Page 2 of 2

«They Won't Let You Bleed»

Asia is the source of much of that growth. If wealth management in Hong Kong is growing at a roughly 9 percent clip according to data from the Securities and Futures Commission, Julius Baer now claims a roughly 30 percent growth rate in the city.

Good Asia bankers are in scarce supply, and competition is fierce in the hurly-burly market. This has driven salaries up and fed a constant churn of private bankers from firm to firm. The bank boasts a 65 percent advisor retention rate after 18 months, compared to what is says is an industry average of less than one-third.

Private banks need the advisors to ensure growth: just as in Switzerland, smaller players are squeezed out of the market. If $5 billion in assets was enough to subsist on fifteen years ago, bank’s today need a minimum of $40 billion to justify their existence, Lee says.

«Shareholders will not let you bleed,» he cautions. Those who have chosen to stanch the bleeding and shut down include Barclays, Societe Generale, and Merrill Lynch.

Fallout from CEO Exit

To be sure, the Swiss bank has few size worries: though not publicly disclosed, experts estimate Julius Baer’s assets in Asia stand at roughly 80 billion Swiss francs.

What is next? Like other private banks, the Swiss firm says clients are increasingly moving away from heavy trading which fueled early profits in the region. Clients now want more advice-giving, and less of a transaction-based relationship. In Hong Kong, Julius Baer added 60 bankers in the last two years, including fund managers for discretionary portfolios – far more lucrative for the bank.

The shock defection of Collardi, who is closely linked with the Asia expansion, casts a pall over the Asian region. Lee admits Julius Baer may suffer collateral damage from losing its figurehead, who was well-known to clients in its growth markets, as finews.asia reported previously.

Eying Vietnam, Cambodia

It also wants to cultivate business outside of the main hot spots – Hong Kong and Singapore. Julius Baer is looking to a prominent ex-UBS banker in Taiwan to kickstart growth. For the newer generation of e-billionaires, the bank’s sponsorship of the Formula E electric car-racing circuit has «our brand profile has increased tremendously,» says greater China head David Shick, who also runs the bank’s Hong Kong office.

Angela Bow, another ex-Credit Suisse banker who joined Julius Baer as emerging markets head last year, says Julius Baer will keep expanding. She has her eyes on Vietnam and Cambodia, where Philippine businesses are growing: «We always say, if there’s a paved landing pad, we will fly there.»

This article was written as part of a two-day press trip to Hong Kong for several Swiss-based media outlets. Julius Baer paid for finews.asia travel and accommodation expenses during the trip, which included a day of management meetings and a visit to Hong Kong's Formula E Prix, which the bank sponsors. finews.asia made no editorial guarantees to Julius Baer.