Julius Baer Is Shutting Down Its Panama and Peru Operations

(Bloomberg) -- Julius Baer Group Ltd. is shutting down its Panama and Peru operations as part of the Swiss private bank’s strategic review of its Latin American business.

The bank is seeking to keep client relationships in those countries while bankers and support staff are relocated to the Bahamas, Chile or Switzerland, a Baer spokeswoman said. The move will affect six relationship managers and support staff, and completes the review by Beatriz Sanchez, who now heads the bank’s Latin American unit.

Sanchez’ move comes only two months after an ex-Baer employee pleaded guilty to participating in a scheme to launder some $1.2 billion bilked from Petroleos de Venezuela SA. That prompted an internal investigation at Julius Baer, but hasn’t led to charges against the bank. A number of Baer’s senior bankers in the region have also left, mostly related to the strategic overhaul, two people familiar with the matter said.

Sanchez has been reviewing Julius Baer’s Panama operations as part of a wider examination of the bank’s business in Latin America, where it manages approximately 40 billion Swiss francs ($40 billion) in assets and employs roughly 160 relationship managers. A number of Baer’s senior bankers in the region have also left, mostly related to the strategic overhaul, two people familiar with the matter said.

“The closures of the Peru and Panama offices are the result of a recalibration of our local footprint,” a spokeswoman said.

Shares Decline

Shares of the bank declined as much as 1.8 percent in Zurich as of 9:57 a.m. after earlier declining as much as 2 percent. The stock has dropped by almost a quarter this year.

The Zurich-based bank grew rapidly through high-profile acquisitions and a hiring spree under former Chief Executive Officer Boris Collardi. The speed at which it grew led to questions about how some customers were vetted. Collardi’s successor is seeking to replicate that business success while addressing know-your-customer and other regulatory requirements more thoroughly.

Sanchez is concentrating her growth plans for the region on Mexico and Brazil, both through deals and hiring. The plan includes the opening of a representative office in Mexico -- where it currently operates through a joint venture -- further expansion in Chile and Colombia through strategic partnerships, and possibly an entry into the Argentinian market.

Julius Baer is also in early discussions to open in Miami to cater to wealthy Latin Americans there and is evaluating different scenarios, people familiar with the matter have said.

Matthias Krull, the banker who was arrested, worked for Julius Baer in Panama when he committed the crimes. He was charged in July and pleaded guilty the next month to a conspiracy that prosecutors say involved money managers and brokerages, as well as banks and real estate firms. Krull is awaiting his sentence.

Julius Baer has turned to a U.S. law firm to help scour Krull’s accounts. Quinn Emmanuel Urquhart & Sullivan LLP, the bank’s outside counsel in the U.S., is leading the review, three people with knowledge of the matter have said, asking not to be identified because it’s confidential.

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