Julius Baer wants to double down on growth in its two home markets, Switzerland and Asia, by targeting ultra-wealthy tycoons and entrepreneurs, traditionally the territory of far larger banks such as UBS and CS.
With 300 billion Swiss francs in assets under management, Julius Baer is not in the top-ten of world’s largest private banks, according to an annual benchmark composed by London-based consultancy Scorpio Partnership. It also doesn’t have an investment banking arm, which has provided an entry point for larger rivals trying to win private banking business in new markets.
But Julius Baer is increasingly looking to muscle into the territory of its much larger rivals in Asia and Switzerland.
High Expectations
To do so, it has tapped two industry veterans with deep relationships in each region, Barend Fruithof in Switzerland and Jimmy Lee in Asia, its second home market which manages nearly 40 percent of the bank’s overall assets.
Fruithof became regional head in October while Lee, who is based in Singapore, became head of Asia on January 1. Like much of Julius Baer’s current top executives, both Fruithof and Lee are former long-standing Credit Suisse bankers, and the bank is looking to both to ramp up its business with wealthy tycoons and entrepreneurs.
«I have high expectations of our new leadership in terms of entrepreneurial sector and managing relationships. That is one part of our strategy,» Julius Baer CEO Boris Collardi (pictured above) said last week during the bank’s full-year results briefing in Zurich.
Low Swiss Market Share
Though the bank traces its Swiss roots back to 1890, it doesn’t command a particularly strong market position in Switzerland. “We have low market share, so we should have potential to go higher. We plan to do this with more offerings for ultra-high-net-worth-individuals. We want to target these individuals, like we do in Asia,» Julius Baer finance head Dieter Enkelmann said.
Fruithof (pictured above), not a private banker by background but a top leadership talent in Switzerland, is known for his ability to forge relationships to wealthy entrepreneurs in Switzerland, while Lee brings strong connections in Singapore and the wider region.
«Jimmy Lee needs to set new energies free, create a momentum, define new goals for his staff and make structural adjustments to put the bank in shape to ride the next growth wave,» CEO Collardi told finews.ch last week.
Lee (pictured above) also fits with a wider trend in Swiss banking to hire local managers in Asia, which is seen as a key advantage in maintaining good relations with local regulators. UBS recently named Edmund Koh as its head of Asia Pacific, while at Credit Suisse Indonesian banker Helman Sitohang was named head of Asia Pacific in 2014, the first Asian executive to the bank’s management board.
Organic Growth vs Deals
Julius Baer has pursued a strategy of aggressive growth by acquisition since swallowing three private banks ten years ago and asset manager GAM from UBS, later buying ING Bank (Switzerland), as well as the international Wealth Management business of Merrill Lynch, Bank Leumi assets in Switzerland and most recently the private banking business of German Commerzbank in Luxemburg.
Now, signs are mounting that Collardi, who spoke of Julius Baer’s next chapter as one «undisturbed» by events such as a $ 547.25 million fine to settle a U.S. tax dispute, is looking to grow organically rather than by major deals.
Household Name in Many Markets
The high-profile Asia and Swiss hires are one sign. Another sign is that Collardi has expended considerably less rhetoric from about the bank’s acquisition appetite, and more about using Baer’s brand recognition to build client relationships organically.
«Julius Baer is a household name in many markets. In the last years we have delivered, in the eyes of our clients we have stayed mostly out of trouble, proven to be a reliable partner, and our team which has been around for awhile is accountable,» Collardi said. «This mix of factors is a good foundation for stable growth.»
Global vs Local
The bank may simply be talking up organic growth more because acquisition targets are hard to come by in highly competitive Asia. In Switzerland, by contrast, private banks are regularly being shopped as most banks grapple with their past as abettors to tax evasion, but not all of the firms are deemed desirable targets. Julius Baer itself last week repeated that it has no interest in acquiring BSI, the Swiss private-banking unit of BTG Pactual bank.
Instead, Collardi is looking to Fruithof to rejuvenate Baer’s fortunes in Switzerland, a saturated market for private banking, by copying Lee’s playbook in Asia. «We have the best of both worlds: global expansion, but market closeness,» he said.
