Boris Collardi

Boris Francesco Jean Collardi (born July 17, 1974) is a Swiss-Italian bank manager. Having joined the Zurich based Julius Baer Private Bank as COO in 2006, he was the CEO from May 2009 until his widely unexpected resignation in November 2017.[1] In June 2018, Collardi joined the Geneva-based Pictet Group as partner.[2]

Boris Collardi
Born
Boris Francesco Jean Collardi

(1974-07-17) 17 July 1974
Nationality
  • Swiss
  • Italian
Occupation

Early Years

Boris Collardi grew up in Nyon, where he obtained an accounting major from the Cessouest School in 1993. Subsequently, he joined the Career Start Program at Credit Suisse in Geneva. From 1995 until 2006 he was active in various functions at Credit Suisse. Commencing as an Analyst in the Investment Research Group in Zurich, he worked his way through the ranks, including two stints in Singapore, before taking the role of private banking CFO in 2003 and becoming private banking COO of EMENA and Head of Special Projects in 2004.[3]

Julius Baer

Becoming CEO

In 2006, Collardi joined the Julius Baer Bank as COO following its acquisition of three private banks and GAM, a Swiss asset management company, in 2005. The publication “Global Custodian” credits him as a decisive factor behind the successful integration of these banks and the subsequent establishment of Julius Baer as “one of the premier addresses in global wealth management”.[4] In 2008, he topped the Wealth Bulletin top-40 list of rising stars under the age of 40 among over 300 contenders. Only one year later, following the tragic passing of Bank Julius Baer & Co. Ltd and Julius Baer Holdings Ltd. CEO Alex Widmer, Collardi was chosen to succeed interim CEO Johannes de Gier, in the process becoming the bank's youngest-ever chief executive.[5]

Strategy

The Wall Street Journal describes what followed as “an aggressive, acquisitive expansion”.[6] At the end of 2009, the bank had 150 billion Swiss francs in assets under management, 80% were booked in Switzerland.[7] Since then, Julius Baer has more than doubled its assets under management, totaling 393 billion Swiss francs in October 2017. Acquiring Merrill Lynch’s international wealth business in 2013 marked the largest single increase in AUM.[6] Diversifying into new markets was also part of the declared strategy – by 2013 more than 75% of the bank’s net new money originated from emerging markets, with Asia in first place followed closely by the Middle East. In 2014, Bank Leumi’s Swiss and Luxembourg business were acquired, with Commerzbank’s Luxembourg division and a majority stake in Italian asset manager Kairos following in 2016.[7] In 2015, Jimmy Lee was hired from Credit Suisse to spearhead Julius Baer’s Asian expansion, with the target of becoming the bank’s “second home market”.[8] Citing cost and complexity of a multi-market presence, Collardi predicted private banks would either focus exclusively on one or two markets, become part of a gigantic, integrated firm offering all facets of banking (asset management, commercial, investment and private banking), or achieve the critical mass to be able to afford an international pure-play private bank, the latter of which formed the basis of his strategy.[9] While keen on expansion, he stressed the importance of organic growth through direct hire and client acquisitions.[10] Asked about some of the failed attempts by competitors to enter the Asian market, Collardi remarked, “We look at three things: costs, investments and three-year revenue growth. At the beginning of each year, we are prudent and adjust short-term expenses and decrease headcount where needed.” Regarding management, he stressed the importance of keeping people in their functions for many years, eliminating the need to re-explain the strategy and building long-term trust with clients.[11] Consequently, the bank’s structure was divided into five markets with independent leadership: Switzerland, Europe, Asia, Latin America and emerging markets, in order to better cater to each’s individual idiosyncrasies.[7] Despite his ambitions, Collardi noted the importance of risk management when evaluating takeovers, going as far as to call them potential atomic bombs. As of 2016, Julius Baer planned to invest several hundred million Swiss francs into technology and was developing a new centralized, fully digital IT platform, to be rolled out worldwide.[10] Simultaneously, Collardi admitted that the bank had been a “late adopter” of technological advancements during a Financial Times interview.[12] Going forward, however, he expressed his enthusiasm for blockchain and its potential to improve transactional products and services, such as international money transfers or stock market trading.[13] He reaffirmed this stance two years later, saying the execution and back office aspects of the value chain will become fully automated and allow for increasingly customizable products. The value creation will shift from transaction execution, which becomes a low-cost commodity, to advisory, with additional resources allocated to direct client contact, understanding clients’ needs and improving the advice provided.[14] As of 2018, Luxembourg and Asia have migrated to the new platform.[15] According to Collardi, the rollout will be completed by 2020.[11] At the time of his departure, the bank’s price-to-book valuation was roughly double that of local rivals UBS and Credit Suisse.[6]

