Feb. 14 (Bloomberg) -- Julius Baer Group Ltd., the 121- year-old Swiss wealth manager, will increasingly move some global functions to Singapore as it diversifies costs away from the Swiss franc, Chief Executive Officer Boris Collardi said.
“There is an emphasis of shifting things out to Singapore,” Collardi said at a media briefing today in the city-state. “I would not exclude that in the next few years we could have even more global functions being based out here.”
Functions would include infrastructure related to markets, treasury operations and products, said David Lim, who runs the bank in Singapore, where 360 people work. Earlier this month, the Zurich-based bank cited the strong franc for raising its medium-term cost-to-income ratio target 2 percentage points to a range of 62 percent to 66 percent, after reporting a 27 percent profit decline last year.
Two-thirds of the bank’s revenue is in euros and U.S. dollars, while more than two-thirds of costs are in Swiss franc, Collardi said today.
The bank needs to continue to make investments in currencies other than the Swiss franc, in countries such as Singapore -- its largest Asia operation, Collardi said. Some of Julius Baer’s information technology operations are currently based there, Lim said.
The euro and U.S. dollar weakened against the Swiss franc by 10 percent and 15 percent on average last year, respectively, the bank said in a statement on Feb. 6 when it announced results. That pushed its cost-to-income ratio to 68 percent from 65.4 percent. Net income fell to 258 million francs ($281 million) last year from 352 million francs in 2010.
Julius Baer is one of 11 financial firms in Switzerland under investigation by the U.S. Department of Justice for allegedly helping Americans hide money from the Internal Revenue Service, two people with knowledge of the matter said last October. Credit Suisse Group AG, Switzerland’s second-largest bank, and Julius Baer said last week that they expect to pay a financial penalty for U.S. tax matters.
Credit Suisse took a provision of 295 million Swiss francs for U.S. tax matters in the third quarter. The cost to the bank of resolving the probe “could be” higher than that provision, CEO Brady Dougan said last week.
Collardi said today he didn’t know what the penalty might be. He said analysts have estimated the penalty will range from 50 million francs to 250 million francs. “I guess that’s what’s reasonable to expect,” he said.
--Editors: James Gunsalus, Lars Klemming.
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