Julius Baer Holding AG

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Julius Baer Holding AG

Bahnhofstrasse 36
CH-8010 Zurich
Switzerland
Telephone: ( + 41) 1-58-888-1111
Fax: ( + 41) 1-58-888-1122
Web site: http://www.juliusbaer.com

Public Company
Incorporated: 1890
Employees: 2,399
Total Assets: SFr 14.05 billion ($8.89 billion) (2001)
Stock Exchanges: Zurich
Ticker Symbol: BAER
NAIC: 522110 Commercial Banking

The leading independent private bank in Switzerland, Julius Baer Holding AG has come to epitomize the Swiss banking tradition after more than 100 years of providing exclusive services to its wealthy customers. Private Banking remains the group’s largest area of operation, accounting for one-third of the group’s annual net operating income, which reached SFr 1.4 billion in 2001, and more than 50 percent of the total assets under the group’s management, which topped SFr 126 billion in 2001. Baer (alternatively spelled as Bär) services its clientele—the company targets private customers worth at least $25 million and willing to invest a minimum of $2 million with the group—through its army of personal bankers, offering an industry-leading ratio of 100 customers per banker, compared with more than 700 per banker for Baer’s larger competitors. Baer private banking customers can expect a range of services, including portfolio management, investment advice, estate planning and related services, financial planning and tax services, and a variety of other amenities, including concierge services. While the company’s largest business comes through its private customers, Baer also services institutional investors. The company has recently broadened its target market beyond its traditional Switzerland and New York base, with offices and branches opening in other areas of the United States and in Europe. Baer’s other areas of operations include Trading Services; Asset Management, with an emphasis on European market investments; and Brokerage Services, with offices in Amsterdam, Frankfurt, Madrid, Milan, New York, Paris, Stockholm, and Zurich (the company owns seats on each local exchange). A public company listed on the Swiss stock exchange, Baer remains controlled and led by the founding Baer family, now in its third and fourth generation at the head of the company.

Swiss Private Banking Pioneer in the 1890s

The Julius Baer banking group had its start at the end of the 19th century. In 1890, the general partnership Hirschhorn & Grob was established to provide banking services in Zurich, Switzerland. In 1896, Julius Baer, then 39 years old, was taken into the partnership, which then reformed itself under the name Hirschhorn, Uhi & Baer. With the death of principal partner Louis Hirschhorn in 1901, the partnership was dissolved once again and reformed under the sole leadership of Julius Baer. Renamed Julius Baer & Co., the firm was granted a seat on the Zurich stock exchange that same year.

Baer’s firm soon became a family business—in 1913, Baer was joined by son Walter, who was to take over as head of the bank after his father’s death in 1922. Walter Baer was joined by one of his brothers that same year. The Baer family had by then become among the most influential members of the Zurich—and Swiss—private financial industry. Julius Baer had previously served as vice-chairman of the Zurich Stock Exchange Association, and son Walter was named chairman of that body in 1931. Three years later, Walter Baer led the formation of the Association of Swiss Private Bankers, established in response to legislation passed that year that narrowed the scope of activities of Switzerland’s banks.

With the rise of the Nazis to power in Germany, especially after the outbreak of World War II, the Baer family, who were Jewish, took steps to preserve their business in the event of a German invasion of Switzerland. In 1940, part of the family traveled to the United States and set up a business office, Baer Custodian Corporation, in New York City. That office, though only temporary, nonetheless introduced the Baer bank to the New York financial market—which was to become a focus for the company in the years following the war. Part of the Baer family that went to New York was later Chairman Hans J. Baer, who, after studying at Horace Mann University, Lehigh University, and New York University, returned to Switzerland in 1947 to join the private banking firm.

International Growth in the 1960s

Like many of Switzerland’s private banks, Baer expanded its operations into the securities trading and stock market as assets management grew to become an important area of the firm’s operations. In 1962, the group extended its securities activities to its New York office, setting up Baer Securities Corporation, which was later reformed as Julius Baer Securities Inc. In 1966, Baer turned toward Mexico, setting up its first company in that country, Baer Mexicana. Two years later, Baer entered the U.K. market, opening Julius Baer International Ltd. to tap into the London financial community.

