The Great Debate UK

Baer bows to the inevitable


REUTERS– Margaret Doyle and Alexander Smith are Reuters columnists. The opinions expressed are their own –

Raymond Baer is splitting the family firm. He has noticed the conflict between the private bank and asset manager. Or, as he puts it, “both entities will benefit from their sharpened focus and the absence of competing interests, thus acting pro-actively in the best interest of all of our stakeholders”.

In English, this means that Baer has realised that its long-term interests are not served by stuffing its well-heeled clients with pricey funds that generate fees for the bank at the client’s expense.
Indeed, many of the rich are feeling bruised from the losses they have taken over the past few years on structured products and alternative assets, like hedge funds, that were supposed to deliver an absolute return.

Fortunately for Julius Baer, it looks as if their private banking clients escaped much of the carnage visited upon GAM, its fund of hedge funds business, in the wake of the Lehman collapse last year. Just 10 percent of GAM assets came from clients of Julius Baer.