Julius Baer’s CEO Faces a Herculean Task

Julius Baer’s CEO Faces a Herculean Task

Stefan Bollinger has put Zurich’s venerable private bank on a strict performance regimen, but the breathing room it buys him may be brief.

Sporting a dark-blue suit and white sneakers, Stefan Bollinger brought a fresh, casual breeze to the executive suite at Swiss private bank Julius Baer.

That spirit extends to the ambitious transformation plan the new CEO has set for the Zurich-based wealth manager. His primary objective is to streamline the organization.«A new leadership structure and a leaner Executive Board will increase accountability, promote disciplined entrepreneurship from the top down, and reinforce our relentless focus on clients,» Bollinger said during the company’s full-year results presentation in early February.

Workforce Reduction

It was a clear signal of change. Alongside the annual results, the new CEO announced a drastic reduction of the Executive Board from 15 to 5 members, targeted cost savings of 110 million francs by year-end, and a 5 percent workforce reduction. He also promised a strategic update before the summer.

Since then, Julius Baer has been in a state of flux.

Damaging Missteps

Bollinger, however, has little choice. The bank needs a fresh start after a string of damaging missteps.

In 2021, the wealth manager agreed to pay $79 million to settle US allegations of money laundering tied to FIFA.

Two years later, Julius Baer was entangled in the scandal surrounding Austria’s Signa Group, owned by René Benko. The bank had extended 606 million francs in loans to the high-profile real estate tycoon. Following the collapse of Signa, Julius Baer was compelled to write off the full exposure, resulting in a 52 percent decline in profit. CEO Philipp Rickenbacher stepped down in February 2024. The responsibility now rests with Bollinger.

The cost/income ratio stands at 70.9 percent, well above the bank’s target of 64 percent.

Market confidence appears to be returning. Inflows picked up again in 2024, particularly in the second half of the year: net new money totaled 14 billion francs, and assets under management (AuM) reached a record 497 billion francs, a 16 percent increase. The bank closed 2024 with a net profit of 1.02 billion francs. 

Cost/Income Ratio Significantly Above Target Corridor

Nevertheless, the job is far from done. The cost/income ratio stands at 70.9 percent, well above the bank’s target of 64 percent.

In February, Swiss financial regulator Finma also launched enforcement proceedings to examine potential shortcomings in the bank’s risk management and lending practices. 

Unfazed, Bollinger is pushing ahead with his overhaul. Following the reduction of the Executive Board and the creation of a Global Wealth Management Committee, he announced in early April the formation of a global product and solutions unit, the segmentation of client coverage into three regional zones, and the centralization of all digital transformation initiatives under one leadership.

«This is another important step toward a simpler and more client-centric organization,» Bollinger said. «The new structure, with its consistent focus on the client, will enhance accountability and disciplined entrepreneurship while also strengthening our risk culture.»

Strategy Update

A strategy update is next on the agenda. Bollinger isn’t giving himself or his team much time – he plans to unveil the bank’s new direction in London on June 3. Before then, he must secure Finma’s support. By that point, newly appointed Chairman Noel Quinn will have been in office for only a month.

Observers are taking note of Bollinger’s pace. «It’s remarkable how quickly he’s moving,» multiple voices in Zurich’s financial circles say. 

Still, some are surprised that he has not yet restructured the upper ranks. «He has significantly downsized the Executive Board, yes. But typically, a new CEO brings in his own team for key positions. That hasn’t happened so far,» notes one industry insider who requested anonymity.

Sustainable Growth 

Others are puzzled by his exclusive reliance on job cuts to achieve further savings by year-end, with no major moves on the IT front. «Next to personnel, IT is one of the biggest cost blocks in any organization. There’s faster and bigger potential there,» note banking experts. 

More importantly, Bollinger’s dynamic approach has resonated with shareholders. His cost-cutting program is expected to yield results. The key question now is how long the honeymoon will last. «Cost reductions are all well and good, but Bollinger will need to generate sustainable growth from within Julius Baer,” as one shareholder remarked.