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Collardi achieved a quantum leap when he bought the wealth management of Merrill Lynch in 2012. It propelled the bank beyond the level of 300 billion Swiss francs ($307 billion) in assets. But the bigger the bank – Julius Baer had 420 billion francs ($433 billion) in assets under management at the end of October – the bigger need the targets be to make it all worthwhile. And that isn’t easy, as documented by finews.com in 2017. Vontobel was ready to pay more for Notenstein than Julius Baer. EFG International would be a coup for the new CEO, but the smaller rival is adamant that it isn’t for sale.

What’s left are the small banks, where mergers have occurred more frequently. But for the Julius Baer of Rickenbacher, taking the gamble on the small fry is hardly worth the potential gain.

5. Passive Clients

The business is tough enough as it is. The banks struggle with mountains of cash held by inactive clients. The gross margin of Julius Baer was well below the 85.5 basis points achieved at the end of 2018.

Boosting the amount of loans granted is one of the ways to increase margins, but the risks are apparent enough. Hitherto, advice and products delivered by privates banks remain attractive enough for rich clients. And the banks harbor great hopes in technological solutions to push relationship managers out to spend more time with their clients.

6. New Business at Will

Private banks all are selling the same product – much as they may boast a unique approach, client focus and DNA. The latest true innovation was the decision to accept the money of crypto-firms and -millionaires. Julius Baer has a cooperation agreement with and a stake in Seba, a new bank that caters to this segment. But apart from the storage and trading of cryptocurrencies, banks such as Julius Baer have not been great innovators as of recently – which may help explain the dwindling margins.

Instead of investing in new solutions, many companies have put all their hopes in providing services to the rich. One example for this trend is Bergos Fleming, the family office operated by Bergos Berenberg, a business that caters also to needs that fall outside the framework of investments and wealth management.

7. Millions Spent on New Technology

Whether it’s a connection between the old core-banking system and the new European solution, or a new robo adviser, Julius Baer is extremely eager to develop and push new technical solutions.

The bank from Zurich’s financial heart has spent more than 1 billion francs on new IT solutions. Digitization requires a high level of development and hence is one of the many challenges facing CEO Rickenbacher – and his fellow private bankers.