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July 21, 2014
06:19 EDTJBAXYJulius Baer, Bank Leumi enter agreement
Julius Baer and Bank Leumi announced that they have entered into a strategic cooperation agreement. Under the agreement, Leumi will refer clients with international private banking needs to Julius Baer, while Julius Baer will refer clients to Leumiís domestic banking services in Israel. In addition, Leumi has also decided it will exit their Swiss- and Luxembourg-based private banking businesses and will transfer its respective international private banking clients to Julius Baer. In Switzerland this will be in the form of a business transfer from Leumi Private Bank, while in Luxembourg the intention of the parties is that Julius Baer will purchase Leumiís local subsidiary, Bank Leumi. LPB and Julius Baer will cooperate closely to ensure a seamless transfer of the majority of the client relationships in Switzerland, including the transfer of associated RMs and staff required to ensure the continuity of the client business. The transfer of the client assets is expected to be concluded by the end of 2015, with the majority to be transferred by the end of 2014 to early 2015. The targeted acquisition of Leumi Lux by Julius Baer is expected to be completed by the end of 1Q15, subject to regulatory approvals. Following the closing, the entity is expected to be combined with the local investment advisory business of Julius Baer. The service offering to clients of both Julius Baer and Leumi is expected to benefit from the strategic cooperation and the resulting transactions. The total transaction goodwill payable is CHF 10M in cash. The capital impact from the transfer of the Swiss-based business is expected to amount to between CHF 60M and CHF 70M assuming that 75% of the client assets will transfer. The transaction in Switzerland is expected to be EPS neutral in 2015 and should result in a low single-digit percentage accretion from 2016.
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