Julius Baer: grinning and bearing it
Asia is vital to the wealth manager’s revenue growth. It is right not to hold back
The mood music is hardly auspicious. China’s economic growth is slowing, the renminbi devaluation and emerging market turmoil are still raw. Yet on the day that luxury goods group Richemont reported lower watch sales to retailers in Asia, another Swiss company that plies its trade in that well-heeled arena — wealth manager Julius Baer — boldly talked of expansion in China.
It is right to be bold. The bank’s boss, Boris Collardi, is merely bucking a gloomy narrative. The latent promise in China and Asian markets is not lost on him or his rivals. Much bigger Swiss wealth manager UBS is well-established in Asia’s growth markets. Credit Suisse wants to boost its share there. It is no surprise that Mr Collardi tells Bloomberg he is up for direct stakes or further partnerships in China.
Is three a crowd, or is there room for the Swiss trio? Julius Baer thinks there is: in-house figures point to the wealth of rich clients in China rising to $8.25tn by 2020, from $4.8tn this year. Its investors seem to agree: as a pure-play wealth manager it trades on more than 4 times tangible book value (wealth manager-cum-investment bank UBS is on 1.5 times). Shares in emerging market fund managers such as Aberdeen Asset Management and Ashmore may have sold off, but Julius Baer’s have weathered both the sell-off and the Swiss franc shock better.
Last month the bank said the market turbulence had not had a “meaningful impact” on its Asian franchise. Clients domiciled in Asia, which Julius Baer calls its “second home”, still account for almost a quarter of total AUM.
Julius Baer can be more agile than its big rivals. Its acquisition of Merrill Lynch’s non-US wealth management business has strengthened its Asian toehold. And it has enough capital wiggle room for bolt-on deals — or a bigger payout. Faced with so-so growth in developed markets, Asia is vital to Julius Baer’s revenue growth. It is right not to hold back