Julius Baer’s inability to leverage its balance sheet like rival financial groups that deploy the so-called «one-bank» model has the upside of dodging potential accidents associated with concentration risk, according to Asia Pacific head Jimmy Lee.
In recent years, one of the top headline propositions in Asia's private banking industry has been the emergence of the «one-bank» model offered by banking groups that own other financial businesses, in addition to wealth management. The model targets entrepreneurial clients that have needs that extend beyond traditional private banking to other areas, such as corporate and investment banking capabilities to support business needs.
According to Julius Baer APAC head Jimmy Lee, the pure-play model doesn’t provide much of this cross-divisional excitement but it also helps dodge potential accidents that have been spotlighted in media headlines, most notably at Credit Suisse.
«We do not own an investment bank. We do not own asset management companies,» said Lee during the opening of the bank’s new office in Hong Kong.
«Boring» Committee
Lee is a 36-year banking veteran and previously spent around seven years in two separate stints at Credit Suisse, which had called itself a pioneer of the one-bank model. He noted that as a pure-play, Julius Baer doesn't have the same capabilities as universal banks to perform multi-fold boosts in assets or liabilities.
«We have one of the most boring asset-liability committees because we can’t leverage our balance sheet,» Lee said, noting high-quality short-term government bonds as the riskiest level Julius Baer will stomach. «We like to differentiate the fact that Julius Baer’s [unique selling proposition] has always been a family business. We are independent.»
Prior to the UBS takeover, Credit Suisse had repeatedly headlined its one-bank capabilities. Ex-CEO Tidjane Thiam previously called Chinese businessman Lu Zhengyao the «poster child» for this cross-divisional approach before the accounting scandal at his firm Luckin Coffee was exposed. The downfall of Greensill and Archegos were other notable examples of one-bank failures.
