The departure of Julius Baer’s chairman is anything but a surprise. The change at the top is a chance to put daylight to the Swiss bank's scandal-tarnished past. And to figure out more sustainable growth.
Daniel Sauter has chosen forward flight: the long-standing chairman of one of Switzerland’s largest private banks is leaving in April. At first glance, the timing is odd: Julius Baer’s CEO Bernhard Hodler has his feet to the fire as his predecessor, Boris Collardi, picks off desirable private bankers.
More worryingly, Julius Baer is in the crosshairs of Switzerland’s Finma over its standards for preventing money-laundering. Roiled by a Venezuelan money scandal, the bank has pledged improvement and is reviewing its South American business.
Sauter, who by age 32 was finance chief of Glencore under U.S. fugitive Marc Rich, has timed his Julius Baer exit to preempt criticism that he was asleep at the wheel. The bank grew from roughly $275 billion in assets the year he joined to $395 billion at last reading.
Copious Acquirer
The heady growth was the result of the Collardi-led strategy to snap up acquisitions, especially in hot spots like Asia; to lend far more aggressively to the world’s wealthy; and to hoover up assets by poaching private bankers.
One of Sauter’s (pictured below, at right, with Collardi) first acts as chairman in 2012 was to approve Julius Baer’s largest-ever acquisition: Merrill Lynch’s private bank outside of the U.S. It took the bank three grueling years to ultimately add $60 billion of the Merrill assets, far less than it had hoped.
Deals went some way to satiating Julius Baer’s appetite for more private bankers, but the bank continued to be an aggressive hirer during its growth phase. The starting shot was 2005, when the bank bought three private banks and GAM from UBS to lay the foundation.
Excitement vs Dullness
And grow Julius Baer did – to the delight of investors, who participated in the gains. But Collardi’s exit and the Venezuelan investigation lay bare the perils of bulking up too quickly. Areas such as compliance and technology appear to have gotten short shrift over the years.
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