Julius Baer happy in second home

Swiss bank Julius Baer, which manages SFr166bn (€180bn), started to build up its Asian franchise five years ago in the belief that dynamic growth in the Far East would change the fortunes not just of the bank itself, but the entire world.

“Looking back, that is exactly what has happened and we were proven right in that assumption,” says the CEO of the bank’s Asian operation, Hong Kong-based Thomas Meier.

“You need to be close to the action in order to make an impact,” he adds, stating the reason why quoted bank Julius Baer is hiring many client advisers across the region.

“Asia will play a significant role in Bank Julius Baer, so it is natural for it to be our second home,” says Mr Meier, commenting on an announcement in 2009 from Zurich-based chief executive Boris Collardi that the business generated from Hong Kong and Singapore would be regarded as important as the domestic strategy in Switzerland. Mr Collardi himself spent five years in Singapore during a previous role with Credit Suisse.

Unlike competitors, who have long desired Asian penetration, but with minimal resources, Julius Baer has 500 staff in Asia, 400 of them in Hong Kong and the rest in Singapore. “In order for it to be your second home, you have to be a certain size,” says Mr Meier. “Our approach is that we want to source 25 per cent of our total book of assets from Asia.”

Julius Baer is looking for a market defining 50:1 ratio of clients to advisers, in order to fulfil these promises.

There is a dual approach here with the twin hubs of Hong Kong and Singapore being used to woo regional clients. Hong Kong is very much the centre for business from North Asia and greater China, where the main part of wealth is generated from IPOs, with these areas expected to eventually account for the majority of growth.

Singapore is the hub for South East Asia, where Mr Meier hopes growth can be captured by his private banking business model.

“If you are going to see GDP growth of 6 to 9 per cent in Indonesia, that will automatically translate into wealth which needs to be managed,” he says. “We have individual teams which take care of this wealth creation. Obviously there are certain geographies we are focused on. Indonesia is a key market, where we have an advisory capacity.”

BACK OFFICE

Singapore is increasingly being used by wealth managers, including Julius Baer, as a home for back office machinery and staff. “What we are using Singapore for is as an outsourcing arrangement to give us support from an IT and operations point of view, so that we don’t duplicate things,” says Mr Meier.

The move and strategy was made possible by the purchase in 2005 of three smaller Swiss private banks, including Banco di Lugano, which had a branch office in Singapore since 2002, originally used as a platform for Italian-speaking clients.

“That helped with speed in terms of building a footprint,” confirms Mr Meier. Although Asian clients had not previously used the platform, it was quickly adjusted so that clients across Northern Asia could use the facilities, without the bank having to go through any further regulatory stresses.

“We changed the offering and platform in a way that could service Asian clients that have investment needs,” says Mr Meier. “We are not talking about investing in Nestlé and other Swiss groups, but giving them access to Asian underlyings such as Petronas.”

While Singapore and Hong Kong have a central place in the Swiss bank’s Asian growth strategy, careful consideration is also being applied to how to best service the Chinese onshore market. A licence for a representative office is currently under application with the Chinese authorities.

“It’s about having credibility in the market,” says Mr Meier. “Through physical presence, even if it is just a rep office, you have already started a dialogue with the Chinese regulator.”

This will not be an easy process by any means and the Julius Baer group is clearly prepared for the challenges ahead. “What you can do in Hong Kong, you can’t necessarily replicate in China,” believes Mr Meier.

“You will have convergence between private banking and the securities side for wealth advisory and wealth management work, which currently does not exist in a form we find conducive.”

Julius Baer has 500 staff in Hong Kong and Singapore combined and is looking for a market defining 50:1 ratio of clients to advisers

Thomas Meier, Julius Baer