Julius Baer Group

Julius Bär Group AG, known alternatively as Julius Baer Group Ltd., is a small to medium sized generalist private banking corporation founded and based in Switzerland. Headquartered in Zürich, it is among the older Swiss banking institutions. In recent years the banks reputation and standing have taken a hit following a string of corruption and money laundering scandals which led to an unprecedented public censure by the Swiss regulatory authority (FINMA). The sanctions were on the back of a detailed investigation revealing a poor employee and risk culture across the bank. Since 2018 the bank has also been on a major cost cutting drive, leading to significant employee attrition and hundreds of job cuts.

Julius Bär Group AG
TypePublic (Aktiengesellschaft)
SIX: BAER
IndustryFinancial services
Founded1890 (1890)
FounderJulius Bär
HeadquartersZurich, Switzerland
Key people
Romeo Lacher (Chairman)
Philipp Rickenbacher (CEO)
Dieter Enkelmann (CFO)
ProductsPrivate banking, wealth management
CHF 3.383 billion (2019)
CHF 770 million (2019)
AUMCHF 402 billion (2020)
Total assetsCHF 107.359 billion (2020)
Total equityCHF 6.289 billion (2020)
Number of employees
6,729 (FTE 2020)[1]
Websitewww.juliusbaer.com

Established as a traditional private bank and named after Swiss banker Julius Bär, it provides investment management, real estate financing, wealth management, and select offerings in sales and trading based on an open and managed architecture. The majority of income is generated by commissions and service fees.[2] Located in 28 countries, it is known for its banking secrecy and bank–client confidentiality. Julius Baer employs a staff of over 6,700 worldwide.[3]

The group manages assets for private clients from all over the world. The firm's services consist mainly of wealth management and investment consultancy. The bank provides products via its open architecture platform as well as securities and foreign exchange trading. The shares of the Julius Baer Group are listed on the SIX Swiss Exchange and form part of the SMI MID, the mid-cap stock index comprising the 30 largest and most liquid listed Swiss companies not in the SMI.

History
Julius Baer Group branch office in Frankfurt

Julius Bär Group Ltd. is a Swiss private banking group which is the parent company of Bank Julius Baer, a traditional private bank based in Zurich, Switzerland. The firm dates itself back to 1890 [4] when an exchange office was founded by Ludwig Hirschhorn and Theodor Grob. Grob left the firm again in 1896 when at the same time Joseph Michael Uhl and Julius Bär joined. In 1901, Julius Bär acquired the bank and remained as partner until 1922. Hans E. Mayenfisch joined the bank on July 1, 1913 as partner and was active until 1947. The sons of Julius Bär became partners as follows:[5] Walter Bär on October 1, 1913 until 1947, Werner Bär in 1921 until his death on February 2, 1960 and Richard Bär, who was a physicist became a silent partner in 1922. After his death in 1940 he was succeeded by his widow Ellen Bär. The members of the 3rd generation became active in the bank with Hans Bär[6] on August 21, 1947 until 1996, last as chairman of the board of Julius Baer Holding Ltd, Nicolas Bär on September 22, 1951 until March 1993, last as Chairman of Bank Julius Baer & Co.Ltd, Peter Bär on November 1, 1955 until his death on November 11, 1998 last as member of the board of Julius Baer Holding Ltd., and Rudolf Bär 1969 until 2005,[7] last as member of the board of Julius Baer Holding Ltd. Hans Bär was succeeded as Chairman by Thomas Bär 1996 until 2003.[8] On July 4, 1970 Dr. Ernst Bieri,[9] former head of the finance department of the City of Zurich joined as outside partner until 1990 as member of the board of Julius Baer Holding Ltd.

