Swiss regulator FINMA ordered Julius Baer to hold an additional CHF250 million of capital, down from CHF500 million earlier in the proceedings, after concluding enforcement proceedings into risk management and anti-money-laundering failures. The requirement remains until the bank completes its planned divestment of clients that no longer fit its risk appetite. FINMA described the violations as serious. FINMA said it was the fifth enforcement proceeding it had concluded against the bank in less than ten years.
The investigation covered private-debt lending to a European group and relationships involving two Russian politically exposed persons. FINMA said the lending exposure eventually exceeded CHF1 billion. CHF586 million remained outstanding at the end of 2023 and was written off in full. The regulator also found deficient scrutiny of asset origins and failures in anti-money-laundering reporting.
FINMA IMPOSED CAPITAL AND CONDUCT MEASURES
FINMA said it was confiscating profits of around CHF10 million and required the bank to submit reports on its risk, error and compliance culture until 2032. The regulator is also gradually relaxing restrictions on new high-risk politically exposed clients until the divestment of client assets outside its risk appetite has been completed.
Julius Baer said the additional capital translated into a minimum common-equity Tier 1 ratio of 9.4%, compared with a reported 18.5% at the end of June. The bank said it had stopped the private-debt business, redefined its risk appetite and implemented remedial measures.
THE TURNAROUND REMAINS UNDER REGULATORY TEST
The bank reported CHF673 million of first-half net profit in July, alongside CHF5.7 billion of net new money. Chief executive Stefan Bollinger said at the time that the impact of the revised risk and compliance framework would carry over into 2027.
FINMA also requires payments to shareholders, such as dividends, to be approved in advance. Julius Baer said it had submitted a request to FINMA regarding its share buyback programme. FINMA said its ruling is not yet legally binding.