Julius Baer seeks to cut bonuses of bankers with risky books: sources

[ZURICH] Julius Baer Group plans to reduce the bonuses of relationship managers who generate revenue from high-risk business, as the bank seeks to introduce a new pay culture, according to people familiar with the matter.

The amount that advisers will see their pay docked varies depending on factors such as the type of transaction and the type of market involved, the people said, asking not to be named discussing remuneration. The change is pending regulatory approval, one of the people said.

The move comes as the bank’s new chief executive officer Stefan Bollinger and chairman Noel Quinn seek to reset the Swiss bank and put it on a path for growth after a string of missteps, including running up a US$700 million exposure to Rene Benko’s real estate empire.

At an investor event in London last month, Bollinger said the bank was reviewing the compensation model with the aim to better align relationship managers’ incentives with the interests of the bank and its shareholders.

“We want to incentivise the RMs to focus predominantly on long-term sustainable growth and therefore we will be very focused on the quality of net new money,” he said.

A Julius Baer spokesperson said the changes, which are pending board approval, would “preserve the essence of our framework, as we pay for performance and want to attract the best talent.”

Wealth managers have different compensation models but often incentivise bankers through bonus payments that are tied to new assets they bring in.

In June, Baer unveiled fresh targets and reintroduced a goal for net new money, which Bollinger stressed was underpinned by strengthened risk management. “Risk management is my DNA, and I will be laser-focused on this,” Bollinger said.

In its interim earnings update in May, the bank announced that Ivan Ivanic was taking over as chief risk officer from Oliver Bartholet, who was retiring. It also said the executive board would be strengthened by a new compliance officer role, to be announced in due course. BLOOMBERG