Is the future of Zurich-based Julius Baer about shifting towards a purer focus on wealth management?
Julius Baer is set to announce its 2023 results, including the widely anticipated write-off related to 606 million francs ($702 million) in Signa-linked exposure. CEO Philipp Rickenbacher is also reportedly exiting the bank while deputy Nic Dreckmannis set to replace him. In addition to leadership changes, the bank is also expected to exit its private debt business which is the source of lending to Signa.
Moving forward, Julius Baer will likely shift its business model to focus more on wealth management, returning to its roots as a pure-play private bank.
UHNW Segment
Rather than doubling down on non-wealth management lending, Julius Baer could be taking a prudent step to sharply shift its strategic direction. While this could help improve risk and stability for the bank, it is not without tradeoffs.
The most notable downside is the potential loss of current and future business linked with ultra-high net worth (UHNW) clients seeking to tap balance sheets for their business needs.
Future Growth Drivers
Although a move back to pure-play mode could divert some UHNW demand, Julius Baer still has other drivers to rely on for scalable growth. Firstly, it will benefit from Credit Suisse's outflows with the continuous acquisition of new talent and assets from the fallen Swiss rival. According to a previous Citi estimate, Julius Baer will be the primary beneficiary of the fallout and is forecasted to capture at least 10 billion francs in outflows.
Secondly, Julius Baer could intensify its focus on external asset managers, as it already has an established business and base of clients. This is a segment that incoming CEO Dreckmann is also relatively experienced in, having served as the bank’s head of intermediaries since 2020.
