Switzerland's financial regulator FINMA has closed its consolidated enforcement proceedings against Julius Bär, finding the private bank committed grave breaches of supervisory rules in its now-shuttered private-debt business and in relations with two Russian politically exposed persons (PEPs). It marks the fifth enforcement action against the Zurich-based lender in fewer than ten years.
The core finding centres on private-debt loans issued from September 2019 to a European corporate group and its founder, in deals whose aggregate volume surpassed 1 billion Swiss francs in 2022 and 2023. FINMA did not name the borrower but the figure points to the former real-estate investor René Benko. By end-2023 an engagement of 586 million francs remained on the books before being fully written down.
FINMA said Julius Bär was neither organisationally nor personally equipped for the business, lacking adequate internal rules, effective controls and trained staff. The regulator added that the bank ignored warning signs, breached its own single-name limits and violated disclosure requirements for concentration risks. Employees and external intermediaries received salaries and commissions worth millions as financial incentives tied to the relationships. The authority also objected to a 60-million-euro pass-through transaction that, it said, made the reported loan size at end-2022 inconsistent with economic reality.
In a separate strand of the case, FINMA concluded Julius Bär seriously breached anti-money-laundering duties towards the two Russian PEP client groups. The bank failed to adequately trace the origin of assets over several years, did not scrutinise adverse media reports and suspicious behaviour sufficiently and omitted required disclosures. Most damaging, in 2019 the bank granted an exception to its own know-your-customer rules — partly on the recommendation of a bank employee who maintained close personal ties to the PEP family.
The authority acknowledged progress: Julius Bär has exited the private-debt book, trimmed lending, strengthened control functions, overhauled compensation and redefined risk appetite. Board and executive management were largely renewed, and the current leadership was not in post when the violations occurred. Nevertheless, FINMA said previous countermeasures failed to produce the necessary shift in risk and compliance culture.
As sanctions, FINMA will confiscate roughly 10 million francs of profit that Julius Bär earned through the Russian PEP businesses. Until the bank completes the separation of assets that no longer fit its risk appetite, it must hold an additional 250 million francs in own funds — down from the 500 million previously demanded — implying a minimum CET1 ratio of 9.4%. Dividend and other shareholder payouts require FINMA approval for now. The bank reported a CET1 ratio of 18.5% at end-June 2026.
The order is not yet legally binding. FINMA has also opened proceedings against three former employees to determine whether they are liable for breaches of supervisory law or internal instructions.
Julius Bär acknowledged FINMA's conclusions, calling the cases legacy issues predating the current management team. Chief Executive Stefan Bollinger said the bank has spent the past 20 months rebuilding its risk and compliance framework, separating risk, legal and compliance functions and overhauling governance and pay.
With the capital headroom restored, Julius Bär has applied to FINMA for a new share-buyback programme, pending final approval.
