Julius Baer said it will slash $207 million from its spending bill over the next two years, including by cutting hundreds of jobs. The private bank ditched a long-held money-gathering target.

The Swiss wealth manager wants to cut costs more deeply than it had begun to last year, and now targets another 200 million Swiss francs ($207 million) in spending cuts by 2022, it said in a statement on Monday. The move, as well as new financial targets from the 130-year-old private bank, is the first major step by Philipp Rickenbacher since becoming CEO five months ago.

Julius Baer said it will eliminate 300 jobs – or nearly five percent of its total workforce, as finews.com exclusively reported in December. Of those, up to 200 will be in Switzerland – where even private bankers who deal directly with clients won't be spared. The bank recently emerged from a costly clean-up following several major scandals, including worrying proximity to corruption at Venezuela's Petrobras.

Pleasing Shareholders

Rickenbacher, a former consultant, must redefine the bank and kickstart growth. Julius Baer will in future pay out 40 percent of its profits to shareholders in dividends, and may also pay special ones or buy back shares. It abandoned a long-held target of netting at least 4 percent of fresh money vs its existing assets, and didn't set a new one.

However, Rickenbacher improved on a current spending target: the bank now wants to lower its cost-income ratio to 67 percent (the previous goal was 68 percent, and Julius Baer currently stands at 71 percent).

Early Setbacks

The steps come after Julius Baer's profits last year crashed by more than one-third to 465 million francs, from 735.3 million in 2018. Profits were hit by several setbacks for Rickenbacher early in his tenure, including a 153 million franc reserve for a decade-old East German case and another 99 million for Italian asset manager Kairos.

The bank had already embarked on a cost-cutting program last February, but it wasn't enough to offset revenue which stagnated at 3.4 billion. Julius Baer lifted its assets to 426 billion francs, thanks mainly to favorable market swings. It netted 10.6 billion francs in fresh money, down from 17.4 billion in 2018.