Swiss private-banking group Julius Baer Group Ltd. (JBAXY.PK,JBARF.PK) on Tuesday confirmed that it is in talks with Bank of America Corp. (BAC: Quote) for buying Merrill Lynch's international wealth management business outside the United States.
"Given the early stage of these discussions, the outcome is entirely open," the company said in its statement.
On Monday, CNBC had reported, citing a person familiar with the matter, that Bank of America is in advanced talks to sell its overseas wealth-management unit to Julius Baer for $1.5 billion - $2 billion.
In April, Bank of America reportedly put its entire non-domestic wealth management business, with the exception of its Japanese division, up for sale. The business manages about $90 billion for rich clients.
Bank of America has been cutting jobs and selling non-core business units as part of its efforts to reduce costs and bolster capital.
In early May, reports said that the U.S. banking giant was planning to eliminate around 2,000 positions in its investment banking, commercial banking and non-U.S. wealth-management arms, which were expanded significantly after the purchase of Merrill Lynch & Co. in 2009. This cut was in addition to last year's announcement of eliminating 30,000 jobs over three years in the consumer banking divisions.
Financial services institutions are faced with the sluggish economy and the federal regulations. Last month, BofA reported a significant drop in first-quarter profit as it took hefty accounting costs related to valuation of its credit spreads. Revenues also declined from the prior year.
A sale of the non-U.S. wealth-management unit would enable the bank to raise additional cash.
For Julius Baer, an acquisition of Bank of America's overseas wealth-management unit would significantly boost its presence in Asia and Latin America.
Julius Baer, which manages assets of roughly $187 billion, is Switzerland's biggest private bank. The company is among the 11 banks targeted by the U.S. authorities investigating alleged assistance in helping their citizens evade tax.
BAC closed Monday's trading at $7.76, down $0.14 or 1.77 percent on a volume of 140.32 million shares.
JBAXY.PK closed Monday's trading at $6.74, down $0.16 or 2.32 percent on a volume of 9,722 shares.
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by RTT Staff Writer
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