Julius Baer Ditches Brazil's Wealth Management Biz for CHF 91M, Ceding to BTG Pactual
News from Zurich by Reuters
BTG Pactual acquires Julius Bär's Brazilian operations
Private banking heavyweight Julius Baer sells off its wealth management business in Brazil to Banco BTG Pactual for approximately 91 million Swiss francs. The high-end financial services outfit made the announcement on Tuesday, with BTG Pactual set to take over Julius Baer Brazil, which boasts around 9 billion Swiss francs in assets under management across offices in São Paulo, Belo Horizonte, and Rio de Janeiro. As of October's end, the group managed a colossal 480 billion Swiss francs worldwide. Regulatory approval is the final hurdle, with the deal expected to close by the first quarter of 2025.
Carlos Recoder, head of the Americas and Iberia business for Julius Baer, revealed the bank had evaluated its Brazilian operations for over a year and concluded that offloading it to BTG Pactual offered the most promising solution. Investment pump and IT modernization were identified as key drivers for expansion, Recoder suggested.
Offshoring the Action
Julius Baer's presence in Brazil is limited to a non-banking license, preventing the local recording of assets. The Swiss institution will persist in serving Brazilian clients from other locations, primarily elsewhere in the Americas & Iberia region, where it maintains a footprint in Mexico, Chile, Uruguay, Colombia, and Spain. According to ZKB analyst Michael Klien, this switch to offshore service reflects the emphasis on profitability.
Battles for Baer
Sources close to the situation hinted that BTG Pactual and local financial institution XP Investimentos submitted the two strongest bids for Julius Baer Brazil. Santander and Safra also submitted offers. Neither XP, Santander, nor Safra commented on the matter. The source added that Julius Baer had estimated the business to be worth more than the price eventually obtained. Goldman Sachs facilitated the transaction's orchestration.
[1] Currency conversion: 106.8 million USD to 91 million Swiss francs (approximately 1 USD = 1.08 Swiss francs)[2] Capital Ratio: A measure of a bank's solvency and ability to meet obligations[3] Assets under management (AUM): The total amount of assets managed for clients by an investment firm or manager.
- By 2025, Julius Baer expects the sale of its Brazilian wealth management business to Banco BTG Pactual to contribute to its global assets under management, which currently stands at 480 billion Swiss francs, growing further.
- The shift in Julius Baer's service approach towards offshoring its Brazilian operations, despite selling the business to BTG Pactual, indicates a focus on profitability, with the bank continuing to serve Brazilian clients from other locations in the Americas & Iberia region.
- In the competitive bid for Julius Baer Brazil, local financial institution XP Investimentos andBTG Pactual emerged as the two strongest contenders, accompanied by Santander and Safra, although the exact bid amounts and the rationale behind XP, Santander, and Safra's decisions not to comment on the matter remain undisclosed.
