Baer Jumps on Bets U.S. Fine to Be Lower Than Estimated
Julius Baer Group Ltd. rose the most in four months in Zurich trading on speculation a U.S. fine for helping Americans avoid taxes will be lower than analysts had estimated.
Switzerland’s third-largest wealth manager said on Tuesday it will take a provision of $350 million this month to settle the U.S. criminal investigation into the matter.
“Julius Baer will be relieved to settle this matter and a total fine of $350 million would be lower than consensus expectations, if indeed that is the final amount,” said Jonas Floriani, a London-based analyst with Keefe, Bruyette & Woods.
The shares climbed as much as 5.8 percent, the biggest increase since Feb. 2, and were 3 percent higher at 53.10 francs at 12:40 p.m. in Zurich.
While the bank said there is no timetable for a settlement, two people familiar with the matter said a resolution is at least several weeks away. The negotiations involve U.S. prosecutors in the Southern District of New York and the Justice Department’s tax division, according to the people, who requested anonymity because the matter isn’t public.
‘Preliminary Assessment’
Julius Baer is one of about a dozen Swiss banks facing criminal probes into whether they helped Americans hide money offshore. UBS Group AG paid $780 million to resolve a case in 2009, and a unit of Credit Suisse Group AG pleaded guilty and paid $2.6 billion to U.S. authorities in May 2014.
“These settlement discussions have now sufficiently advanced to enable Julius Baer to make a preliminary assessment of a probable and approximate amount required to reach a settlement with the DoJ,” the Zurich-based bank said in the statement.
The provision announced by the bank is at the lower end of expectations and removes “considerable uncertainty” over the extent of excess capital and the company’s acquisition options, Nomura International Plc analyst Jon Peace said in a report.
An additional 106 Swiss banks signed up to avoid prosecution under a disclosure program that requires them to say how they helped Americans avoid taxes. So far, 13 have secured non-prosecution agreements, paying combined penalties of about $266 million.
More Purchases
The Justice Department hasn’t asked Julius Baer to plead guilty, Jan Vonder Muehll, a spokesman for the bank, said by telephone. He declined to comment on the details or the timing of any settlement.
A Justice Department spokeswoman, Nicole Navas, declined to comment on the talks.
Julius Baer has been cooperating for about four years with U.S. authorities. It previously set aside about 80 million Swiss francs ($86 million) for expenses such as legal fees.
Paying $350 million in a settlement would leave the bank with capital to make more acquisitions, according to Tim Dawson, a Geneva-based analyst with Baader-Helvea.
The company is integrating Merrill Lynch wealth units purchased from Bank of America Corp. in 2012 and has said it’s interested in making further purchases.
