Executives at the Zurich-based bank told Bloomberg Monday that they are considering whether to start a wealth management business in the U.S. as well as seek out partnership or acquisition opportunities in Latin America in pursuit of growth.
Rapid economic growth has been quickly generating riches in countries such as Brazil and has turned the region into the second-fastest-growing wealth-management market in the world, behind only China, according to a report by accounting firm PricewaterhouseCoopers. The firm predicts a market explosion to $5.3 trillion in 2025 from $2.4 trillion in 2018.
The money of many Latin American clients is managed in the U.S., and Julius Baer won’t let the COVID-19 pandemic get in the way of its expansion into both American continents, according to Beatriz Sanchez, the bank’s head of the Americas.
“The question about a U.S. platform is: Which type of operation do we want, and to cover what markets?” Sanchez told Bloomberg. “And that is a decision that we take very seriously.”
Switzerland’s fifth-largest bank by assets is also aiming to double its assets under management in Latin America in three to five years, Sanchez said.
Despite closing its local businesses in Peru and Panama and shrinking its presence in Uruguay since 2019, Julius Baer is making moves in its larger Latin American markets. In Brazil, it bought a minority stake in a digital asset management firm last year, and in February it completed a merger of two of its Brazilian wealth-management subsidiaries.
Julius Baer is also considering further minority-stake investments in Mexico and opening another office in Chile, according to Bloomberg.
“We have taken a look at our Latin American footprint and decided that the focus needs to be in de-complexing and concentrating in markets where we can have an impact,” Sanchez said. “That fits with our long-term strategy of being one of the leading wealth managers for the region.”
But Julius Baer’s expansion efforts are hindered by regulatory sanctions it received in February, when the Swiss Financial Market Supervisory Authority banned the bank from conducting “large and complex” acquisitions in Latin America after finding that it “fell significantly short” in preventing money laundering in the region.
A former Julius Baer banker pleaded guilty in 2017 to being involved in the transfer of bribes between South American FIFA officials. Another did the same in 2018 for helping to launder bribery- and fraud-connected funds from a major Venezuelan oil company. Earlier this month, the Swiss bank said it is preparing a double-digit million dollar settlement with the U.S. Department of Justice over its role in the wide-ranging FIFA scandal.
Sanchez said the regulator’s investigations into her company were for practices in place before early 2018, and that Julius Baer has since undergone a “tremendous remediation process” and reinforced its codes of conduct as well as ensuring, “We have all the knowledge about a client.”
Julius Baer did not immediately respond to a request for comment.