The AuM of structured products at Julius Baer and EFG International has declined to CHF17.0 billion and CHF4.2 billion as at the end of 2022, respectively.

Julius Baer Group saw its assets under management (AuM) fall 12% to CHF424 billion (US$452 billion) as at the year-end due to ‘negative market performance’ despite a recovery in net new money generation from an outflow of CHF1.1 billion to inflow of CHF9.8 billion in H2 22. 

Structured products accounted for four percent of total AuM, the same level as a year ago but a decrease from five percent as at the end of 2020.

Operating income was stable at CHF3.9 billion in 2022 year-on-year ‘benefiting from higher rates offset impact from AuM decline and lower client activity’.

A decline in structured-products-related income was offset by higher interest rates, which brought ‘significant rise in treasury swap income’. As a result, net income from financial instruments at fair value through profit or loss climbed 19% to CHF1.1 billion, accounting for 28.2% of the operating income after net commission or fee income at CHF2.0 billion.

Groupwide, the bank posted CHF1.0 billion adjusted net profit, down 8% YoY.

In addition, lower client deposits and structured products issuance led to a 9.2% decrease of balance sheet at Julius Baer as of the end of 2022 YoY. Assets amounted to CHF106.5 billion while financial liabilities from structured products issued were CHF11.6m, down 20.0% from a year ago.

The bank’s markets unit, headed by Luigi Vignola (pictured) following a spinoff last year, acts as a manufacturer and risk manager of structured products and derivative solutions issued from the bank's balance sheet.

SRP registered 1,140 SIX Swiss Exchange-listed structured products launched by Julius Baer in Switzerland in 2022, comparted to 1,505 in 2021 -  most were reverse convertible investment certificates, of which 225 were deployed with a worst-of option.

The Swiss bank has been strengthening its Asia Pacific teams. It welcomed Karthik Chandrasekaran, former head of brokerage and structured products at Citibank International Personal Bank (IPB) Singapore, in December 2022, as an executive director, non-resident Indian (NRI) investment specialist; and in July, appointed Rajarshi Mitra as Apac head solutions and sales, cross asset within the markets division from HSBC Global Markets based in Singapore.

EFG International

As at the end of 2022, the private bank's AuM dropped 16.8% to CHF143.1 billion from a year ago reflecting the market correction and the disposal of the Spanish private bank Asesores y Gestores Financieros (A&G) that took place in 2021.

The figure, which included CHF2 billion in investment products or services with ‘a dedicated ESG focus’, represented a further decline from CHF155.8 billion six months ago.

Structured notes accounted for CHF4.2 billion, making up 2.9% of the AuM, which was down 24.7% from a year ago.

The bank has ‘entered into specific agreements with a Swiss fintech company to manage all the material aspects of the structured notes issuance programme’.

‘While EFG International rely on the organisation, expertise and processes, documented and regularly reviewed by reputable independent third parties, it has implemented and continuously evaluates additional oversight controls to mitigate the outsourcing risk with this service provider,’ stated the report.

In March 2021, EFG International struck a partnership with Investment Navigator to automate suitability assessment of services and products including distribution eligibility checks on ISIN level for mutual funds, ETFs and structured products as well as digital compliance guidance on cross-border business activities.

In terms of financial liabilities designated at fair value, structured products contributed CHF218.8m as at the end of 2022, down 14.0% from a year ago,  which accounted for nearly half of the total.  

Additionally, the bank has pledged financial investment securities as collateral for CHF14.4m (2021: CHF 53.5 million) related to its role as collateral provider in relation to structured products issued by its fully owned subsidiary EFG International Finance (Guernsey).

Groupwide, net new money inflows dropped 22.7% to CHF6.1 billion in 2022 YoY. ‘Further increased operating leverage with underlying operating income up by 6.4% to CHF1.26 billion and stable underlying operating expenses at CHF 951.7m,’ stated the report.

EFG issued 94 EuroTLX-listed investment certificates in 2022, SRP data shows.

Click the links to read the 2022 annual reports of Julius Baer Group and EFG International.