Swiss watchdog begins enforcement motion towards Julius Baer | USAEMALL.com

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Switzerland’s financial regulator has opened enforcement proceedings against Julius Baer, the latest hit to the Swiss wealth manager from its exposure to failed property group Signa.

Finma said on Monday that it had notified Julius Baer of the “opening of proceedings” following “lengthy and rigorous investigations”, casting a shadow over its new chief executive, Stefan Bollinger, who is seeking to engineer a turnaround of the scandal-hit bank.

Finma does not have the power to fine lenders, but under a formal enforcement procedure it can reprimand firms, confiscate profits or remove banking licences.

It comes after Julius Baer was last year forced to write down its full SFr606mn ($670mn) exposure to Signa, the heavily indebted property empire of René Benko which collapsed in 2023.

The Swiss bank and wealth manager said on Monday that it was subject to “regulatory enforcement assessments” by Finma regarding its Signa-related losses.

Shares in Julius Baer fell more than 13 per cent following the publication of the group’s annual results on Monday, which analysts described as “disappointing” because of a lack of detail about its strategy to boost growth.

The bank also announced plans to cut 400 jobs, or about 5 per cent of its workforce, as part of a cost-cutting drive under Bollinger, a former Goldman Sachs banker who joined the Swiss lender last month.

“This is the first move to create a leaner, more straightforward way of running our business. We are going to apply the same principles through the entire organisation,” Bollinger said of the changes.

The bank’s cost-income ratio for 2024 came in at 71 per cent, which it described as “still unsatisfactory”. Bollinger is targeting savings of SFr110mn through the cost reduction programme.

The bank said that it would also shrink its executive board from 15 members to five in a revamp of its leadership team. Last week, the group’s chair Romeo Lacher said he would step down at its annual meeting in April, paving the way for a leadership overhaul.

“A new leadership structure and a leaner executive board will increase accountability,” Bollinger added.

The bank posted annual profits of SFr1.02bn for 2024, more than double the previous year when it was hit by losses related to Signa. Assets under management jumped 16 per cent to SFr497bn.

The bank said it would present a strategy update, including new medium-term targets, before the summer.

Regarding the Finma proceedings, Julius Baer said: “We pursue the principle of transparent and active co-operation with the competent authorities. For principal reasons we cannot provide any further information on ongoing co-operation and/or proceedings.”