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Julius Baer, Unscathed by Swiss Uncapping of the Franc, Warning of Pain Ahead for Banks

Boris Collardi

The Swiss National Bank made the shocking move of eliminating its currency cap on the Swiss franc, and many banks lost money. Citigroup, Deutsche Bank and Barclay’s suffered joint losses of $400 million because of the decision. Although Julius Baer, the third largest Swiss bank said it hadn’t taken any losses in the days following the Swiss National Bank’s decision, Julius Baer CEO Boris Collardi said a robust Swiss franc could set off mergers and consolidations in the industry. Private banks, which earn most of their revenue in foreign currency, could get hit particularly hard.

As reported by Reuters, Collardi spoke at an event in Berne, “This will directly affect the profitability of Swiss institutions if we don’t do anything.” Banks might face a higher cost-income ratio, and to avoid heavy losses, many banks may decide to merge, sell themselves or shut down. The number of private banks has already fallen because of regulatory pressures and strained margins.

Former Prime Minister Ehud Barak has worked for the Julius Baer Group, which has an exclusive clientele of heirs, entrepreneurs, politicians and celebrities. The bank was started by the Baer family who were targeted as Jews in Europe and escaped the Holocaust to settle in America. The Baer family has been helping Jews in their lawsuits against Swiss banks who hid assets stolen from Jews by the Nazis. The Baer family also is the leader of Keren Hayesod Switzerland and has donated millions to Jewish causes. Ehud Barak serves as special adviser to the management of the bank and its global CEO, Boris Collardi, in geopolitical issues and economics.

 

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