Julius Baer Asia Quest Demands High Energy From Collardi
When Julius Baer Group Ltd. (BAER) was looking for a new leader in 2009, Boris Collardi wasn’t exactly a shoo-in. Five years on, Switzerland’s private banking protege still has a lot to prove.
In an industry dominated by executives in their 50s and 60s, Collardi was 34 when he became chief executive officer of the country’s third-largest wealth manager. He vaulted to the top on the back of two stints in Singapore and promotions at Credit Suisse Group AG (CSGN) -- valuable experience for a company wooing wealthy people in emerging markets.
“Just to be a Swiss bank isn’t enough anymore,” said Collardi, who said he visits Hong Kong and Singapore every six weeks and regards Singapore as his second home after Zurich. “Now you need to bring local competence.”
Collardi, 39, has used his experience of living and working in Asia to advance the transformation of Julius Baer from a bank focused on western Europe to a network of businesses spanning Europe, Asia, the Middle East and Latin America. The CEO, who earned $6.7 million in 2013, will be judged on whether Julius Baer can compete with top international banks in the world’s fastest-growing markets.
Deposits in the two biggest offshore centers for affluent Asians -- Singapore and Hong Kong -- account for almost one quarter of the 264 billion Swiss francs ($295 billion) under management at Julius Baer, Switzerland’s biggest wealth manager after UBS AG (UBSN) and Credit Suisse. Under Collardi, the bank has also opened a representative office in Shanghai.
“When I started in this business 80 percent of Asian clients used to come to Europe and have a Swiss account,” Collardi said in a telephone interview. “That breed is like Jurassic Park. It’s disappearing. Now the new ones are all entrepreneurs. They all want to have their money in Asia where there are better returns.”
Collardi plunged into the top job at Julius Baer, established in Zurich in 1890, at a time of upheaval in the Swiss banking industry. Much of Europe was in recession, and the Swiss government had bailed out UBS the year before. France, the U.K., the U.S. and Germany had embarked on an international regulatory effort to contain the use of offshore banks as tax shelters.
Since then, total managed assets have increased 75 percent, boosted by the acquisition in 2012 of Bank of America Corp.’s Merrill Lynch wealth units outside the U.S. Those units encompass about 20 countries, with almost half the assets in Singapore and Hong Kong. The bank has said incorporating these disparate franchises is a challenge that won’t yield a profit before 2015. Analysts at Kepler Cheuvreux and Mediobanca SpA have questioned how quickly the bank can turn around the Merrill Lynch assets that made a pretax loss in 2011.
Julius Baer has declined 2.5 percent in Zurich trading since the bank split from its asset management unit GAM on Sept. 30, 2009. That beat the Bloomberg Europe 500 Banks and Financial Services Index, which slumped 17 percent over the same period. The stock’s 5.5 percent advance since Collardi announced the Merrill Lynch deal on Aug. 13 is dwarfed by a 41 percent surge in the 43-company benchmark. Julius Baer was down 2 percent to 36.32 francs at 12:41 p.m. today in Zurich.
Agreeing on Collardi wasn’t easy, recalled Raymond Baer, who made the final decision as chairman of his family’s bank, before he stepped aside in 2012. Julius Baer needed someone who could persuade shareholders to back a bold expansion in emerging markets, which were producing a growing share of the world’s wealth and millionaires.
The competition included UBS and Credit Suisse, global heavyweights in the business. Whoever got the position would also have to reckon with locals like Singapore’s DBS Group Holdings Ltd. and United Overseas Bank Ltd.
“We decided, after probably the most heated discussions I’ve probably ever had, to go for a young CEO,” Baer, 55, said at a meeting of the British-Swiss Chamber of Commerce in Geneva in May last year. “This is project management, integration, M&A. We wanted someone with the energy level only a young person can have. We wanted a cosmopolitan person.”
Collardi looks the part. He dresses in smart suits, speaks fluent German, French, English and Italian and skis in St. Moritz. His route to the top was swift and full of experience in frontier markets. The son of Swiss and Italian parents, he grew up in Nyon, a castle-topped town near Geneva, and opted out of a plan to study economics at a university after his father, a sales director at a technology company, showed him a newspaper ad for a trainee program in private banking at Credit Suisse in Geneva.
After joining the bank in 1993 at age 19, Collardi was promoted two years later to oversee front office support for clients from the Asia-Pacific region. That eventually led him to Singapore where he rose through the ranks to become chief operating officer of Credit Suisse’s private bank in 2004. He came on board Julius Baer in the same role in 2006, when his new employer was absorbing four businesses acquired from UBS and opening offices in Hong Kong and Singapore. Among the deals that followed, Julius Baer purchased ING Groep NV’s Swiss private bank in 2009.
“It’s important you understand the local context, you understand what’s different between the Singaporean Chinese, the Hong Kong Chinese, the Taiwanese Chinese, and the mainland Chinese,” the CEO said. Speaking at least a smattering of the local dialects, understanding Chinese social protocol and even selecting which shirt to wear at an event in Indonesia, are all important, according to the CEO, who met his Singaporean wife while working for Credit Suisse in the city-state.
While Julius Baer’s Asia operations are overseen by Thomas Meier, a Swiss, about 80 percent of more than 1,000 employees in the region are locals. The bank offers Asia-focused equity and fixed-income funds and has about 100 people on the trading floor in Singapore to take orders from clients.
Sebastian Dovey, a London-based consultant with Scorpio Partnership, said Collardi can’t afford to be complacent after turning a small private banking business in Asia into a clear contender in the competition for wealthy clients.
“It’s a feather in Boris Collardi’s cap, although the job is far from finished if he wants to challenge the likes of UBS and Credit Suisse in the region,” Dovey said. Clients’ invested assets in the Asia-Pacific region surged to 223 billion francs at UBS at the end of March, from 169 billion francs two years earlier.
Banks in Hong Kong and Singapore hold $1.4 trillion in offshore deposits and are expected to overtake Switzerland’s $2.3 trillion of offshore wealth, Boston Consulting Group said in a report in May, without giving a timeframe.
Millionaires’ wealth climbed 15 percent to $152 trillion globally in 2013, supported by a 31 percent surge in riches in the Asia-Pacific region outside Japan to $37 trillion, BCG said in the report. Millionaires in that same region are expected to account for $61 trillion by 2018, compared with an estimate of $44.6 trillion in western Europe.
For customers concerned less about proximity to their money than about shielding their fortunes from volatile currencies and shaky governments, Switzerland remains appealing, offering privacy, discretion and stability.
When Collardi wants to dazzle a client, he takes them to lunch at one of Geneva’s most exclusive watchmakers, Patek Philippe. Run by Chairman Thierry Stern, son of Honorary President Philippe Stern, the company’s most intricate timepieces sell for more than $1 million.
“It’s nice to have clients at the bank but if you want a real impact, you invite them for lunch at Patek Philippe with the owner,” Collardi said. “That impresses them forever.”
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