Julius Baer misses profit view as U.S. tax probe weighs

Mon Feb 3, 2014 7:21am EST
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By Katharina Bart

ZURICH (Reuters) - Julius Baer BAER.VX suffered a double blow on Monday as yearly earnings fell short of expectations and clients transferring from recently acquired Merrill funds were set to reach only the low end of its target range.

Shares in the Zurich-based private bank, which had hit an all-time peak late last month, were down some 5 percent after the results and traded at 41.85 Swiss francs by 1210 GMT.

Baer posted a 19 percent rise in full-year earnings, missing expectations after legal fees relating to the U.S. probe of banks who allegedly helped rich Americans dodge taxes.

Underlying net profit, after stripping out integration, restructuring and other costs, rose to 480 million francs against forecasts of around 495 million, according to a Reuters poll of 12 banks and brokerages.

Baer also said it would hit the lower end of its target for the transfer of assets invested by former clients of Merrill Lynch's overseas wealth arm, which it bought in August 2012. Baer is presiding over a three-year integration during which it hopes to encourage as many ex-Merrill clients as possible to move their funds to the Swiss bank.

Baer took a 15 million Swiss franc legal provision relating to the U.S. tax investigation. It is one of 14 Swiss banks being targeted by U.S. prosecutors for allegedly offering hidden offshore accounts to help clients avoid taxes.

Baer, which hasn't put aside any funds towards a settlement in the U.S. probe, said it would like to reach agreement with U.S. prosecutors as soon as possible. "Whenever they call us, we're ready," Chief Executive Boris Collardi told journalists.

While Baer, Credit Suisse CSGN.VX and unlisted rivals such as Pictet are caught in the crosshairs of the U.S. probe, attention has shifted to the wider Swiss banking industry.   Continued...

A logo of the Swiss private bank Julius Baer is seen at the company's headquarters in Zurich, February 4, 2013. REUTERS/Michael Buholzer