Swiss financial regulator FINMA has concluded enforcement proceedings against private bank Julius Baer, lifting or easing several restrictions and sending the bank’s shares sharply higher.
Julius Baer shares climbed as much as 8.8% on Tuesday, reaching a record high after FINMA announced the conclusion of its investigation.
The bank also said it had submitted a request to resume its share buyback program, which was suspended during the regulatory proceedings. The buyback remains subject to final approval from FINMA.
FINMA Finds Serious Risk and Compliance Breaches
FINMA said its investigation found serious failures in risk management and anti-money laundering controls at Julius Baer before the appointment of its current management team.
The inquiry focused partly on private debt loans involving a European group and banking relationships connected to two Russian politically exposed persons.
According to FINMA, Julius Baer ignored multiple warning signs, breached its own risk limits and facilitated opaque transactions linked to the collapse of Austrian property tycoon Rene Benko’s Signa group. The bank eventually recorded 586 million Swiss francs in loan losses in early 2024.
The regulator also found that Julius Baer had failed to properly establish the source of assets belonging to high-risk clients linked to the two Russian politically exposed individuals.
Restrictions Eased, but Additional Capital Required
FINMA has lifted or partially relaxed capital and liquidity restrictions imposed on Julius Baer.
The bank will now be allowed to gradually resume new business relationships with politically exposed clients from high-risk countries.
However, Julius Baer must maintain an additional 250 million Swiss francs ($300 million) in capital until it completes the disposal of clients deemed incompatible with its business.
That requirement is down from the previous 500 million francs. FINMA said the bank’s new minimum capital ratio of 9.4% remains well below its current level of 18.5%.
FINMA will also confiscate about 10 million Swiss francs in profits that it said Julius Baer generated in violation of supervisory requirements.
Fifth FINMA Enforcement Proceeding in Less Than a Decade
The regulator said the latest case marks its fifth enforcement proceeding against Julius Baer in fewer than 10 years.
FINMA described the findings as evidence of significant weaknesses in the bank’s internal risk and compliance culture.
As part of the measures, Julius Baer must submit compliance reports to FINMA through 2032. Dividends and other payments to shareholders will also require prior regulatory approval.
FINMA has separately opened proceedings against three former employees over possible violations.
Julius Baer Says Reforms Are in Place
Julius Baer said it has introduced broad corrective measures and overhauled its risk and compliance framework.
The bank has also shut down its private debt business as part of its restructuring efforts.
CEO Stefan Bollinger said the changes had created a simpler organization with a stronger foundation and clearer strategic direction.
Analysts at Zürcher Kantonalbank said investors could now begin to see the impact of the regulatory decision, including potentially limited share repurchases before the end of the year.
Julius Baer has also undergone significant management changes since early 2025 as it works to strengthen the bank following the problems surrounding its exposure to Signa.
With the enforcement action now concluded, investors are awaiting FINMA’s final decision on the proposed share buyback program.
