite

* FY net profit 473 mln Sfr vs 461 mln Sfr in poll

* Net new money 5 bln Sfr vs 5.5 bln Sfr in poll

* Dividend 0.40 Sfr, tier I capital ratio 24.2 pct

* CEO says no indication stolen client data stems from Baer

* Shares down 2.6 pct, in line with European banks

(Adds comments from analyst conference, updates shares)

By Jason Rhodes

ZURICH, Feb 5 (BestGrowthStock) – Swiss private bank Julius Baer
(BAER.VX: ) said its inflow of client money slowed last year as
international tax clampdowns caused many off-shore customers to
repatriate funds.

Baer has benefited from a torrent of client money gushing
from its larger, troubled Swiss rival UBS (UBSN.VX: )(UBS.N: ), and
inflows continued into 2010, but the slower rate experienced
last year could herald a more positive outlook for UBS.

Even so, full-year net profit rose 7 percent to 473 million
Swiss francs ($446 million), just ahead of expectations,
Switzerland’s third-biggest bank said, despite the client money
inflows reaching only the lower end of its target and missing

Inflows into Baer’s Asian business compensated for many
Italian clients taking advantage of an Italian government tax
amnesty and moving money home from Swiss branches in 2009, as
well as Baer’s phased exit from the U.S., prompted by the case
against UBS, which authorities there accused of helping tax

“The stock traded down to our target price over the last few
weeks. While it is now more adequately priced, risks are
mounting as well,” said Kepler Capital Markets analyst Mathias

“We continue to believe the stock will only deliver modest
returns over the next 12 months.”

Shares in Julius Baer traded 2.6 percent lower at 1044 GMT,
in line with the DJ Stoxx European banks index (.SX7P: ).

Continued international pressure on Swiss bank secrecy is
unlikely to relent any time soon, with Germany the latest
country to launch a broadside on its Alpine neighbour.

German Finance Minister Wolfgang Schaeuble sent shockwaves
through the Swiss private banking industry (Read more about the banking industry recovery.) this week when he
said Berlin was prepared to pay for stolen data belonging to
potential tax cheats at a Swiss bank. [ID:nLDE6101NM]

“We have no indication that these are Julius Baer data,”
said Chief Executive Boris Collardi. “We are reasonably
comfortable with our German exposure.”


Baer had a turbulent 2009, entrusting whizz-kid Boris
Collardi with transforming the group into a pure-play bank after
the suicide of Alex Widmer, his popular predecessor as chief
executive. [ID:nL1480209]

It and domestic rival Credit Suisse (CSGN.VX: ) have benefited
from customers jumping ship from UBS after its U.S. tax dispute
and the biggest loss in Swiss corporate history.

Baer’s slowing inflows could indicate UBS is turning the
corner, even if the negative headlines are not completely over
yet for its beleaguered larger rival. UBS and Credit Suisse
reveal full-year results next week.[ID:nLDE6121XL]

Tier I capital ratio was 24.2 percent at the end of the
year, double its target, showing its capital position remained
very robust under the stewardship of Collardi, who stamped his
mark on the bank by grabbing ING’s (ING.AS: ) Swiss private
banking assets for 520 million francs in October.

Baer has said it will use its cash pile for further
acquisitions in Europe or Asia and raise new capital if
necessary to fund a bigger buy.

“Right now our focus is on Switzerland as a consolidation
place, but not necessarily on adding a high concentration of
offshore European clients at one go,” said Collardi, adding Baer
would also consider targets in the rest of Europe and Asia.

“We anticipate 2010 being a very active M&A market,” he

The bank said it would pay a dividend of 0.40 Swiss francs,
reflecting a flat dividend policy taking into account the
spin-off of asset management arm GAM (GAMH.VX: ) last year.

Baer would, however, refrain from share buybacks in the near
future, in favour of retaining the financial flexibility offered
by its strong capital position, said Chief Financial Officer
Dieter Enkelmann.

It would also continue to hire new relationship managers,
who bring with them the highly sought cash of their clients,
after poaching 48 client advisers in 2009, despite this being a
difficult year to find quality new staff, Collardi said.

Investing Advice

(Additional reporting by Sam Cage, editing by Will Waterman)
($1=1.060 Swiss Franc)

UPDATE 3-J.Baer inflows slow as tax clampdowns bite