In addition to its international expansion, Baer also began diversifying its products, launching its first Swiss Investment Fund, called Baerbond, in 1970. The death of Walter J. Baer that year (brother Werner had died in 1960) marked the end of the second generation of Baer s at the head of the by then prestigious bank. Yet the Baer family remained firmly in control as the third generation, particularly Nicolas J. Baer, who went on to serve as president of the Association of Swiss Private Bankers, took over the leadership of the group. In 1974, the company formed a new offshore operation, Baerbank (Overseas) Ltd. in the Cayman Islands, which changed its name to Julius Baer Bank and Trust Company the following year. Baer also incorporated a new company, Bank Julius Baer & Co. Ltd., which took over the assets of the founding company. Baer then moved to restructure its growing number of companies under a single entity, Julius Baer & Co. (Holding) Ltd.

Hans J. Baer was appointed the company’s chairman in 1975, a position he was to hold through the end of the century. Baer continued the group’s selective international expansion, opening an office in San Francisco in 1978, then launching Julius Baer Investments as a separate office in London in 1980. Baer went public that year, listing on the Zurich stock exchange—an unusual move for the highly discrete world of Swiss private bankers. Nonetheless, the Baer family remained strongly in control of the family business.

Baer, which had established its international presence primarily through its securities operations, opened its first foreign bank branch office in London in 1982. That year the company added a new product, an offshore investment fund called Liquibaer. In 1983, the company turned its attention to New York, establishing Julius Baer Investment Management, which offered international pension fund products to the U.S. market. The following year, Baer opened its first full-service bank branch in New York—which received fiduciary powers from the Comptroller of the Currency, the first foreign bank to be accorded that status. It also allowed the company to combine banking and securities trading services under the same roof—something not available to U.S. banks.

Baer next turned to Hong Kong, establishing a representative office in that city in 1985. The company also expanded in Switzerland itself, acquiring a 51 percent share of a branch in Geneva in 1986. By then, Baer had firmly established itself as one of the most respected names in the worldwide financial community—yet the group itself remained relatively tiny. With just $1.5 billion in assets under the group’s management, Baer was not even large enough to take a place in the top 20 of Swiss banks.

Into the early 1990s, however, Baer underwent a significant growth spurt, particularly in North America, setting up new offices in Los Angeles in 1989 and in Palm Beach, Florida, in 1991, and launching a joint venture, BJB Global Investment Management Ltd., to enter the Canadian market in 1993. The banking group also began acting as a securities agent in the United States for a growing number of smaller overseas banks. Another factor in Baer’s growth was its decision to boost its private banking activity in the United States, where securities had long been the company’s primary source of revenues. The company began targeting what it labeled as “Europhile” Americans, that is, wealthy individuals attracted by the highly personal approach of Swiss-styled private banking. As a result, Baer’s asset management portfolio grew strongly, reaching $23 billion in 1992, then climbing to $32 billion the following year.

Baer continued to expand elsewhere, launching a subsidiary in Frankfurt, Germany, Bank Julius Bär (Deutschland) AG, and a Guernsey subsidiary, Julius Baer Trust Company (Channel Islands), both in 1989. In 1990 the company launched a new Luxembourg-based investment fund. In 1994, the company added a branch of Bank Julius Baer in Guernsey and also entered Monaco with the establishment of Société de Gestion Julius Baer (Monaco). The following year, the company launched a new Zurich-based subsidiary, Julius Baer Asset Management Ltd.

Company Perspectives:

Julius Baer Group ‘s Mission: We believe private property is an essential feature of an open society and of a future worth aspiring to. We support social and cultural activities. We recognize and respect the ethical principles of a humane society and structure our operations in such a way as to preserve natural resources. Clients: We offer our clients professional service and individual expert advice with a view to increasing their security, independence and affluence. Our two main objectives are asset preservation and capital growth. Employees: Our employees are our greatest asset and we encourage them to maximize their potential through ongoing further training. We support initiative, personal commitment and the acceptance of responsibility. We aim to be a socially responsible employer and attach great importance to the welfare of our staff. Shareholders: We maintain and strengthen shareholders’ confidence by setting clear goals, providing regular, transparent reporting, and generating above-average returns combined with excellent performance.

Private Banking Leader at the Dawn of the 21st Century

In 1996, Baer surprised the Swiss private banking community when it announced that it had acquired a 51 percent controlling stake in family-owned Swiss private bank Bank Falck & Co., based in Lucerne. By 1998, Baer had completed the take over of Falck and converted it as a branch of Bank Julius Baer. By then, the company had added a new bank branch in Lausanne, a new Paris-based subsidiary, and a representative office in Vienna. As the decade drew to a close, Baer continued to build up its international network, adding branch offices in Milan and Amsterdam in 1999, offices in Berne, Basel, and Madrid in 2000, and an office in Stockholm in 2001.

