The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A major Swiss-owned financial institution yesterday revealed the closure of its Bahamas business with the loss of 30 jobs in the latest blow for the financial services industry.

Julius Baer said the decision to close its Nassau "booking centre" was part of a strategy designed to slash its global cost base by 200 million Swiss francs, adding that The Bahamas terminations would be "staggered" during an orderly wind down with all staff receiving due severance pay and benefits.

Peter Wirth, Julius Baer Bank (Bahamas) principal, did not return Tribune Business messages seeking comment, but a spokesperson said: "It's about 30 employees that will be impacted. Julius Baer will conduct a professional liquidation process. This will take time, so the job cuts will be staggered. The affected employees will receive severance packages."

In subsequent replies to Tribune Business questions, Julius Baer made it clear that the decision to exit The Bahamas was driven largely by its own "commercial" strategy and view of its "future growth potential" in this nation.

"Julius Baer will no longer have a presence in The Bahamas once the liquidation process has been finalised," the institution confirmed. "The decision to close our office in The Bahamas is a purely commercial decision based on future growth potential.

"The closure is part of a global efficiency programme which the group has announced today. This is a purely commercial decision. The group is reviewing its global footprint based on future growth potential."

Julius Baer's updated global strategy report, released yesterday, said The Bahamas exit was part of a wider cost-cutting drive. International media reports said up to 300 jobs group-wide may be shed, meaning this nation would account for 10 percent of the total.

"Julius Baer will reduce its cost base by 200 million Swiss francs through productivity and efficiency measures," the report added. "These measures will include simplifying its organisation, improving operational excellence in all areas, and reviewing the Group’s geographic footprint based on future growth potential. It has already been decided that the booking centre in The Bahamas will close."

Bahamian employees, based at its Ocean Centre headquarters at Montague on East Bay Street, were informed of the Swiss-headquartered institution's decision for the first time yesterday.

"After the long-standing commitment to The Bahamas, Julius Baer has not taken this decision lightly and regrets the impact of this group-wide programme on local staff and clients," the bank said.

"All the necessary steps for this process are being taken in close alignment with the relevant authorities. The booking centre will remain operative for an appropriate period of time in order to allow for an orderly dissolution of the business. The group is committed to offer all affected clients a suitable alternative."

Julius Baer added that it would assist its Bahamas-based staff through the wind down, "and continues to rely on their professionalism and support". It added that the closure was designed "to address margin pressure and structurally lower the group's cost base by 2022, as its bids to simplify its organisational structure and "streamline" the front office".

News of Julius Baer's impending closure stunned many in the financial services industry. One executive messaged Tribune Business: "Trying to see if they are completely closing down their trust company, too. We had several senior trust officers who went there so we're all very concerned."

Elsworth Johnson, minister of financial services, trade and industry and Immigration, declined to comment on the implications of Julius Baer's exit as he had just returned to The Bahamas and was unaware of what had happened.

However, the loss of such a major name in Swiss and global wealth management represents another hit for The Bahamas together with the loss of more high-paying jobs from a sector that has played a key role in developing this nation's middle class.

The Julius Baer decision is a further sign of how global consolidation continues to impact the Bahamian financial services industry as institutions reduce their footprint to operate only from nations where they can achieve the desired returns. "It's bad news. Those are high-paying jobs," one source, speaking on condition of anonymity, said.

Craig A. 'Tony' Gomez, Baker Tilly Gomez's managing partner, yesterday told Tribune Business that "the message it sends" was likely to be more important for the wider Bahamian financial services industry than the loss of jobs.

He added that the arrival of new institutions tended to signal a jurisdiction was strong, and doing well, while their departure was often interpreted as a sign of weakness. "It's a bit unfortunate," Mr Gomez said of Julius Baer 's move, "but it could merely be a shift in strategy, which is commonplace these days.

"We have to examine ourselves, and The Bahamas is still a well-regulated, well-run jurisdiction. We're not seeing anything different from other jurisdictions. The story of today has changed from that of yesterday, and every financial institution is evaluating where they must move to.

"It's not only happening with financial institutions, it's happening with Google, Amazon and Facebook. It's all the major players. But for an island nation like ourselves, where the financial community is the second largest part of the economy, we're hopeful the minuses don't outweigh the pluses."

The Bahamian financial services industry has struggled to grow, and effectively been in a state of slow decline, following the 2000 "blacklisting". It has been kept off-balance by a constant stream of tax, anti-money laundering and counter-terror financing initiatives from the likes of the European Union (EU) and Organisation for Economic Co-Operation and Development.

Financial services industry sources had last week predicted that 30 lay-offs were coming in the sector, but suggested they were likely to fall at another institution - Private Investment Bank - not Julius Baer. It is unclear whether they named the wrong institution, or if something similar has - or will - occur at that other bank. There was no confirmation of this before press time last night.