As part of its integration process and cost reduction efforts,
Julius Baer Group last week announced job cuts at the recently
acquired foreign wealth management division of Merrill Lynch − a
unit of Bank ofAmerica
Corporation ( BAC ). Almost 30%-40% of the workers in this
division is about to get pink slips from the Switzerland-based
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In August, the Swiss bank acquired BofA's international wealth
management operations to further diversify its footprints in fast
growing emerging markets − Asia, Latin America and the Middle
East. The total cost related to the acquisition is
anticipated to be CHF1.47 billion ($1.58 billion), including
restructuring, integration and retention charges of about CHF400
million ($430 million).
Majority of the global banks are currently aiming to bring down
costs amidst the gloomy macro-economic factors and Eurozone crisis.
The job cuts are of utmost importance to Julius Baer's wealth
management division since it will help the company to attain its
strategy to bring down the cost-income ratio to 70% from its
present level of 100%.
BofA has been actively divesting its non-core and unprofitable
operations since the last two years. Europe-based Banks - such as
Deutsche Bank AG ( DB ),
UBS AG ( UBS )
and Credit Suisse Group ( CS ) -
have also trimmed down their workforce to a large extent in the
In the sluggish economic environment, banks have been increasingly
adopting rigorous cost-cutting measures to maintain a sound capital
buffer in order to endure a financial crisis. However, with
numerous job losses, unemployment rate could worsen and further
slow down the economic recovery.
Overall, until revenue generation revives, a worsening cost-income
ratio will continue to force many more banks to reduce their costs
through job cuts, since they need to enhance profitability in order
to boost capital ratios.