Resignation

On November 27, 2017, Julius Baer announced the resignation of its CEO Boris Collardi, effective immediately, due to his decision to take on a new position as partner of The Pictet Group, a direct competitor. Chief Risk Officer Bernhard Hodler assumed the CEO position, with the bank announcing an evaluation process addressing the long-term leadership of the group.[16] In September 2017, Bernhard Hodler was announced to be replaced as Chief Risk Officer by Oliver Bartholet, coming from UBS, effective April 1, 2018, with Hodler becoming deputy to the CEO.[17] There was speculation at the time as to Hodler being the intended successor to Chairman of the Board Daniel Sauter, who would be hitting the 12-year term limit in 2019. At the annual shareholder meeting in April 2018, Chairman Sauter announced Hodler was appointed to guide the bank in the long run and not as an interim solution.[18]

While the bank was generally considered to be in good shape by the company chairman Daniel Sauter, analysts as well as media outlets, his strong leadership position in the bank and the abrupt departure were considered risk factors towards the market valuation and mid-term success of the bank. Key shareholder Harris Associates also expressed their disappointment.[19] Shares opened down 4.2% following the news.[20] The news, while unexpected, should not have come as a complete surprise according to sources within the industry, as Collardi was known for his drive and affinity towards challenges and had largely implemented his vision for Julius Baer since taking over the realms in 2009.[7] He was quoted in 2014 saying, “When you have a challenging environment, you can win on strategy and execution. If you have the right idea, deploy the right resources, and see the opportunity before someone else, you can really make a difference.”[12]

Pictet

At Pictet, Collardi has assumed the role of partner alongside Nicolas Pictet, Renaud de Planta, Rémy Best, with whom he is running the bank's global wealth management business, Marc Pictet, Bertrand Demole and Laurent Ramsey.[21] He is the first outsider to join in almost 20 years and one of only 42 to ever hold such as position. Despite the company's smaller size, though the 492 billion Swiss francs in AUM are greater than at his former employer, Collardi stressed his desire to be more of an entrepreneur than employee as a key factor in his decision to take on the role.[19] Due to Pictet's legal structure, Collard's new compensation plan will likely never be released to the public, but his departure from Julius Baer did result in a considerable compensation cut including not receiving a bonus for 2017 and leaving behind over 7 million francs worth of unvested stock awards.[22]

Despite Pictet’s reserved attitude regarding public commentary, the bank has conceded its need to grow in Asia.[23] Collardi's extensive experience in Asia, a region where Pictet’s presence is comparatively small at US$36 billion AUM relative to Julius Baer's 65 billion USD, makes him a good fit for the bank. It has, however, also fueled speculation on the potential for poaching not only employees but client assets from his former employer. Collardi excluded this possibility, indicating there was enough room for both to grow, and mentioned that in any case getting to know the existing teams was required before decisions on additional hires could be made.[24] Given Pictet's 213-year history, traditional approach and tendency to hire from within the company, his appointment also made possible culture clashes a topic, considering Collardi's extensive personal network and tendency to be directly involved with staffing decisions. Nicolas Pictet, the eighth-generation to run the bank, remarked that, on the contrary, he sees Collardi as a powerful endorsement of the continued strategy of independence, organic growth and focus on the long term in the best interests of our clients.[25]

Impact on Switzerland’s Banking Sector

Besides guiding his former employer Julius Baer though the transition to a much larger, globally established pure-play private bank, Collardi has also engaged himself for the Swiss banking sector as a whole. He was president of the Association of Swiss Asset and Wealth Management Banks for over six years until his resignation in May 2018. During this time, he established the association as a recognised political and public voice, in alignment with his personal conviction that private banking is and should undoubtedly continue to be a key export industry in Switzerland.[26] Collardi was also a Board Member of the Swiss Finance Institute since 2014 and was elected Vice-Chairman in September 2017.[27] At the Swiss Banking Association's 2018 Annual General Meeting he was elected to the Board of Directors.[28]