The 4th generation was involved with the leadership of the bank with Raymond Bär[10] from 1988 until 2012, last as Chairman of the board of Julius Baer Holding Ltd. Michael Bär joined the bank in 1992 and was active in various senior operating functions, last as a member of the group executive committee until 2005. As representatives of the family shareholders Mark Bär (1999–2005), Andreas Bär (2003–2005) and Beatrice Speiser-Bär (2003–2009) were members of the board of Julius Baer Holding Ltd.[11] Since its inception in 2014, the bank has been title sponsor of the FIA Formula E championship.[12]

Capital and scale

Julius Baer originally operated as a partnership and was incorporated on November 27, 1974 with a share capital of CHF 14.040 mio, divided into 56‘400 registered shares of CHF 100 each and 16‘800 bearer shares of CHF 500 each. The company went public in 1980. The Baer Families relinquished control in 2005 converting the share capital into a single class of registered shares all quoted at the SIX Swiss Exchange.[13] Today, MFS Investment Management is the single biggest shareholder with nearly 10% of voting rights.[14]

In 2020, Julius Baer announced it plans to slash 300 jobs, a decision which is a part of the company's CEO's three-year plan to improve the bank's profit margins. [15]

Acquisitions

In September 2005, Julius Bär acquired the independent private banks Ferrier Lullin, Ehinger & Armand von Ernst, Banco di Lugano, and the asset management house Global Asset Management (GAM) from the Swiss banking giant UBS AG, to become one of the largest independent wealth management firms in Switzerland. UBS acquired almost 21% of Baer's shares as part of the deal,[16] but sold off its stake in May 2007 to fund a share buyback.[17] GAM was demerged as a separate company in October 2009.[18] The companies of the group are consolidated within Julius Bär Gruppe AG, whose shares are listed on the SIX Swiss Exchange.

In November 2012, Julius Baer and Milan-based Kairos Investment Management SpA (‘Kairos’) announced that they had reached an agreement for a cooperation to jointly create a leading onshore wealth management player in Italy. Julius Baer’s Italian SIM was integrated into Kairos and, simultaneously, Julius Baer acquired 19.9% of Kairos. All Italian wealth management activities of the two groups run under the name Kairos Julius Baer.[19]

Julius Baer acquired Merrill Lynch’s International Wealth Management business (IWM), based outside the US, in August 2012, for 860 million Swiss francs ($884.8 million). The deal grew Julius Baer's assets under management by 40%, raising the AuM to 251 billion francs ($258.2 billion).[20]

In July 2014, Julius Baer announced that it had purchased the private banking assets of Israeli Bank Leumi.[21]

Subsidiaries and associations

GAM Holding AG

Global Asset Management (GAM) is an independent asset management business spun off from Julius Baer in September 2009 and is listed on the SIX Swiss Exchange, with a global presence, employing over 900 staff in 14 countries. Today's GAM Holding AG comprises the distinct but complementary businesses GAM and Swiss & Global Asset Management. The latter has evolved from the asset management business of Julius Baer. GAM Holding AG offers a diversified range of investment products and services to institutions, intermediaries, private clients and charities.

Julius Baer Foundation

The main focus of the Julius Baer Foundation is youth, vocational training, recycling and wealth inequality. Projects that directly benefit the younger generation are sponsored in various ways. Set up in 1965 by Walter J. Baer initially for charitable causes in Switzerland, the scope has grown together with the expansion of the business to a global scale. Julius Baer Foundation works together with and supports among others Sistema B (Chile), Solafrica (Ethiopia), Swisscontact (Switzerland) and Plastic Free Planet (UK).[22] It continues its traditional support of the Julius Baer employee-based JB Cares organisation and selected art museums in Switzerland.

Controversies and lawsuits

In February 2008, Bank Julius Baer filed a lawsuit (Bank Julius Baer v. WikiLeaks) against WikiLeaks in a federal court in California and obtained a permanent injunction disabling the website wikileaks.org, which was subsequently overturned as a violation of freedom of speech.

Alex Widmer, the chief executive of Bank Julius Baer, took his own life on December 4, 2008. [23] [24] Hans de Gier, the former chief of Julius Baer Group, assumed Widmer's responsibilities for the interim.[23]

In May 2009, Boris F. J. Collardi assumed the role as CEO for the Julius Baer Group Ltd. and Bank Julius Baer & Co. Ltd.

