Julius Baer's CEO Boris Collardi talks growth plans

Julius Baer's CEO, Boris Collardi, plans to grow the private bank and considers Asia its second home market behind Switzerland.
Andrea Benenati, Boris Collardi and Thomas Meier
Andrea Benenati, Boris Collardi and Thomas Meier

Boris Collardi, the 35-year-old CEO of the Swiss private bank Julius Baer, was recently in Hong Kong to meet with clients and his bankers here to discuss their future -- which may include Julius Baer's Hong Kong office becoming a bank branch. He talks about the bank's plans for Asia.

Julius Baer is often quoted as a potential consolidator within the private banking industry. Which regions are the most attractive and have the most potential? 
You're right, different markets have different trends in terms of consolidation. For example in Switzerland there are different tiers of banks. One tier of banks that has come under strong pressure are the European banks who have part of their headquarters or branches in Switzerland, such as Commerzbank, Dresdner, and of course ING, where for a variety of reasons, they have to sell their businesses. We have seen a de facto consolidation of the private banking industry within the Swiss market because there are sellers at reasonable prices. 

Now there are fewer buyers than there were maybe 12 or 24 months ago, so it is a very interesting consolidation play in Switzerland, especially for players such as Julius Baer. We are experiencing a buyers' market and can afford to choose what we would like to buy. There isn't a week that we don't receive a new file of an organisation or unit that is for sale. 

We are very selective. This is because it is not just a question of financial resources and having available capital, it's also a question of committing the entire organisation's resources. One must consider the opportunity cost of doing a deal, or passing it by. 

Obviously, if you do a deal that was not the best deal that you could have had in a relevant period you tie up your resources and you cannot do the next deal. So it is very important when we look at things to select the right deal. 

How do you determine which is the right deal in a market?
It starts with the size. For Julius Baer, when we look at what is being offered it is a case of, "the bigger the better" at this time. That is because the effort required in acquiring and consolidating a bank that is worth $5 billion, $15 billion, or $50 billion, is pretty much the same.

The second thing we look at is client diversification and client portfolios. 

You found one case that was interesting this year, tell us about ING. 
ING Bank (Switzerland) is a very interesting bank, because they obviously have some typical European clients, but a substantial part of clients were leveraging from the global ING network. They have a very nice book of Middle East, Eastern European and Latin American clients. In summary, that deal was ideal: it's a nice size - about $15 billion; it's nicely diversified with clients from different geographies; and it was available at a reasonable price.

It was synergetic for us, because it is in Switzerland. We could do the deal today, and tomorrow we could incorporate the platform with the people, and their head office. Additionally, the price that we paid offers a higher rate of return for our shareholders than if we were doing a share buyback right now.  

What aspirations do you have outside Europe, particularly in Asia? 
Where I think Julius Baer has done extremely well in the past three years is that it diversified into emerging markets. We built up our presence in Latin America and the Middle East, and started hiring more aggressively in Eastern Europe. These are all very important markets, but they could be described as 'second tier' compared to what we have committed to do in Asia. 

For us, Asia is our second home market behind Switzerland. This is really important. This is a vital means of diversifying our portfolio and we believe we can do it in Asia better than anywhere else for three reasons:

First of all, Swiss banks and Swiss private bankers have been in Asia for a long time. Asian clients understand the Swiss way of private banking, they understand that this is a very highly efficient model of private banking and Swiss private bankers understand Asia quite well. 

Secondly, the growth rate is the strongest among the emerging market regions.

Thirdly, Julius Baer has just had a very successful first three-year phase of growth. We are now an established player here in Asia.  We have been awarded for our excellence in advice. [Julius Baer also won FinanceAsia's Best Private Bank award in 2008 and 2009.] We have more than 300 great professionals. Our executive board member, Thomas Meier is now based in Singapore. We have a 'centre of excellence' here in Asia. 

Our Asia enterprise continues to develop, providing first-rate customer solutions to our new and existing clients here. This is definitely one region that is key for us, and outside of Switzerland, it will be the focus of further investment. 

It seems you have ambitious goals for Asia, does this include an acquisition?
We would love to have had M&A opportunities in Asia but because it seems that everybody wants to be in Asia, prices are relatively high. Asia is a seller's market -- quite simply there is nothing to buy. The one opportunity that came onto the market so far did not actively fulfil our acquisition criteria.

In Asia we would love to have a deal in one form or another, but right now, we can organically grow nicely during the next few years.

I am here in Hong Kong to review our road map for the next three years with Andrea Benenati, CEO of North Asia. In the words of Lao Tzu: 'The journey of a thousand miles begins with a single step'.  We are starting this journey and will apply for branch status in Hong Kong.

During the next three to five years, depending on how the markets perform, we expect Asia's asset base to grow clearly faster than the rest of our group.

Julius Baer is known for its position as the largest of the pure private bank organisations in Switzerland. Is there a chance you will become too big?
The essence of our growth strategy is to not grow just in terms of size, or simply for the sake of it. Our growth is qualitative growth, and we have and hire the right people to embark on this growth with us. 

As of October, we had SFr150 billion ($147.4 billion) of assets under management, not including ING's SFr15 billion. Our group-wide net new money goal during the next three years is 4% to 6% with Asia contributing a multiple. We will grow organically, and there may be more M&A opportunities. It remains our priority to grow at a rate that ensures our RMs [relationship managers] can continue to provide outstanding service to their clients. 

We hold to our status that "we are big enough to matter, and small enough to care", and we wish to maintain this.

Finally, you're a bit young to be a CEO of a private bank -- an industry that often seems to equate age with experience. How do clients and bankers react when they see you?
I don't feel uncomfortable, about my age, actually quite to the contrary; it's probably a good asset right now to have a lot of stamina. 

Basically if you start working relatively young and have the opportunity of working with some of the best people in private banking, then you learn quite a lot over a short period of time... if you consider 16 years a short period of time. 

I must admit my age is very positive in some arenas, especially in terms of generation change on the client side. We now have many clients in their 80s and we are meeting their children who are in the 40s, and it is nice that I can connect very rapidly with their children. 

The private banking business needs new solutions to new problems, and not just old solutions to new problems. I believe that this is something that everybody underestimated until this year. The industry is transforming itself. So, you have to come up with new ideas, new ways of doing business, and rethink the old ways. You need to be very flexible. This needs quite a bit of confidence about the future - believing that the future is going to be good and better. It is one advantage of being younger that you are more optimistic about the future. 

¬ Haymarket Media Limited. All rights reserved.