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May 19, 2022

Julius Baer cuts Moscow ties; outlines Russia exposure

Understand the impact of the Ukraine conflict from a cross-sector perspective with the Global Data Executive Briefing: Ukraine Conflict


Julius Baer has started the wind-down of its advisory subsidiary in Moscow in response to Russia’s continuing military aggression in Ukraine.

The Swiss bank said that approximately 1.6% of its $460bn (CHF457bn) assets under management (AuM) were linked to Russian individuals who are neither residents of Switzerland nor the European Economic Area.

Julius Baer’s market risk exposure to Russia is “not significant and tightly managed”, the bank said while outlining its results for the first four months of 2022.

Julius Baer, which has been complying with relevant national and international sanctions on Russia, stopped accepting new Russian clients following Russia’s invasion of Ukraine.

The Swiss bank said in a statement: “The Group has credit exposure to a single-digit number of clients subject to these sanctions.

“The exposure is in the form of mortgage loans at conservative lending values against residential properties in prime locations in Western Europe, as well as a marginal Lombard credit exposure fully covered by pledged liquid assets collateral.”

The net asset value of the bank’s Moscow-based advisory subsidiary, Julius Baer CIS, accounted for CHF0.4m as of the end of December.

Results

For the first four months of 2022, Julius Baer reported an AuM of $460bn (CHF457), a 5% decline from the end of last year.

The bank cited negative market performance, corporate divestments and client deleveraging as the reasons for the decline, which was partially offset by a positive currency impact.

The adjusted cost/income ratio was 63% in the first four months of 2022 while the adjusted pre-tax margin was 30 basis points (bp).

Julius Baer is targeting an adjusted cost/income ratio of less than 67% and an adjusted pre-tax margin range between 25 and 28 bp for 2022.

Julius Baer CEO Philipp Rickenbacher said: “We are initiating a new phase of profitable growth, building on the transformation we pursued successfully since 2020. Our unique client-centric business model and our dedicated focus on high and ultra-high net worth clients put us in a strong competitive position to shape our future.

“Capitalising on this strength, by the end of the decade, we will solidify our standing as the leading international wealth manager by growing the size of our business, its profitability, increasing its earnings quality and evolving the way we operate.”

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