Pre-tax profit at Julius Baer dropped by 21%
to CHF474m in 2011 as the Swiss bank acknowledged it was in ongoing
discussions with US tax authorities on its now closed cross-border
services to US clients.
In his business update to the 2011 results,
CEO Boris Collardi said Julius Baer has taken a pro-active and
cooperative approach to resolving the US tax situation and will
continue to cooperate fully with the US authorities.
Julius Baer shut its US offshore business in
Julius Baer is one of an estimated 11 Swiss
private banks under the scrutiny of the US Department of Justice.
US authorities have already charged Baer’s rival Wegelin with
helping US taxpayers hide more than $1.2bn.
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The Zurich-based bank’s net profit also
dropped by 21%, impacted by the one-off €50m ($65m) payment to
German authorities in April last year that ended a similar
investigation on tax evasion.
The ‘pure play’ private bank reported flat
assets under management figures ending the year at CHF170bn,
largely unchanged from the end of 2010.
Currency fluctuations and market performance
chipped away at the benefits brought by an increase in net new
money flows, up 6% to CHF10.2bn from CHF8.8bn in 2010.
Emerging markets drive new money
The reported money inflows derived mainly from
the growth markets such as Asia, Russia, Eastern Europe, the Middle
East and Latin America, the bank said.
Total client assets dropped by 3% to CHF258bn
at the end of 2011 as the bank faced a negative market performance
and adverse currency developments.
Another cause for concern was its rising
cost-income ratio, which has grown steadily from 63% in 2009 and
65% in 2010 to 68% in 2011.
The 2.5% increase is due to higher costs and
the foreign currency exposure of the expenditures in Swiss francs,
the bank said.