Julius Baer’s decision to slash about 1,000 jobs following its purchase of Bank of America Merrill Lynch’s international wealth management operations will lead to lay-offs in Singapore and Hong Kong. Baer says the US firm will suffer most of the redundancies; and recruiters add that underperforming Merrill bankers in Asia are especially vulnerable.
The deal is expected to close in Q1 next year and the cuts will happen in stages after that. The Merrill wealth business outside of the US and Japan, which the Swiss firm has agreed to buy, made a first-half loss of $30.4m. Baer is now seeking to cut costs by reducing the post-merger combined headcount of about 5,700.
Merrill Lynch has about 100 financial advisors – its term for relationship managers – in Singapore and another 150 in Hong Kong, says Rahul Sen, executive director, Gibson Tullberg.
Only about 28 of them in Singapore and another 75 in Hong Kong are generating $1m or more in annual revenue – Baer’s minimum threshold – leaving nearly 150 others at risk, he adds. “We do see changes taking place within the Merrill lot going over to Julius Baer as they won’t all make the cut.”
So, any clients in common?
While revenue will drive most redundancy decisions, client duplication may help decide the fate of some. If a Baer banker shares too many clients with a Merrill transferee, one of their roles could be in jeopardy, says a Singapore headhunter who asked not to be named. “If the matter can’t be settled internally, then the firm may go to its clients and ask them who they’d prefer to deal with – this happened with Credit Suisse and Clariden Leu.”
Baer and Merrill shouldn’t suffer the same amount of duplication as Credit Suisse’s recent integration of its subsidiary Clariden Leu – neither of the former two banks have many China clients in common, for example. However, private banking recruiters point to Indonesia desks as being potential targets for cuts.
High-performing Merrill bankers with a ring-fenced set of clients are in a better position. “We have even heard that they will be given the same payout, or golden handcuffs, as the JB bankers,” says Sen. “This has angered quite a few JB people.”
Of course, not all of either side’s bankers will want to stay at the merged firm. Sen explains: “The cultures, systems and the DNA of both organisations are different. The question also arises whether existing JB bankers will feel short changed. In regions where their firm did not have a strong presence, they would benefit from the integration; but in Asia, where JB has a presence, there could be a mismatch.”
Baer has announced that some back- and middle-office staff will lose their jobs. Although, says Sen, this will not happen immediately because the product platforms are different and the migration of accounts will take time.