Boris Collardi became CEO of Julius Baer during a time when the Swiss banking industry was facing significant challenges. The United States Department of Justice had begun investigating long-standing practices among Swiss banks with regards to how it treats foreign client assets. Julius Baer had voluntarily approached the DoJ regarding its past practices in 2009, something the Swiss Financial Market Supervisory Authority (FINMA) had advocated against, as it was looking for a universal solution for banks and raised concerns the bank may otherwise violate Swiss banking secrecy laws. Such an agreement was reached in 2013. Julius Baer signed a deferred prosecution agreement with the DoJ in 2016, in which the bank agrees to pay 547.25 million USD in compensation, which were booked in the bank's 2015 financial results, acknowledges its practice of helping US citizens evade taxes by setting up undeclared accounts, but in exchange will not be prosecuted. This penalty was lower than what rivals UBS and Credit Suisse paid and, as opposed to the latter, did not include an admission to a criminal charge. Acting Assistant Attorney General Caroline Ciraolo commented that while this agreement made it clear that there is a heavy price to be paid for misconduct, there is significant benefit in fully cooperating.[29] In 2016, Collardi announced he anticipates further consolidation in the finance sector as a result of both the settlements reached with US authorities and increased regulatory pressure going forward resulting in increased costs.[20]

While the investigations into Swiss tax practices were a setback for the industry, Collardi maintained Swiss banking had significantly more to offer than tax avoidance or evasion. During a 2010 offshore banking conference in Zurich, he commented: “Switzerland currently manages around a third of the world’s USD 7 trillion worth of offshore money. I believe around 40 percent of these assets currently under management in Switzerland are here for secrecy reasons but only around eight or 10 percent of that amount is here purely for tax avoidance and greater transparency will see this all but vanish. However, the levels of service and safeguard of assets that the Swiss banking system provides will enable it to continue its role as a safe haven for incoming funds.”[30] Part of his strategy for Julius Baer's expansion was to increase the percentage of mandated assets under management, meaning the bank makes decisions on behalf of the client on the basis of general criteria such as expected returns, acceptable volatility, market segments, ethical considerations and more. Mandated AUM increased from 30% in 2015 to 45% in early 2017, with the ultimate goal of reaching 100%. Another element was the implementation of new advisory levels based on tiers, the aim of which was to both increase the consistency and quality of the advice given to clients as well as stabilize the revenue streams for the bank amid stricter regulations on fees and retrocessions and an increasingly competitive market putting pressure on margins. Similar steps were taken at competitor UBS.[7] Talking to CNBC Asia in 2013, Collardi said: “I personally think that given a choice even in this new business model, clients will continue to favor Switzerland over other financial centers.”[31]

Vision for the Swiss Banking Industry

At the joint annual press conference of the Association of Swiss Private Banks (ASPB) and the Association of Swiss Asset and Wealth Management Banks (VAV) in January 2018, Boris Collardi presented his vision for Swiss private banking and wealth management, summarized below.[32]

Relevance of the sector

Collardi emphasises the significance of the sector for Switzerland. Private banking generates more than half of all revenues in the local banking sector. Within that sector, two thirds of gross revenues originate from the cross border business, in which Switzerland is the global leader, at twice the size of the US or Singapore, and three times the size of Hong Kong. On the other hand, the above-average growth rates in Asia up to 2021 make it clear this could change. He sees Switzerland’s stability and security as a central unique selling point. Nevertheless, Western Europe remains Switzerland’s largest cross-border wealth management market. It accounts for 40% of business at one trillion Swiss francs from EU domiciled clients and employs around 20’000 people and results in approximately 1.5 billion Swiss francs in business tax revenue. Most importantly, it is dependent upon active and unhindered access to the European Common Market and an intact, stable political relationship, ruling out a “stand-alone” policy for Switzerland.

Key challenges facing the industry
  • The high general debt level and the low interest rates which must be risk-managed.
  • The regulatory framework from the fallout during the financial crisis, described as “essentially sensible”, which result in increased expenditure on compliance, investor protection, accounting standards and tax data exchange.
  • Client expectations towards bank services (quality, reliability, transparency) and the IT platforms required to deliver this.
  • Increasing competitive pressure due to the globalized nature of the business.

Elements of future success

In order for Switzerland to remain the global market leader in private banking by 2025, he presents a competitive regulatory framework, a positive image and sustainability in the industry as essential.

Competitive regulatory framework

This takes into account the export nature of the private banking and asset management business. Implementation of the OECD developed automatic exchange of information (AEOI) is, by Collardi's assessment, a fundamental paradigm shift. It requires actively approaching clients and providing a full range of services locally rather than clients seeking out a bank. With regards to the European Single Market this assumes, at a bare minimum, continued bilateral agreements and acknowledged equivalency of Swiss financial regulation. In case the aforementioned does not succeed, Collardi suggests a comprehensive financial services agreement should be sought out which fairly balances Swiss and EU interests.

