Reuters: Regulatory News: UPDATE 1-Julius Baer H1 profit rises, Merrill deal costs rise

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UPDATE 1-Julius Baer H1 profit rises, Merrill deal costs rise Jul 22nd 2013, 05:53 Mon Jul 22, 2013 1:53am EDT * Net profit attributable to shareholders 152.1 mln Sfr vs 212.8 mln Sfr * Julius Baer says Swiss govt move on US tax probe "helpful" * Bank lifts Merrill Lynch deal integration costs by 55 mln Sfr ZURICH, July 22 (Reuters) - Julius Baer adjusted net profit rose more than 25 percent in the first half, beating analyst estimates as increased client activity lifted operating income and gross margins. The company said on Monday adjusted net profit stood at 261 million Swiss francs ($277.48 million), ahead of estimates for 238 million francs in a poll of analysts surveyed by Reuters. The Swiss private bank, which is being investigated by U.S. authorities cracking down on tax evasion, described as "helpful" measures announced by the Swiss government earlier this month to help Swiss banks including Baer to cooperate with U.S. authorities. Strict bank secrecy, which helped Switzerland build a $2 trillion offshore industry, is under fierce attack as cash-strapped governments get tough on tax evaders, with Swiss banks under investigation in Germany, France and the United States. Baer is one of the more prominent Swiss banks being looked at by prosecutors for helping wealthy Americans evade their tax obligations by offering them hidden Swiss offshore accounts. It did not elaborate on the status of negotiations with U.S. officials. Stripping out acquisition and other costs, net profit for the first six months dropped to 152.1 million francs, from 212.8 million francs year-ago. Baer said it would spend more than initially budgeted to integrate last year's acquisition of Bank of America Merrill Lynch's overseas private bank. The bank raised its target for deal, restructuring and integration costs to roughly 455 million francs, from 400 million francs previously. "This is mainly the result of higher estimated costs related to the client onboarding process," Baer said in a statement. The pace of private banking hiring - and with it fresh funds won from clients - slowed as Baer integrated last year's 860 million Swiss franc ($914.31 million)acquisition of Bank of America Merrill Lynch's overseas private bank. Net new money - a key bellwether of future revenue - stood at 3.4 billion francs, which translates to a rate of 3.6 percent growth, undershooting its target. Baer had warned in May that net new client money could skim the lower end of its 2013 target of 4 to 6 percent growth, as various crackdowns on undeclared funds held in Switzerland spur withdrawals. Link this Share this Digg this Email Reprints

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