|The Bahamas Investor Magazine
January 21, 2015
January 21, 2015
This past year, Julius Bär Bahamas marked an important milestone—its 35th birthday. For more than three decades the Swiss bank has been a fixture of The Bahamas’ financial services scene and the group’s chief executive officer, Boris Collardi, is bullish on the prospect of many more years to come. Collardi, who has been at the helm of Julius Bär for five years, is pursuing an ambitious growth strategy that involves exploiting the potential of emerging markets, making strategic acquisitions and investing in infrastructure and talent.
The Bahamas plays no small part in these plans, with Collardi calling the jurisdiction a “cornerstone” of the bank’s future, and praising the jurisdiction’s long tradition of banking, combined with its ability to roll with the changes.
“Thirty five years is a very important milestone. If you celebrate 35 years it means there has been continuous business and demand,” he says. “The financial centre in The Bahamas has adapted, developed and positioned itself over a long period of time to answer client requirements. That is a pretty good prerequisite for the future. The authorities and the financial centre at large have a proactive dialogue and think of what is required for the future. People are on the ball and understand that The Bahamas is a dynamic centre that needs to be managed accordingly.”
High on the agenda for Julius Bär’s future in The Bahamas is investment. Investment not only in the bank’s product portfolio, but also in its staff. Collardi is positive about the depth of talent in The Bahamas and says that professional development is a key part of progress in an industry where relationships are fundamental to success.
“There is a strong pool of banking talent in The Bahamas and the fact that it is able to educate people to serve sophisticated international clientele really speaks for the place,” he says. “We are continuing to invest in infrastructure, people and developing talent. That is the way it has to work for an industry like ours that is based on relationships.
“We are not in the tangible goods business. We are providing a service that gets translated into a set of products and solutions and along the way you cannot connect with anything except your banker. When you have a relationship with people that is the basis for creating trust and when you have trust, you can do business.”
Regulating the markets
That emphasis on relationships is why Collardi became a banker in the first place. After being prompted by his father to take up an internship with Credit Suisse at 19, he got to see the nuts and bolts of banking and was soon hooked. “It was almost love at first sight,” he says. “I liked that banking was one of the industries where you invest in people. I thought it was really interesting to see the way a bank functioned—how things come together, how you advise clients.”
Collardi became CEO of Julius Bär just as the global recession took hold and bankers started to feel the bite of the failing economy. Despite the uncertainty, the new CEO relished the challenge.
“When I took over it was the worst time. It was really the low point, but I like to develop and build businesses where there is work to be done. That is where it is most interesting.”
Following the crisis, corrective measures were introduced that had a profound effect not only on the markets, but also the entire wealth management landscape, according to Collardi, who predicts that the effects will be felt for years to come. “The regulatory environment is very tough and is still evolving. Some banks still do not have enough capital to weather another storm. The changes will stay with us for another three to five years. People do not like to hear it, but I think that’s the reality. We are at a very interesting point in the history of the industry. Once this process is finished, we are going to have a stronger, more concentrated industry.
“Wealth management was not invented yesterday and I personally feel a sense of responsibility. In 10 or 15 years we will get into calmer waters and what we have then will be a result of how well we managed this period of transformation.”
Having worked with, and learned from, “real bankers” throughout his career, Collardi particularly wants to see the sector shed its negative image and reward those who have been consistently delivering good service in a difficult environment. “If I look at the reputation of the financial services industry, it is certainly not where it should be considering the high quality of people we have,” he says. “The minority’s actions ruined the reputation of our whole industry, so we are on a mission to show that honest work is rewarded. There is no free lunch. In the future you are only going to be paid for doing the right thing, for adding value, for producing performance and for giving good advice. If you put the interests of the client at the centre, then you have a sustainable industry.”
The client-centric model is becoming even more important as the world’s wealth shifts and emerging markets such as those in Latin America and the Caribbean give rise to more diverse consumers with unique needs. Around half of Julius Bär’s assets derive from markets outside of Europe. Although Asia currently takes the lion’s share of these, Latin America is a growth area for the bank and Collardi says it is targeting numerous countries in that region, such as Brazil, Mexico and Colombia, tailoring their approach for each market.
“For Latin America our strategy is expansion in all these different markets and The Bahamas is one of the cornerstones of this,” says Collardi. “The Bahamas can and will play a bigger role for regional clients. We see clients from the region increasingly interested in coming to The Bahamas.”
