Julius Baer Group has agreed to buy Commerzbank’s Luxembourg-based private banking wing in a deal which will see it raking in an extra €3 billion in assets.

The Swiss private banking group is likely to pay around €68 million for the privilege, if €25 million of regulatory capital is part of the transaction. Julius Baer has also said it anticipates around €20 million in integration and restructuring costs.

Expected to boost Julius Baer’s assets under management in Luxembourg to around $5 billion, the deal will go through in mid-2016.

Temenos teamwork

Julius Baer finalised a lengthy core banking selection process in early 2015, opting for Temenos and its T24 offering. Temenos beat off competition from rival Avaloq in the final round of the process, and came at a time when the vendor’s shares were taking a dip.

This T24 selection played a crucial role in this latest acquisition. Commerzbank Luxembourg being a fellow user of the Temenos system, staff in its IT team had the ‘relevant expertise’ with the platform to aid Julius Baer in its T24 implementations globally.

T24 is being implemented initially in the Asian region, replacing legacy systems such as ERI’s Olympic, in use in Julius Baer’s Singapore and Hong Kong locations.

The anticipated completion date for the roll-out in Asia is expected to be 2017, after which the Swiss firm will look into further implementations in other regions across the globe.

Strong implementation

Boris Collardi, chief executive of Julius Baer, says the deal with Commerzbank Luxembourg ‘strengthens the implementation of our global banking project by aligning Europe with our Swiss and Asian platform strategy’ and that the extra expertise afforded to the company will reduce execution risk.

The bank has been expanding with a number of mergers, including that of asset manager Fransad Gestion SA, Bank Leumi’s subsidiaries in Luxembourg and Switzerland (which also happen to be Temenos’ T24 users) and Merrill Lynch’s International Wealth Management business.

Despite this, the bank revealed that its gross margin had narrowed at the end of October 2015 and its client inflow had dropped by 2%.