Swiss Private Banking World Stunned as Baer CEO Joins Rival

Updated on
  • Collardi resigns to join Pictet as wealth management co-head
  • Average partner at Pictet stays at bank for more than 20 years
Julius Baer Investors Stunned as CEO Collardi Joins Rival

Boris Collardi stunned investors by stepping down as chief executive officer of wealth manager Julius Baer Group Ltd to join a rival bastion of Swiss private banking.

Having held the top job at Zurich-based Julius Baer from the age of 34 and emerging as the industry’s consummate salesman, Collardi is effectively taking a demotion to become Pictet & Cie.’s co-head of global wealth management. Baer only learned of his decision to leave at the weekend, according to its chairman, who said the move was for personal reasons, without elaborating. Key shareholder Harris Associates was among those expressing disappointment at the departure, which sent Julius Baer shares down the most in 17 months.

Boris Collardi

Photographer: Michele Limina/Bloomberg

Collardi is swapping the limelight and pressure of leading a listed company for a lower-key but potentially more lucrative position at Switzerland’s third-largest wealth manager. Collardi is the first outsider in almost two decades to join Geneva-based Pictet & Cie as a partner, with the wealth manager having counted only 42 people in that position in its more than 200-year history. Pictet partners receive a share of annual profit, which was 422 million francs ($430 million) in 2016, while Collardi earned 6.5 million francs last year.

“We assume that the main reason for Mr. Collardi’s decision was not to be publicly exposed anymore in the way like he was at Julius Baer,” Andreas Brun, an analyst at Mirabaud Securities in Zurich, said on Monday by telephone. “He is probably one of the best representatives of a company we can think of in terms of selling a bank’s investment case.”

Shares Slump

Julius Baer fell 6.1 percent at 5:02 p.m. in Zurich, the biggest decline since June 2016. The drop pared gains this year to 25 percent, still the fourth-best performance in the 20-member Swiss Market Index.

Collardi personified the rise of Julius Baer as a young and energetic CEO, doubling assets since taking over almost a decade ago and spearheading a drive into Asia, inspired by his experience in Singapore with Credit Suisse. It’s a contrast with Pictet, run by a committee of six to nine partners that jointly own and manage the business, according to a report by the Witten Institute for Family Business. The majority of partners come from a small circle of Geneva families, though partners can’t pass on their stakes to their children.

In a sign that some private banks are broadening their horizons to deal with the challenges facing the industry, Lombard Odier earlier this year hired Annika Falkengren, chief executive officer of SEB AB for 11 years, as managing partner to bolster the bank’s international expertise.

“Geneva private banks need growth and Collardi is an executive who has proven that he can deliver on that front,” said Christian Zogg, a fund manager at Liechtensteinische Landesbank AG. He holds Julius Baer shares.

Internal Promotions

Renaud de Planta was the last outside executive at Pictet, joining from UBS in 1998. Since him, there have been four internal promotions: Remy Best, Marc Pictet, Bertrand Demole and Laurent Ramsey.

In addition to being a coup for Pictet, the appointment may also be a boost for Geneva’s private banking sector, which has suffered outflows related to the end of bank secrecy and the decline of the once thriving fund of hedge funds business. Pictet oversaw about 492 billion Swiss francs at the end of September. That compares with 393 billion francs at Julius Baer. There won’t be a shift of Pictet’s strategy but the bank is keen to benefit from Collardi’s network, especially in Asia Pacific, a personal with knowledge of the matter said.

Collardi said in September that he expects the region to account for about a third of its business in the next five years.

“Sad, disappointed to see him go,” said David Herro, Harris Associates’ investment chief for international equities. “But certainly I believe the organization is strong enough to handle it.” Harris is the third-largest shareholder in Julius Baer and the largest in Credit Suisse Group AG.

Partner-Run

Pictet is owned by its partners, who changed its corporate legal structure at the start of 2014 so they no longer have unlimited liability for losses.

The partners live in the region and meet several times a week, according to a spokesman for Pictet. Each new partner receives a form of loan from the others in order to acquire his initial stake, which is paid back over several years with profits made from their share in the partnership, according to the Witten Institute report. The average tenure of each partner is more than two decades.

“Partners have to be nominated by existing partners,” the report said. “And as they know they will be working together for the next 20 years or so, this decision is probably given more consideration than many marriages.”

In some ways it’s a return to his roots for Collardi, who grew up in Nyon on the shores of lake Geneva and started his career with Credit Suisse in Switzerland’s French-speaking financial hub.

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