San Francisco Frontiers - Swiss regulator concludes Julius Baer bank probe

Announcing its much-anticipated findings, the Swiss Financial Market Supervisory Authority (FINMA) said it had established that the bank had "committed serious violations of supervisory provisions".

It highlighted breaches of "the requirements for appropriate risk management and the legal obligations relating to the prevention of money laundering".

FINMA had initiated its fifth so-called enforcement proceeding against Julius Baer in a decade in December 2024 -- before the arrival of a new management team that has since launched a major reorganisation.

In the first phase of its probe, the regulator looked into several loans granted to collapsed Austrian real estate empire Signa.

It opened a second phase of the proceeding in August last year -- months after a new chief executive arrived at the firm -- looking into possible breaches of anti-money-laundering rules involving clients linked to two "politically exposed" Russians.

FINMA said Julius Baer had "already implemented many immediate measures... to address the identified shortcomings and improve its culture".

At the regulator's request, the bank had among other things "redefined its risk appetite... strengthened its control functions, overhauled its remuneration system... (and) fundamentally overhauled its corporate governance framework", it said.

- $12 million seized -

As for penalties, FINMA said it was "confiscating" around 10 million Swiss francs ($12 million) in ill-gotten gains and had opened proceedings against three former employees.

It said that due to the bank's changed risk situation and the measures already implemented, it had been able to "lift in part or in full, the immediate measures previously imposed in the areas of capital and liquidity".

It added that measures restricting the bank's activities in the lending business, and in relation to entering into new business relationships with politically exposed persons from high-risk countries, had been lifted or relaxed.

Following the announcement, Julius Baer saw its share price jump 7.23 percent shortly before closing, to 76.76 francs each, while the Swiss stock market's broader SPI index was up just 0.01 percent.

"We view the conclusion of the proceedings positively: after a long wait, investors can now genuinely turn the corner," said analyst Ausano Cajrati Crivell of Zurcher Kantonalbank.

"In our view, the bank is emerging from the 'clean-up phase' structurally strengthened."

The bank's chief executive Stefan Bollinger hailed the FINMA decision as "an important milestone, which is a recognition of our efforts over the past 20 months".

In the statement, the bank said it had submitted a request to FINMA regarding its share buyback programme, which was "pending final approval".

A.Smith--SFF