Swiss bank Julius Baer, under new chief executive Stefan Bollinger, plans to reduce its workforce by approximately 5% and streamline its executive board size following significant losses linked to the failed property group Signa. Seeking to achieve savings of 110 million Swiss francs ($120.1 million), the wealth manager announced an immediate reduction in its executive board from 15 members to five after disclosing lower-than-expected pretax profits for 2024 on Monday. The restructuring caused a more than 10% drop in its shares to their lowest point since November.
Bollinger, who assumed leadership last month amid the fallout from the Signa losses, emphasized that the revamped leadership structure and smaller executive board would promote accountability and discipline throughout the organization.
Highlighting the objective to operate more efficiently, Bollinger stated, This is the first move to create a leaner, more straightforward way of running our business. We are going to apply the same principles throughout the entire organization.
The planned workforce reduction of 400 positions will primarily affect back-office and other non-client-facing roles, mainly in Switzerland. Despite a 16% rise in assets under management to 497 billion francs, Julius Baer admitted that its cost-income ratio of 70.9% in 2024 was "still unsatisfactory," significantly off the mark from its target of less than 64% by 2025. Additionally, the bank disclosed its decision to forgo a new share buyback program.
Acknowledging the mixed results, analysts at Bank Vontobel pointed out that the adjusted pretax profit fell 3% below consensus expectations. The bank anticipated a slowdown in net new money inflows, expecting the pace to resemble the 3% achieved in 2024 rather than the over 4% seen in the second half of the year.
CFO Evie Kostakis indicated that Julius Baer had bolstered its risk framework, resulting in a slightly more conservative approach toward client risk profiles.
Facing an ongoing enforcement assessment by the Swiss financial market authority FINMA due to the Signa losses, Julius Baer has witnessed significant leadership changes. Chairman Romeo Lacher announced his resignation effective April, paving the way for a fresh start among the top management.
CEO Bollinger clarified that the bank would refrain from announcing new share buybacks until the review is complete and currently had no plans for mergers and acquisitions, focusing instead on organic growth.
($1 = 0.9159 Swiss francs)