Julius Baer Seeks Deal With U.S. Next Week, Sonntagszeitung Says

Industry:    2015-12-21

Julius Baer Group Ltd., Switzerland’s third-largest wealth manager, may have to pay more than it anticipated to settle a case with the U.S. Justice Department over American offshore accounts, the Swiss newspaper Sonntagszeitung reported, citing people familiar with the matter. U.S. prosecutors could ask Julius Baer to settle for much more than the $350 million earmarked by the bank for the case, the newspaper reported. Julius Baer spokesman Jan Vonder Muehll declined to talk about the newspaper’s report, saying the bank doesn’t comment on rumors. Representatives from Baer will meet with U.S. officials in the coming week for “decisive” negotiations, the newspaper said, without saying where it got the information. Julius Baer set aside $350 million in June to resolve the four-year investigation with the Justice Department. A month later, the company reported net income fell to 39 million Swiss francs ($39.3 million) from 178.3 million francs, mostly tied to the provision. Chief Executive Officer Boris Collardi said he’s “very hopeful” the tax dispute will be closed this year. Once the U.S. tax dispute is settled, Collardi could make further acquisitions. Julius Baer agreed to buy Commerzbank AG’s wealth management unit in Luxembourg and added to its stake in Italy’s Kairos Investment Management SpA to 80 percent. The bank may consider a bid for Barclay Plc’s Asia wealth unit , Reuters reported on Friday. “The article doesn’t say whether it is a final decision from the DoJ,” Jonas Floriani, a London-based analyst at Keefe, Bruyette & Woods, said by phone. The newspaper story is a negative for Julius Baer, he said. “The bank was showing confidence that the amount set aside as provision was enough.” In his view this may raise questions on the bank’s capital position and capability for mergers and acquisitions. He has an outperform rating on the stock.

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