Julius Baer to cut another $159 million of costs by 2028

Julius Baer to cut another $159 million of costs by 2028

ZURICH (Reuters) -Julius Baer will cut a further 130 million Swiss francs ($159 million) in costs by 2028, the Swiss private bank said on Tuesday, as CEO Stefan Bollinger seeks to turn the page on past setbacks and restore confidence.

The wealth manager announced a write-down of 130 million francs on its credit portfolio last month, which followed losses of 586 million francs made public early last year, largely linked to the collapse of property group Signa.

The latter led to a management shake-up, with Bollinger becoming CEO in January and ex-HSBC chief Noel Quinn chairman in May.

"We must go back to our core purpose as a wealth manager," Quinn told an investor conference in London.

"A few years ago, the business expanded its product offering into lending to clients that were invested in long-term fixed assets as the primary source of the client's wealth. In my view, those clients and the transactions that followed were more aligned to corporate banking than to wealth management or private banking," he said.

In a strategy update, the bank said it was targeting an adjusted cost-to-income ratio of less than 67% and aiming for a 4–5% net new money growth per year by 2028.

Its shares were down 2% in early trading.

"Julius Baer's new strategy under recently appointed CEO Stefan Bollinger is based on fairly conservative assumptions, which should make new targets achievable, but equally those new targets are well-below market expectations," Citi analysts said in a research note.

The bank had already announced a gross cost savings target of 110 million francs by end-2025, which it expects to exceed by around 20 million francs.

"Julius Baer is committed to upgrading its risk and compliance management processes and accountability throughout the organisation," the bank said on Tuesday.

($1 = 0.8175 Swiss francs)

(Reporting by Ariane Luthi. Editing by Rachna Uppal and Mark Potter)