On January 16, 2011, former Julius Baer employee Rudolf Elmer announced that he would be handing over to WikiLeaks bank account details of individuals and corporations holding offshore accounts that indicates corruption inside the bank such as massive tax evasion.[25]

In February 2016, Julius Baer reached a $547 million settlement with the United States Department of Justice to avoid prosecution related to investigations of aiding US citizens in committing tax evasion.[26]

On February 20, 2020, the Swiss Financial Market Supervisory Authority (FINMA) censured Julius Baer for falling "significantly short" in combating money laundering between 2009 and 2018 with regards to corruption allegations involving FIFA and PDVSA, Venezuela's state-owned oil and gas company. FINMA ordered Julius Baer to change its remuneration and recruitment policies, imposed an indefinite ban on all acquisitions, and appointed an auditor to oversee the bank to ensure it’s compliance with anti-money laundering standards. The bank remains on probation until certain conditions are met and stands to lose its banking license should it not be able to demonstrate reasonable progress in meeting the regulator’s demands.[27]

See also

Notes and references
  1. "Presentation of the 2020 half-year results for the Julius Baer Group". Julius Baer. Retrieved 2020-10-09.
  2. "Business Review 2019". Julius Baer. Retrieved 2020-12-21.
  3. "Business Review 2019, page 26". Julius Baer. Retrieved 2020-12-21.
  4. 1890-1990 Eine Familie und ihre Bank, 1990 Bank Julius Bär, Zurich
  5. "Hans J. Baer, It's not all about money, Memoirs of a private banker, Beaufort Books, New York, 2008, Prominent members of the Baer Families, Biographical Sketches"
  6. "Hinschied von Hans Bär". NZZ (in German). 2011-03-22. Retrieved 2019-04-29.
  7. "Spätberufener Sternenforscher". ETH Zürich (in German). 2017-12-01. Retrieved 2019-04-29.
  8. "Thomas Bär, Banker und Bauer". NZZ Folio (in German). 2000-05-01. Retrieved 2019-04-29.
  9. "Ernst Bieri gestorben". NZZ (in German). 2003-11-22. Retrieved 2019-04-29.
  10. Alison Langley (2002-12-06). "Change, the New Face of Private Swiss Banking". New York Times. Retrieved 2020-11-09.
  11. Offering memorandum Julius Bär, November 11, 2005
  12. "Julius Baer announced as title sponsor for Zurich E-Prix". FIA Formula E. 2018-01-05. Retrieved 2019-05-28.
  13. "Family Owners of Julius Baer, A Swiss Bank, Cede Control". www.nytimes.com. 2005-01-17. Retrieved 2020-12-21.
  14. "Significant Shareholders". Julius Baer Group. Retrieved 2020-12-21.
  15. Gonçalves, Pedro (2020-02-04). "Julius Baer to slash 300 jobs and close Bahamas office". www.internationalinvestment.net. Retrieved 2020-03-16.
  16. Wright, Tom (6 September 2005). "Julius Baer buys units form UBS". The New York Times. Retrieved 2020-12-21.
  17. "Today In Business: UBS Sells Julius Baer Stake". The New York Times. 26 May 2007. Retrieved 2009-02-22.
  18. de Sa'Pinto, Martin (1 October 2009). "Julius Baer splits operations, unlocks value". Reuters. Retrieved 2010-03-26.
  19. Larsen, Ross (2015-11-16). "Julius Baer Agrees to Raise Stake in Italy's Kairos to 80%". Bloomberg.com. Retrieved 2018-08-01.
  20. Schaefer, Steve. "Julius Baer Picks Up Merrill Unit From BofA". Forbes. Retrieved 2018-07-30.
  21. Shotter, James (2014-07-21). "Julius Baer in deal to acquire Israeli lender Leumi's assets". Financial Times. Retrieved 2020-12-21.
  22. "Julius Baer Foundation Annual Report 2018". Julius Baer. Retrieved 2020-01-31.
  23. Reid, Katie (5 December 2008). "Bank Julius Baer CEO dies unexpectedly". Reuters.
  24. Ralph Atkins (1 June 2016). "Suicide highlights Swiss executive stress". Swissinfo.ch.
  25. Ed Vulliamy (16 January 2011). "Swiss whistleblower Rudolf Elmer plans to hand over offshore banking secrets of the rich and famous to WikiLeaks". Guardian. Retrieved 17 January 2011.
  26. "Julius Baer signs final deal with the US". Swissinfo.ch. 5 February 2016.
  27. Martuscelli, Carlo; Tokar, Dylan (February 20, 2020). "Swiss Regulator Censures Julius Baer in FIFA Money Laundering Case". The Wall Street Journal. Retrieved February 25, 2020.
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