GIC holds 3% stake in Swiss private bank Julius Baer

ZURICH • Singapore has built up a stake of about 3 per cent in Julius Baer Group, providing a major boost for the Swiss wealth manager as it struggles to attract new money and rein in costs.

The acquisition, through wealth fund GIC, will come as a relief for chief executive officer Bernhard Hodler after Julius Baer’s stock fell the most among Switzerland’s biggest firms last year. BlackRock and Wellington Management are also among its top shareholders.

Mr Hodler is under pressure amid a prolonged stretch of lacklustre returns as he works through cost cuts and purges riskier accounts. Last month, the private bank reported new client money that fell short of its targets.

Julius Baer has put together a shortlist of candidates to replace Mr Hodler as CEO and may make a decision by the third quarter, according to people familiar with the matter.

For the year ended March 31 last year, Julius Baer achieved a 20-year annualised rate of return of 3.4 per cent.

As of that date, its portfolio was split 37 per cent in bonds and cash, 23 per cent in developed-market equities, and 17 per cent in emerging-nation stocks. Private equity and real estate comprised 11 per cent and 7 per cent respectively, while inflation-linked notes accounted for 5 per cent.

It is not the first time GIC has invested in Swiss banks. The fund purchased debt in UBS early in the financial crisis and became the bank’s biggest shareholder when the debt was converted into stock. GIC then cut its ownership by almost half two years ago, saying it was “disappointed” that it lost money on the investment.

The London-based Sovereign Wealth Centre has put GIC’s total holdings at US$398 billion (S$545 billion), making it one of the world’s biggest state funds.

Julius Baer is not the only Swiss asset manager attracting the attention of big-name investors. GAM Holding, which has been rocked by client redemptions after a fund manager scandal, saw billionaire investor George Soros build up a 3 per cent stake through a subsidiary of his family office recently.


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