Julius Bär is hoping Latin American operations will follow the successful precedent set in Asia where, for almost a decade, the bank has been steadily building a presence and is now the sixth largest wealth management firm. With more than 1,000 employees in that market, Collardi calls the region “a second home for us” and credits the bank’s versatility for its success there, saying: “Asia is something we built from scratch. You have to adapt to the local environment. We are very comfortable there and that is something we want to replicate in other parts of the world.”
A shrewd acquisition policy has helped Julius Bär in its drive to capture market share worldwide. The bank made headlines in 2012 when it acquired Merrill Lynch’s International Wealth Management business in a deal worth around $840 million. The purchase, which saw Julius Bär scoop up well-established operations throughout Asia and Latin America and increase its presence to more than 25 countries and 50 locations, was one of the proudest, and most challenging, moments of Collardi’s career.
“When I started in the ’90s [in banking], Merrill Lynch was an establishment. Not only in investment banking, but also on the wealth management side. [The acquisition] was something I never thought I would experience in my career,” he says. “It was a very big, traumatic transaction in a way. There is not a part of the business that hasn’t been affected.”
A year prior to the Merrill Lynch acquisition, Julius Bär purchased a 30 per cent share of the largest wealth management group in Brazil, GPS Investimentos Financeiros & Participacoes, and in March 2014, bought a further 50 per cent–increasing its holding in the firm to 80 per cent. “In the last few years, Brazil has been a domestic market and that is why we made an acquisition there—to have a footprint, to have a presence and to serve clients locally.”
Collardi believes acquisitions are a natural part of the growth trajectory for a bank such as Julius Bär that finds itself thriving in a contracting, and cautious, market. “When you are doing a good job, you grow a little bit faster than the market. We have done quite a lot of acquisitions in the past few years because of the huge consolidation in the market,” he says. “Today, there are a lot of sellers, but not a lot of buyers. That presents an opportunity.
“We have never gone out there and said ‘we need to be this big, or that big’. Our growth has been a result of our strategy and our focus on our core competence, which is wealth management.”
For Julius Bär, growth abroad has been matched by growth at home. The bank’s main focus is its core market of Switzerland where it is the third largest wealth manager behind UBS and Credit Suisse. “We believe that if you are a Swiss bank, your key strength has to be in your home market,” says Collardi. “UBS, Credit Suisse, Julius Bär all of us are growing–at different paces, but we are all growing. I believe Swiss firms will have massively expanded outside Switzerland in a window of 10 to 15 years.”
Collardi is proud to be at the forefront of Swiss banking and says he feels obligated to showcase his country’s financial strengths. “That is one thing I would like to prove to the world—that a Swiss bank can not only transform itself and innovate, but also be one of the leaders of its industry globally. I think that is really important. We believe that Switzerland, as a small country with fewer resources, has to be more flexible than others to be able to compete.”
With the integration of Merrill Lynch’s international business nearly complete, Collardi says his immediate priority for Julius Bär is giving the bank a chance to catch its breath. “When you do such a large integration, you need a bit of a consolidation and digestion phase.”
However, the globe-trotting CEO will not pause for long. This year, Julius Bär celebrates 125 years of operation and is taking the festivities on the road to reward and thank its clients, partners and employees across the world. Meeting the people on the ground is fundamental to Collardi’s leadership philosophy, believing that the best CEOs are the most visible and most communicative.
“You cannot run this business from your office, based on a spreadsheet,” he says. “You need to get to know people, make yourself available, to listen and to communicate. I try to communicate to people that we do not just have to get to the next quarter, we have to build the future of this company.”
While celebrating the past 125 years, the bank is also looking ahead. In the near future, the firm is investing “several hundred millions” into a new communications system that will bring together the fragmented infrastructure of its various offices into one streamlined platform. Collardi estimates that the new system will take up to four years to complete and says it will help the bank improve its performance. “My objective is that five years down the road we have a very highly competitive infrastructure processing system that allows us to render the best service to the client,” he says. “Our team can really focus on delivering the best service to the client and ultimately to deliver very good performance.”
On a personal level, Collardi’s plans align with the bank’s. The CEO considers himself a “guardian” of the firm, which he calls his “family,” and says he hopes to be proud of all he has accomplished when he eventually hands over to a successor. To this end, he guards against complacency, saying: “Where we are today is thanks to a series of achievements, of goals that we have set and challenges we have conquered, but that is all behind us. The road ahead is the one to conquer. That is the spirit we try to have across the firm.”