Confirming an increasing amount of media speculation of a move to buy private banking assets from Dutch bank ING, Swiss-listed Julius Baer said today it has reached an agreement to buy ING Bank (Switzerland), paying SFr520 million (around $510 million) in cash.

The deal, which includes the acquisition of subsidiaries in Monaco and Jersey, means that the expanded business will have combined assets under management of more than SFr160 billion, based on figures for August, Julius Baer said in a statement.

Last year’s financial turmoil, the squeeze on bank margins and drive for new markets are pushing merger and acquisition activity in the private banking industry. At the start of this year, the world’s biggest wealth management business was formed through Bank of America’s purchase of Merrill Lynch. There has been speculation that Julius Baer is among a handful of banks looking to buy private banking assets of ING in different parts of the world, including Asia.

In today's statement, Julius Baer said the purchase price includes surplus capital of SFr170 million based on a target Tier 1 ratio of 12 per cent. At the end of August this year, ING Bank had assets under management of SFr15 billion, adding 10 per cent to Julius Baer’s overall private client assets and doubling its presence in Geneva.

Julius Baer will acquire a bank that employs a staff of 310. According to the statement, the ING unit will be integrated into its operations, creating “estimated pre-tax synergies of SFr35 million per annum”.

The acquisition is expected to have a neutral impact on earnings per share in 2010, and be “strongly accretive from 2011 onward”, Julius Baer said, while the impact will reach “a high single-digit percentage in 2012”.

Pending regulatory approvals, the closing of the transaction is expected to take place in the first quarter of 2010.

"Julius Baer is taking advantage of current market developments in acquiring a high quality, profitable asset with a strong track record. The client base is similar to the one of Julius Baer and ING Bank’s employees share the same client-centric passion, making it a true cultural fit,” said Raymond Baer, chairman of the bank.

ING Bank’s roots in Switzerland date back to 1962, when Banque Bruxelles Lambert established a subsidiary in Geneva.

Boris Collardi, chief executive of Julius Baer, said: “This transaction fully matches the strategic and financial criteria which we have communicated. We are pleased to add significant scale to our domestic and European platforms while strengthening our business in Central and Eastern Europe, Russia and other growth markets.”