He emphasises the importance of refraining from the so-called ‘Swiss finish’, meaning not going beyond international standards and thereby putting the Swiss financial centre at a disadvantage. Effort should instead be put into ensuring compliance with the ‘level playing field’ principle by foreign competitors. Of particular relevance is the ‘activation clause’, recently adopted by the Swiss parliament, which was strongly advocated for by the Association of Swiss Asset and Wealth Management Banks. It means information is only handed over to a country if it adheres to the principle of reciprocity and there is an assurance it will be used properly. For context, in 2017, Yves Mirabaud, senior managing partner at the Geneva-based private bank carrying his name, commented that “Data could be sold or used to put pressure on clients or their families,” and that he is specifically referring to countries with uncertain democratic standards or high levels of corruption. Pascal Saint-Amans, the OECD’s tax policy director, acknowledged this argument, but added that if such an ‘activation clause’ was used as an excuse, the offending country will be sanctioned. Nevertheless, critics remained unconvinced, such as Nicholas Shaxson of the Tax Justice Network, an organization that lobbies against tax havens, who called it a “justification for an ocean of fraud.”[33]

Finally, he proposes the establishment of a ‘lighthouse’ institution for training and education in the financial sector, similar to what the world renowned Ecole hôtelière de Lausanne does for the hospitality trade.

Positive industry image

The positive image aspect focuses on highlighting the banking sector's over 200-year tradition as well as its efforts to maximize quality and professionalism. In order to achieve this, the dialogue with politicians, the administration and the population is to be stepped-up in order to achieve full acceptance as an export industry like any other.

Sustainable transformation

Sustainability in the industry involves the importance of partnerships and a continuous digital and industrial evolution. Partnerships with independent asset managers (IAM), have, by Collardi's assessment, been somewhat neglected in the past and are now rightfully receiving much deserved attention. Despite being competitors with regards to direct client contact and advisory services, they face the same challenges in dealing with regulation and training resulting in considerable interdependence. IAMs will not be able to cope with all of the incoming regulatory requirements and infrastructure demands, while larger banks will have the opportunity to diversify revenue streams by serving IAMs.

Collardi sees digitization as a positive impact, resulting in fintech and automated advisory services for the increasingly autonomous but demanding customers. However, he is convinced that the provision of personal advice to clients will always be at the heart of the private banking and wealth management business.

In the industrial aspect he draws comparisons to what has occurred in the automotive industry and calls for a more entrepreneurial approach. Manufacturing has largely been automated, with the majority effort being invested in research and development in order to differentiate the products. Similarly, he sees legal, compliance, standard banking documentation, procurement and mortgage processing as a priority for complete or partial automation. Further areas of interest are basic financial research solutions and solutions for know your customer (KYC) requirements such as client background checks. Due to the effort required to develop such systems, it is important for banks to closely cooperate in non-competing sectors, i.e. standardized solutions, preventing unnecessary duplications and increasing quality standards. He mentions the repositioning of SIX Group and their establishment of a “network services” innovation unit as a first step in the right direction. Its aim is to develop services for its shareholders, who are almost exclusively domestic and foreign banks.[34]

Other affiliations

Publications
  • Collardi, Boris F.J. (October 2012). Private Banking: Building a Culture of Excellence. Wiley. p. 256. ISBN 978-0-470-82437-5.

Interviews
gollark: ε™ by GTech™.
gollark: Why not? The apioformic "completeness" thing?
gollark: Of course, we can't actually work out what these numbers *are*.
gollark: "First" being "least absolute value" with a tiebreaker for negative numbers or something.
gollark: "First number not describable by any property other than this one", "second number not describable by any property other than this one", etc.

