The Swiss private bank is more richly rewarding its top private bankers with year-end bonuses – after reducing their ranks by more than six percent last year.

More bonuses among fewer client advisers is how best to sum up the Swiss private bank's strategy for 2020 bonuses, according to «Bloomberg,» (behind paywall) which reports that Julius Baer is raising year-end awards for «high-performing» private bankers by at least ten percent, citing sources. By contrast, those lower on the performance metrics will see cuts of at least ten percent.

The move represents the fulfillment of an overhaul of pay and incentives under CEO Philipp Rickenbacher, as finews.com reported in September, and follows a surge in annual profits by more than half. The new pay scheme is Rickenbacher's method of severing a correlation between pay and past failures in fighting money laundering, for which former executives were taken to task by Swiss regulator Finma last month.

Seeking Greener Pastures

The ranks of Julius Baer's influential private bankers dropped by more than six percent on the year, illustrating that Rickenbacher's tightening of the reins was probably working: the bank employed 1,376 private bankers at year-end, which is 91 less than in 2019.

«We want our relationship managers to occupy themselves with sustainable profitability of the bank to a degree that simply wasn’t that relevant to them before,» Rickenbacher told finews.com four months ago. The pay scheme doesn't apply to 2020, but will be introduced over the next two years – and is likely motivating some bankers to seek greener pastures.

Ditching Long-Held Goal

Julius Baer's private bankers hoovered up 15.1 billion Swiss francs ($16.8 billion) in fresh money last year, which together with buoyant financial markets lifted Julius Baer's overall assets to 434 billion francs. The new money represents growth of 3.5 percent against its existing assets.

Julius Baer last year ditched a long-held target of netting at least 4 percent last year, a tacit admission that it had accepted tainted money in its period of heady growth from 2009 to 2017. The Swiss wealth manager's overall bonus pool will climb by an undisclosed amount, «Bloomberg» reported.