By Lisa Jucca
MILAN (Reuters Breakingviews) - Boris Collardi is bowing out of Julius Baer at the peak. The whizzkid of Swiss private banking is leaving the $13 billion group for smaller rival Pictet after eight years in charge. Bold deals and aggressive expansion in Asia boosted earnings and lifted the wealth manager’s shares to record highs. Replicating such achievements will be harder.
Collardi’s departure is unexpected and puzzling. The 43-year-old was arguably a candidate for a future top job at UBS or Credit Suisse. He has chosen instead to become co-head of global wealth management at the Geneva-based private bank. Deputy CEO Bernhard Hodler, who is also Julius Baer’s Chief Risk Officer, is taking over while the board decides on a permanent replacement.
The 5 percent-plus drop in Julius Baer’s shares on Monday morning suggests investors are braced for a change. Since taking charge in 2009, Collardi has doubled the group’s assets under management. As larger rivals retrenched following the financial crisis, he used deals to aggressively transform the once-sleepy Swiss bank. The 2012 acquisition of Merrill Lynch’s international wealth management business was crucial in bulking up Julius Baer’s presence in fast-growing markets such as Asia.
Despite blots such as a $500 million-plus penalty for helping U.S. citizens evade taxes, the private bank’s track record has been impressive. At the close of markets on Friday, Julius Baer had produced a total shareholder return of 88 percent under Collardi, against 8 percent at larger competitor UBS and minus 19 percent for the Stoxx 600 index of global banks.
Expectations are similarly high. Julius Baer now trades at 2.1 times expected 2017 book value per share, almost twice the valuation for UBS and Credit Suisse and the most pricey of all Swiss listed private banks, according to Thomson Reuters Smart Estimates.
The risk is that clients, assets and relationship managers – which the bank has struggled to attract – follow Collardi out of the door. Meanwhile, the group will face pressure from resurgent global banks and ever-tighter regulation. Toppy markets are a further worry.
Collardi leaves the bank in good shape. Life will be harder for his successor.
Reuters Breakingviews is the world's leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.
Sign up for a free trial of our full service at https://www.breakingviews.com/trial and follow us on Twitter @Breakingviews and at www.breakingviews.com. All opinions expressed are those of the authors.