Julius Baer Shares Decline Amid Increased Speculation Over EFG Deal

EFG International AG shares surged following reports of market speculation that Julius Baer Group Ltd. might soon announce a takeover of its rival.

The private bank’s shares rose by as much as 10% and were temporarily halted on Thursday due to excessive volatility, following a report by Inside Paradeplatz suggesting an announcement could come on Friday after the market closes. Meanwhile, Julius Baer shares fell by as much as 6.7% after the report.

Representatives for both EFG and Julius Baer declined to comment when contacted by Bloomberg News.

In late May, Bloomberg reported that Zurich-based Julius Baer had held preliminary discussions with EFG about a potential merger, according to sources familiar with the matter. These talks have been intermittent, and there is no certainty they will result in a transaction.

A merger between the two banks would create a wealth manager with over 500 billion Swiss francs ($561 billion) in assets under management, further transforming the Swiss financial industry following UBS Group AG’s emergency takeover of Credit Suisse last year.

Analysts are divided over the speculation. KBW’s Thomas Hallett, in a note titled “This Time Feels Different,” said a deal would “make financial sense.” He estimated a purchase price of 4.5 billion Swiss francs and projected 30% in cost savings, leading to a 10% return on investment by 2027.

Hallett also noted that a merger could address Julius Baer’s search for a permanent CEO after Philipp Rickenbacher’s departure, suggesting EFG CEO Giorgio Pradelli as a possible candidate. Rickenbacher stepped down earlier this year due to the bank’s exposure to the Signa property empire.

KBW also mentioned that investors might welcome the return of former Julius Baer CEO Boris Collardi “in some capacity.” Collardi joined EFG’s board in 2022.

Conversely, Citigroup analyst Nicholas Herman noted that Julius Baer’s share price drop reflected concerns over unattractive returns from the potential deal, along with possible departures of relationship managers and client assets.