The story of Julius Baer began in 1890. 130 years later we sat together with Raymond J Baer, Honorary Chairman and great grandson of the company’s founder, Julius Baer, to learn how the humble family business has grown over the decades into the international reference in pure wealth management, with more than 50 locations in over 25 countries worldwide.
Julius Baer had a very modest beginning. It all began with a small money change house that eventually turned into a small family-controlled bank. Back in 1886, my great- grandfather Julius Baer emigrated from Germany to Switzerland, where he bought himself into Hirschhorn & Grob, a small money change house based in Zurich. Circumstances were kind to him and a few years later, in 1901, he was able to buy the firm. He renamed it Julius Baer and the Bank was born.
Julius Baer went on to have three sons: Richard, Walter, and Werner. This was the beginning of the family history and ownership of the Bank. When the second generation - Walter and Werner - entered the Bank, they were all living within a quarter of a mile of each other on Bergstrasse in Zurich. They knew each other as well as they knew themselves and the closeness of the families was of huge benefit to the company. Indeed, the three brothers, and eventually each of their chosen sons representing the third generation, never had a dispute about any of the important business decisions they made on behalf of the Bank, enabling it to move for-ward and grow without interruption.
They knew each other as well as they knew themselves and the closeness of the families was of huge benefit to the company.
As World War II loomed and Switzerland’s future was uncertain, my grandmother decided - as many of our clients did - to move to the United States with her four young children. Just before that, she had unexpectedly lost her husband, my grandfather. The three families of the second generation were therefore forced to live further apart. Because of the confusion of the war, a subsidiary of the Bank was established in New York in 1940. This was the first step in Julius Baer’s international expansion, and the start of our global outlook.
Over the next few decades, the three branches of the family grew rapidly – at times growing faster than the business itself. The family decided that a change was needed if the business was to flourish in a similar way, and, for a multitude of reasons, in 1974 the decision was taken to change the partnership into a stock company that would be floated on the stock exchange six years later. This was an unprecedented move; never before had a private bank opened itself up to the public in such a way. But we were rewarded for our bravery; the move coincided with the beginning of the equity bull market in the Eighties and we were able to easily raise the money to fund the Bank’s global expansion.
This was an unprecedented move; never before had a private bank opened itself up to the public in such a way.
The IPO fundamentally changed how our family interacted with the Bank. As the business grew, we realised that we needed to start viewing the business in a more detached, rational way. At first, we enlisted the help of an éminence grise to help us find this new perspective, but following my appointment as Chairman and a strategic review of our businesses in 2003, my cousin Michael Baer and I decided that we needed to change things more fundamentally.
Until that point, we had made a business predominantly with Europeans who wanted to stay in America rather than come back to Europe. However, times had changed and many of those families had now returned to Europe. We concluded that we could no longer maintain our footing in the United States. It was with a heavy heart that the family decided to sell our business there and go east – to Asia.
After a number of heated debates about what was best for the family and what was best for the Bank, we concluded that we needed to let the Bank grow up.
It wasn’t only the times that had changed, though. The regulatory framework had changed too, and we needed to change with it. After a number of heated debates about what was best for the family and what was best for the Bank, we concluded that we needed to let the Bank grow up. That meant moving to a one share, one vote system and relinquishing control of the Bank.
Although the end of the family-run era was not the end of the family’s involvement with the Bank, it was a hugely difficult and emotional decision for us all. Watching the incredible growth of Julius Baer from 2005 onwards, though, confirmed that it was the right decision for the Bank and it has been – and continues to be – a source of great pride for the family.
The purchase of five private banks from UBS in 2005, along with the asset management firm GAM, gave the Bank the cash flow to be able to expand in Asia. It also provided Julius Baer with an incredible new talent pool. Since my days on Wall Street in the Eighties, I had dreamt of instituting the meritocratic approach I’d experienced there at Julius Baer. Following the mergers, we were finally able to do it. We built a fantastically experienced team that was the equal of anything I could find in London or New York.
Since my days on Wall Street in the Eighties, I had dreamt of instituting the meritocratic approach I’d experienced there at Julius Baer.
It was with this new management team that Julius Baer headed into the financial crisis of 2008. The global recession left bank stocks severely depressed, mostly because of their investment banking activities, and so, following a valuation analysis, we realised that we had to separate from GAM. We needed to make sure that our currency, the currency of the private banking assets, became more valuable again. So, in 2009, we split the two companies and Julius Baer’s shares rapidly increased in value. This paved the way for the final step of our ambitious expansion plan: the acquisition of Merrill Lynch’s International Wealth Management business in 2012. This was the missing piece of the puzzle that really enabled us to offer the very best services and solutions to our clients.
Although at times it seems as if the changes happened in rapid succession, the transition from family business to public company has been a long metamorphosis, and the Baer family has accompanied the bank at every step of its transformation. Today, with Philipp Rickenbacher at the helm, we already have the fifth generation of professional CEOs at the Bank, but the family has remained close at hand. We have done this not only to ensure that the DNA stays the same, but also because we want to keep interacting with our clients and with the key decision makers of the Bank. Today, we can say proudly that we have done so successfully and we look to the future with a sense of great hope and excitement.
Reflections from Raymond J Baer
ON THE FUTURE
It is very important that all of us – not only the Baer family, but also the employees and clients of our Bank – keep writing chapters in the book of Julius Baer’s history. The book does not finish and we should all be proud to contribute our chapter. The only person who needs to live on forever in spirit is Julius Baer, our founder. All of us are just trying to make sure that this is a sustainable, responsible, proud, and passionate place to be. This is the best thing we can do to face the challenges ahead.
ON JOINING THE BANK
One has to understand that both my cousin Michael and I were educated abroad and had business experience abroad, which had a huge impact on how we viewed the business. I was on Wall Street in the best of all times in the Eighties, and I knew what a meritocracy looked like. It was a rough environment but they assembled some of the best and brightest people there. When I was asked whether I wanted to join the Bank in 1988, I hesitated because I was having such a great time. I was hesitant to come back to Zurich, which was a sleepy old town then, nothing compared to now, and Julius Baer was a family business – so I kept thinking how much fun could that be and what freedom would I have to change things? But looking back it proved to be an amazing journey – I had more change, more excitement, more positive and negative headaches than I could ever have dreamed of, because we could change and safeguard the business against many obstacles. It was a fantastic journey.
ON THE CULTURE AT JULIUS BAER
Julius Baer is a meritocracy that respects that we are dealing with human beings. We are not a very hierarchical organisation and should not tolerate politics within the firm. We demand that people respect each other throughout the hierarchies – from the mail service to the drivers to the cleaners. In our business, there is no reason to be arrogant and there is never a reason to look down on people, but there is always a reason to speak up. We need people who will speak up! May the best argument win! If that culture prevails, I am very confident that this Group will have a fantastic future.
We always believed when we expanded in Asia that the Julius Baer brand, its legacy, and its history were and are of huge relevance to the emerging markets, Asia in particular. We were lucky enough to have jumped on the train at the right time. Today we could not have built the business we have built. Asia is our second home market and it is indispensable to the Group.
ON GROWING UP IN THE BANK
Growing up, I remember that my father always used to come home for lunch. Back then, the banks closed for lunch, so he always used to come home to read the mid-day papers. I also vividly remember that our house was always full of our friends and clients of Julius Baer. We talked about world affairs, politics foremost, markets not so much. But my father rarely talked about the Bank at home – I learnt about the business much later on.