Julius Baer Faces Scrutiny Amid Strategic Overhaul
Julius Baer Group Ltd. announced a series of strategic initiatives to establish itself as "the most admired international wealth manager." However, the announcement was overshadowed by the financial watchdog Finma opening an enforcement procedure against the lender.
Finma's investigation stems from control lapses revealed during the collapse of Rene Benko's Signa real estate empire in 2023, resulting in substantial loan defaults for Julius Baer. The enforcement procedure could lead to measures such as a reprimand, confiscation of profits, or even license revocation.
CEO Stefan Bollinger attempted to downplay the impact of the share price drop, attributing it to a "short-term market move." Nonetheless, the bank's decision to suspend share buybacks this year raised concerns among investors.
Bollinger outlined plans to reduce the executive board from 15 to 5 members and cut annual costs by 110 million Swiss francs, leading to potential job cuts of up to 400 in Switzerland.
Analysts anticipate a larger buyback program next year, pending the outcome of Finma's review. Julius Baer previously stated its intention to resume capital distribution next year, but the Signa debacle forced a suspension in February 2024.