Swiss financial institutions are undergoing significant restructuring efforts as major players like UBS and Julius Bär grapple with recent turmoil and regulatory scrutiny.
At UBS, the upcoming announcement of the 2024 earnings is shrouded in uncertainty following substantial layoffs within its Private Equity division. Reports indicate up to 50% of the division’s employees may be let go, which has stirred considerable unrest among employees. Among those affected is Markus Benzler, one of the most central managers overseeing asset management, who had worked with UBS since 2005. His exit, along with other notable figures such as Matthias Gögele and Jochen Mende, suggests drastic changes are underway.
According to UBS, these changes are part of a broader restructuring initiative aimed at creating what they describe as 'a global leading private equity business.' A spokesperson stated, "After the Go-Live of Unified Global Alternatives, we aim to consolidate our teams and competencies to build on the strengths of the combined platform.”
While UBS is framing this as part of its strategy to boost profitability amid resourcing shifts, insiders raised concerns about the timing and nature of these departures, particularly as figures like Benzler were deemed integral to key funds including the Evergreen Secondary and the Swiss Entrepreneurs Fund.
At the same time, Julius Bär is facing pressure due to significant losses of 586 million Swiss francs linked to client René Benko, which has subjected the bank to regulatory enforcement by the Swiss Financial Market Supervisory Authority, or FINMA. The circumstances surrounding these losses raise serious questions about the risk oversight practices at the bank, particularly since the loans were issued without sufficient collateral. This troubling situation prompted the departure of the bank’s president, Romeo Lacher, who had been involved in the approval process for these significant loans.
Recently, Lacher was also removed from the board of the Swiss National Bank, bringing additional scrutiny to his leadership decisions. The regulatory enforcement measures spotlight previous issues, particularly after FINMA had previously chastised Julius Bär for serious breaches of money laundering regulations involving high-profile cases like FIFA and PDVSA, Venezuela’s state-owned oil company.
With the recent transition, Julius Bär’s new CEO Stefan Bollinger is making his mark with major leadership changes, removing 10 top executives from the company’s operational management. This move is aimed at streamlining the management structure and increasing accountability throughout the organization. Bollinger articulated, "A new leadership structure and slimmer management will increase responsibility, promote disciplined entrepreneurship from top to bottom, and strengthen our customer focus.”
The adjustments within Julius Bär highlight the increasing pressures faced by major banks to not only restore client trust but also adhere to regulatory standards, which appear more stringent following recent events.
Despite declaring significant profitability, with reported figures of over 1 billion Swiss francs from managed customer assets totaling 500 billion, the stagnation of revenue poses challenges. Bollinger’s strategy to tackle these issues includes cost-cutting measures under the initiative termed "Drumbeat," aiming to save 140 million Swiss francs annually, with potential job losses forecasted. The bank is addressing the need for greater operational efficiency, especially as it continues to navigate the fallout from its connection to Benko and the enforcement actions from FINMA.
Overall, the restructuring of these Swiss financial institutions could signal a broader transformation within the sector, as they work to align with regulatory requirements and rebuild their reputations. The outcomes of these changes will undoubtedly be closely watched by both investors and clients, eager to understand the future direction and stability of their financial service providers.