References
  1. Miller, John (27 November 2017). "Julius Baer CEO Collardi quits suddenly to take Pictet job". Reuters. Retrieved 8 March 2019.
  2. Advani, Shruti (13 June 2018). "Top Pictet Private Banker Resigns". finews. Retrieved 8 March 2019.
  3. "Curriculum Vitae" (PDF). Swiss Finance Institute. 2014. Retrieved 8 March 2019.
  4. "Julius Baer Appoints Boris Collardi As CEO". Global Custodian. 31 March 2009. Retrieved 8 March 2019.
  5. "Boris FJ Collardi". European CEO. 16 March 2010. Retrieved 8 March 2019.
  6. Davies, Paul J. (27 November 2017). "Julius Baer Loses CEO and Some of Its Luster". The Wall Street Journal. Retrieved 8 March 2019.
  7. Avery, Helen (27 November 2017). "Julius Baer: What's behind Boris Collardi's surprise move to Pictet?". Euromoney. Retrieved 8 March 2019.
  8. "Curriculum Vitae" (PDF). Julius Baer. Retrieved 8 March 2019.
  9. Derhally, Massoud A. (10 March 2013). "Julius Baer in the Middle East: Finding a new footing". Arabian Business. Retrieved 8 March 2019.
  10. "Julius Baer CEO says Asia revenue may excede Europe's in 5 years". Le News. 22 September 2016. Retrieved 8 March 2019.
  11. Avery, Helen (27 November 2017). "Private banking: Julius Baer's wealth-gathering machine". Euromoney. Retrieved 8 March 2019.
  12. Corcoran, Adrian (30 December 2014). "Interview: Julius Baer's CEO on Banks Middle East Growth Ambitions". LinkedIn. Retrieved 8 March 2019.
  13. Boris Collardi (6 October 2016). Julius Baer CEO: Blockchain will be a gamechanger (TV Interview). CNBC. Retrieved 8 March 2019.
  14. Boris Collardi (24 January 2018). EXCLUSIVE: BORIS COLLARDI SPEAKS FOR THE FIRST TIME SINCE HIS DEPARTURE FROM JULIUS BAER (1/2) (TV Interview). CNNMoney Switzerland. Event occurs at 6:00-9:30. Retrieved 8 March 2019.
  15. "Julius Baer's Tech Road Mao". finews. 1 February 2018. Retrieved 8 March 2019.
  16. Reuters (27 November 2017). "Switzerland's third-largest publicly traded private bank loses CEO to Pictet". The National (Abu Dhabi). Retrieved 8 March 2019.
  17. "JULIUS BAER STRENGTHENS RISK GOVERNANCE WITH EXECUTIVE APPOINTMENTS". Julius Baer Group. 22 September 2017. Retrieved 9 March 2019.
  18. Gruber, Angelika; Shields, Michael (11 April 2018). "Julius Baer CEO to lead bank for years - chairman". Reuters. Retrieved 8 March 2019.
  19. Winters, Patrick; Foerster, Jan-Henrik (27 November 2017). "Swiss Private Banking World Stunned as Baer CEO Joins Rival". Bloomberg. Retrieved 8 March 2019.
  20. Franklin, Joshua; Gruber, Angelika (14 January 2016). "Julius Baer CEO sees more consolidation in Swiss banking". Reuters. Retrieved 8 March 2019.
  21. "Boris Collardi to join Pictet as new Partner by mid-2018". The Pictet Group. 27 November 2017. Retrieved 8 March 2019.
  22. Bart, Katharina (19 March 2018). "Boris Collardi Leaves Millions on the Table After Julius Baer Exit". finews. Retrieved 8 March 2019.
  23. Bart, Katharina (28 May 2018). "Private Banker Boris Collardi Waves Goodbye to the Red Carpet". finews asia. Retrieved 8 March 2019.
  24. "Boris Collardi Explains His Exit". finews. 19 January 2018. Retrieved 8 March 2019.
  25. Advani, Shruti (27 June 2018). "Pictet Braces for Collardi Breeze". finews. Retrieved 8 March 2019.
  26. "New leadership duo proposed for the VAV" (PDF). Association of Swiss Asset and Wealth Management Banks. 20 April 2018. Retrieved 8 March 2019.
  27. "Swiss Finance Institute Appoints new Members and new Vice Chairman of its Foundation Board" (PDF). Swiss Finance Institute. 10 November 2017. Retrieved 8 March 2019.
  28. "Julius Baer CEO Collardi quits suddenly to take Pictet job". SwissBanking. 13 September 2018. Retrieved 8 March 2019.
  29. "Julius Baer signs final deal with the US". Swissinfo. 5 February 2016. Retrieved 8 March 2019.
  30. "Boris FJ Collardi". European CEO. 16 March 2010. Retrieved 8 March 2019. and Rajeshni, Naidu-Ghelani (30 May 2013). "Less 'Secret' Switzerland Still Favorite Banking Hub: Julius Baer". CNBC. Retrieved 8 March 2019.
  31. Rajeshni, Naidu-Ghelani (30 May 2013). "Less 'Secret' Switzerland Still Favorite Banking Hub: Julius Baer". CNBC. Retrieved 8 March 2019.
  32. ASPB Media Conference: Boosting private banks with a programme of reforms and differentiated regulation and "Differentiated Regulation Supports the Competitiveness of Private Banks" (PDF). Association of Swiss Private Banks. 18 January 2018. Retrieved 8 March 2019.
  33. Franklin, Joshua; O’Donnell, John (15 June 2017). "Swiss banks lobby for get-out clause as end of bank secrecy nears". Reuters. Retrieved 8 March 2019.
  34. "Corporate Governance". SIX Group. Retrieved 8 March 2019.
  35. "Boris Collardi". World Economic Forum. Retrieved 8 March 2019.
  36. "Boris Collardi". International Institute for Management Development. Retrieved 8 March 2019.
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