Julius Baer’s Moody’s Downgrade Worsens Latin America Hangover

(Bloomberg) -- Julius Baer Group Ltd.’s attempts to move on from a damaging money-laundering scandal in Latin America took another blow after the bank was downgraded by Moody’s Investors Service.

In a move that is set to increase the Swiss bank’s borrowing costs, Julius Baer’s issuer rating was cut to Baa1 from A3 by Moody’s after the bank was reprimanded by Switzerland’s financial regulator for money-laundering failings a little over a week ago.

A decade of breakneck expansion under former Chief Executive Officer Boris Collardi hit a wall in 2018 with the arrest of one of Baer’s former high-flying bankers in Miami, who was later convicted and sentenced to 120 months in prison for his role in laundering money for Petroleos de Venezuela SA, Venezuela’s state-owned oil company.

Then came a regulatory probe, the results of which were announced earlier in February. The Zurich-based lender fell “significantly short in combating money laundering” between 2009 and early 2018, Swiss regulator Finma said. It banned the bank from making any “large and complex” acquisitions as punishment and appointed an auditor to oversee progress.

A spokesman for Zurich-based Julius Baer didn’t immediately respond when contacted outside of normal working hours.

--With assistance from Steven Arons.

To contact the reporter on this story: Patrick Winters in Zurich at pwinters3@bloomberg.net

To contact the editors responsible for this story: Dale Crofts at dcrofts@bloomberg.net, James Amott, Robert Brand

©2020 Bloomberg L.P.