Bank Julius Baer outlines strategy to surmount Signa scandal fallout
Julius Baer Pumps Brakes on Expenses with $159M Cost-Cutting Plan
Get ready for a leaner, more efficient Julius Baer. The Zurich-based wealth management powerhouse has unveiled a stringent cost-cutting plan, aiming to slash another SFr130 million ($159 million) in expenses by 2028. This move follows a year of restructuring, reshuffling, and putting out fires, leading many to question if the bank's new strategy is more than just rhetoric.
The cost reduction comes as part of a broader plan to restore confidence in the embattled Swiss lender after a string of scandals and financial setbacks. The bank has already announced a separate target of SFr110 million in cost reductions to be achieved by the end of this year.
To achieve this monumental task, Julius Baer will focus on streamlining operations, reducing non-personal expenses, and simplifying its technological infrastructure. According to the bank's executives, these measures will lead to enhancements in efficiency and cost discipline[3].
However, the updated plan also includes a slightly looser cost-to-income ratio target, with an aim to reach less than 67% by 2028, compared to a previous goal of 64% by 2025[1][2].
The strategic update comes as Julius Baer grapples with various legacy issues, including large loan losses and regulatory penalties. Last month, the bank reported a SFr130 million loan loss, and earlier this year, the Financial Times revealed it had been ordered to pay over SFr4 million for anti-money laundering and compliance failings in its handling of high-risk clients[1].
The enforcement decision was previously undisclosed by either the bank or the regulator. In December 2022, the bank wrote down its full exposure of SFr606 million to collapsed Austrian property group Signa and shut its private debt business[1].
Since January, new CEO Stefan Bollinger has led an aggressive cost-cutting drive, resulting in job losses, executive board reshuffles, and changes to the bank's overall strategy. Former HSBC boss Noel Quinn joined as chair last month[1].
Despite the cost-cutting efforts, analyst Thomas Hallett of Keefe, Bruyette & Woods remains unimpressed with the bank's new targets. He noted that the net new money and cost-income ratio targets fall short of excitement[1].
Having faced their fair share of turmoil, Julius Baer's hope is that these cost reduction measures, along with a new focus on client growth, will help restore their reputation and position them competitively within the wealth management sector by 2028[3]. Time will tell if the bank can effectively navigate the swift-moving tides of the banking world.
In an effort to restore confidence and compete in the wealth management sector, Julius Baer has announced a cost-cutting plan, aiming to save SFr130 million ($159 million) in business expenses by 2028, through streamlining operations, reducing non-personal expenditures, and simplifying their financial infrastructure. This strategic move involves improvements in efficiency and cost discipline within their business finance.