With the global economy booming at the dawn of the 21st century, Baer’s own fortunes grew strongly, as the group topped total assets under management of SFr 126 billion ($80 billion) and total corporate assets of $8.89 billion by 2001. Part of the company’s growth came through the establishment of a dedicated Brokerage division to tap into the charging stock market—the company had even attempted to join the online brokering rush. The move into brokering, however, was to turn against the group, with a collapse of the markets in 2001, and the group was forced to shut down its online operation, losing its investment.

In 2002, Baer placed the next generation of the family at its head, in the form of Raymond J. Baer, who led the company on a drive to refocus its efforts on its core private banking business. Baer also set out to revive that division as well. During the late 1990s, the company also had attempted to open itself to a broader customer group, dropping its preferred minimum investments to as low as $150,000. At the beginning of the new century, however, Baer revised its customer profile, setting a preferred minimum investment target of $2 million from clients with a personal worth of at least $25 million.

As the Swiss private banking industry appeared to be edging toward a consolidation phase—led by the merger of venerable banks Lombard Odier and Darier Hentsch in 2002—Baer preferred to bank on its independence. As Raymond J. Baer told Forbes: “A lot of banks are consolidated to achieve critical mass. This means that there is usually a lack of vision about what their challenges are. We don’t believe that critical mass is the issue.” Instead, Baer turned toward the new century with its own vision, based on a heritage as one of the world’s most prestigious banking groups.

Principal Subsidiaries

Bank Julius Bär (Deutschland) AG; Infidar Investment Advisory Ltd. (72%); Julius Baer Asset Management Ltd.; Julius Baer Bank and Trust Company Ltd. (Cayman Islands); Julius Baer Family Office Ltd.; Julius Baer France SA; Julius Baer International Limited (U.K.); Julius Baer Investirne Ltd.; Julius Baer Investment Advisory (Asia) Ltd. (Hong Kong); Julius Baer Investment Advisory (Canada) Ltd.; Julius Baer Investment Management Inc. (U.S.A.); Julius Baer Investment Funds Services Ltd.; Julius Baer Investments Limited (U.K.); Julius Baer Italia Investment Funds Services Srl; Julius Bär Kapitalanlage Aktiengesellschaft (Germany); Julius Baer (Luxembourg) SA; Julius Baer Securities Inc. (U.S.A.); Julius Baer Trust Company (Cayman) Ltd.; Société De Gestion Julius Baer (Monaco) S.A.M.

Principal Divisions

Private Banking; Trading Services; Asset Management; Brokerage Services.

Principal Competitors

UBS AG; Lavoro Bank AG; Schweizerische Nationalbank; EFG Bank European Financial Group; HSBC Republic Bank Suisse S.A; Graubundner Kantonalbank Chur; Valiant Holding; Coutts Bank Schweiz AG; Banque Privée Edmond de Rothschild S.A.; Banca Unione di Credito; BDL Banco di Lugano; Luzerner Regiobank; Bank Sarasin und Co.; Clariden Bank Group; Bank Linth; Corner Banca S.A; Gewerbekasse in Bern; Bank Hofmann AG; Bank Hapoalim Switzerland Ltd.; WIR Bank.

Key Dates:

1890:: A banking partnership is founded as Hirschhorn & Grob, in Zurich, Switzerland.
1896:: Julius Baer joins the Hirschhorn partnership, which is reincorporated as Hirschhorn, Uhl & Baer.
1901:: Julius Baer takes control of the partnership, which is renamed Julius Baer & Co. and granted a seat on the Zurich stock exchange.
1940:: The Baer family sets up its first office in New York, Baer Custodian Corporation.
1962:: Baer launches Baer Securities Corporation in New York.
1966:: A subsidiary opens in Mexico.
1968:: The company sets up its first subsidiary in the United Kingdom, Julius Baer International Ltd.
1974:: Company holdings are restructured under Julius Baer (Holding) Ltd.
1980:: Baer lists shares on the Zurich stock exchange.
1986:: Baer acquires a majority stake in the branch office in Geneva.
1989:: A subsidiary is formed in Germany.
1996:: The company acquires 51 percent of Bank Falck & Co. in Lausanne (100 percent in 1998).
1999:: The company opens branch offices in Milan and Amsterdam.
2000:: The company opens a branch office in Madrid and branch offices in Berne and Basel.
2001:: The company opens a branch office in Stockholm.
2002:: Raymond J. Baer is named chairman.