Julius Baer plans bonus change to focus more on asset growth

JULIUS Baer Group is planning to regulate its bonus system as a part of an effort to draw extra shopper cash beneath interim chief govt Nic Dreckmann.

As a part of the transfer, the financial institution will probably improve how a lot fee it pays to relationship managers for pulling in recent belongings, folks acquainted with the matter stated. The modifications to the present system will probably contain tweaks slightly than a elementary overhaul, they usually might be introduced as quickly as subsequent week, the folks stated, asking to not be named discussing non-public data.

A spokesperson for Julius Baer declined to remark.

The new mannequin would reduce a coverage put in place by former chief govt Philipp Rickenbacher, who shifted away from asset progress to prioritising long-term profitability within the wake of a money-laundering scandal. Dreckmann took over final month after Rickenbacher stepped down following steep losses on loans made to the now-insolvent Austrian property and retail conglomerate Signa.

Julius Baer has been beneath stress since late final 12 months when it revealed it had run up about US$700 million in loans to Signa and its founder, Austrian tycoon Rene Benko. The Swiss lender finally wrote off virtually all the quantity, leading to a deep revenue hit.

The bonus modifications beneath dialogue now should not associated to Signa, the folks stated. Still, Signa will have an effect on pay because the losses on the loans hammered Julius Baer’s efficiency and its share worth, resulting in a 55 per cent discount within the fairness a part of final 12 months’s compensation for some senior managers, two of the folks stated. 

The 5 members of Julius Baer’s govt board chargeable for credit score selections gained’t obtain any variable pay for 2023, the financial institution stated final month. It’s additionally exiting the enterprise that was on the coronary heart of the Benko relationship. 

Variable compensation for relationship managers, who concentrate on attracting shoppers however go away the precise administration of the cash to others, is a key lever that personal banks akin to Julius Baer have at their disposal to spice up new enterprise. While some wealth managers solely pay discretionary bonuses, others tie them to metrics akin to internet new cash or shopper profitability. BLOOMBERG

Source: www.businesstimes.com.sg”