Swiss financial institution Julius Baer steps up cost-cutting drive | USAEMALL.com

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Swiss bank Julius Baer is stepping up a cost-saving drive to target SFr130mn ($159mn) in cuts by 2028, as it seeks to engineer a turnaround under new leadership.

In a strategy update on Tuesday, the Zurich-based lender and wealth manager announced the new 2028 target, in addition to SFr110mn of cuts by the end of this year that it previously announced in February.

Julius Baer said the new cost target would be achieved by “streamlining non-personnel expenses”, as well as focusing on “cost discipline” and IT simplifications.

The move follows the bank’s struggles to overcome legacy issues including large loan losses and regulatory penalties.

Last month it reported a SFr130mn loan loss, while the Financial Times recently revealed it had been ordered to pay more than SFr4mn by the country’s financial regulator for anti-money laundering and compliance failings in its handling of high-risk clients.

The enforcement decision had not previously been disclosed by either the bank or the regulator.

Last year it wrote down its full SFr606mn exposure to now-collapsed Austrian property group Signa and shut its private debt business, triggering the leadership overhaul. New chief executive Stefan Bollinger took over in January.

“Julius Baer is committed to upgrading its risk and compliance management processes and accountability throughout the organisation,” the bank said in its strategy update.

Since he joined, Bollinger has overseen an aggressive cost-cutting drive, axing jobs, slimming down the executive board and changing the bank’s strategy. Former HSBC boss Noel Quinn joined as chair last month.

Julius Baer said on Tuesday it expected to exceed its previously announced SFr110mn gross cost savings target by SFr20mn by the end of 2025.

It is aiming for a cost-to-income ratio of less than 67 per cent by 2028, compared with a previous target of 64 per cent by 2025, and is also looking to achieve a 4 to 5 per cent range for net new money growth by then.

Thomas Hallett, an analyst at Keefe, Bruyette & Woods, said the strategy update was “underwhelming” and that net new money and cost-income-ratio targets “fail to excite”.

Bollinger said: “Since January we have made a lot of progress on multiple fronts aimed at strengthening our organisation and the trust of all our stakeholders.”