Switzerland’s financial regulator has concluded its enforcement proceedings against Julius Baer, signaling a significant regulatory milestone for the Swiss private bank. The Swiss Financial Market Supervisory Authority (Finma) ended its investigation into Julius Baer’s exposure to the collapsed Austrian property group Signa, alongside a related probe into the bank’s dealings with politically exposed persons (PEPs) from Russia.
Finma's inquiry uncovered serious breaches of supervisory requirements, specifically relating to risk management and anti-money laundering protocols. The investigation was expanded after Julius Baer’s exposure to Signa led to a full writedown of SFr606 million (approximately $726 million). However, the regulator acknowledged that the bank had implemented corrective measures and efforts to improve its internal culture, justifying the closure of the proceedings. This marks Finma's fifth enforcement action against Julius Baer in under a decade.
The conclusion of the probe represents a significant advance in CEO Stefan Bollinger’s efforts to overhaul the bank’s governance and restore its standing. Bollinger, who assumed leadership from Goldman Sachs in early 2023, has initiated broad management changes, cost reductions, and a scaling back of the bank’s private debt operations. His tenure has also been marked by an extended review of Julius Baer’s loan portfolio, revealing additional credit losses.
"Today we’ve reached an important milestone, a recognition of our efforts over the past 20 months," Bollinger stated following the announcement. Under his direction, Julius Baer has sought regulatory approval to resume share buybacks, contributing to a strong market response. The bank’s shares rose more than 8 percent during early trading in Zurich and closed with a 6.8 percent increase.
Despite closing the enforcement case, Finma will require Julius Baer to maintain an additional capital buffer of SFr250 million until the bank completes a planned divestment of client assets deemed inconsistent with its risk appetite. The bank must also submit regular reports on its risk management, error handling, and compliance culture until 2032. Additionally, Finma is confiscating SFr10 million of profits generated in breach of supervisory regulations linked to the two Russian PEP client groups.
Finma indicated it would gradually lift a temporary prohibition on establishing new business relationships with politically exposed clients from high-risk jurisdictions. Meanwhile, Julius Baer has pursued a restructuring plan that includes a substantial reduction in workforce, a streamlined executive board, and strategic realignments. The board was bolstered last year by the appointment of former HSBC Chief Executive Noel Quinn as chairman, emphasizing the bank’s commitment to improving oversight and governance.