FINMA imposes new controls on Julius Bär

CHF 250 million in additional capital will now sit behind Julius Bär's balance sheet after Switzerland's financial regulator closed a compliance procedure tied to the bank's Signa lending and a money laundering case.

The Swiss Financial Market Supervisory Authority, known as FINMA, announced the measures on September 29, 2026. It also restricted the bank's freedom to reward shareholders: dividends and other distributions must receive prior approval from the regulator.

The action follows two separate areas of concern. FINMA began examining loans to entities within a European group in December 2024, a reference to the private lending extended to Austrian property group Signa. In August 2025, it opened a further procedure concerning possible anti money laundering failures involving clients connected to two Russian politically exposed persons.

FINMA said the case was the fifth compliance procedure involving Julius Bär in less than ten years. The regulator has also begun proceedings against three unnamed former employees who may have breached supervisory law or the bank's internal rules.

For Switzerland's financial centre, the decision adds another regulatory test for a major private bank. It places capital, governance and client due diligence under continued scrutiny while the institution pursues its next strategic phase.

Julius Bär's Signa exposure produced a CHF 606 million write-down in 2023, turning private lending into the bank's defining risk event of recent years.

The loans went to entities associated with Signa, the Austrian property empire built by René Benko. Signa later entered administration. Benko was sentenced to two and a half years in prison by an Innsbruck court in September 2026 after being found to have caused losses to creditors, according to the linked reporting.

Julius Bär's loss led to a leadership rupture. Chief executive Philipp Rickenbacher was dismissed after the bank disclosed the write-down. FINMA then opened its procedure in December 2024, examining the bank's handling of several loans granted to entities within the unnamed European group.

The regulator's measures point to weaknesses that went beyond a single bad credit decision. Julius Bär said it has exited the private lending business, revised its risk management and compliance framework, strengthened governance and installed a new management team.

Private banks in Switzerland routinely serve wealthy entrepreneurs and international clients, but the Signa episode showed how concentrated, complex lending can expose a wealth manager to losses far outside its traditional business. FINMA's capital order now formalises the cost of that lesson.

FINMA confiscated about CHF 10 million in gains tied to two groups of Russian clients described as politically exposed persons, widening the enforcement action beyond credit risk.

The regulator launched a separate procedure in August 2025 to examine possible breaches of anti money laundering rules. The case concerned clients associated with two Russian PEPs. FINMA's decision does not identify the clients in the published account, and the three former employees facing separate proceedings have not been named.

Anti money laundering controls are a central obligation for Swiss financial institutions. Banks must establish who ultimately owns assets, assess the risks surrounding politically exposed clients and monitor whether transactions fit a customer's profile. The source material does not detail the transactions or the specific internal failures alleged in this case.

The confiscation removes gains that FINMA says Julius Bär made from the two client groups. The action also signals that compliance failures can produce a direct financial consequence even when a case does not involve a headline loss comparable to the Signa write-down.

Julius Bär has grouped the response within its broader overhaul of compliance, governance and risk management. The bank's new management team must now demonstrate that the revised framework works across a business serving clients from multiple jurisdictions and risk categories.

Julius Bär says its CET1 ratio stands at 9.4% after the new requirement, while the ratio was 18.5% at the end of June, according to the bank's statement.

The bank said the CHF 250 million requirement was CHF 500 million lower than the amount initially required. That means the first requirement would have been CHF 750 million, before FINMA reduced it as the case moved toward closure. The additional capital is measured in Common Equity Tier 1, the highest quality form of bank capital and a key measure of resilience.

Julius Bär said it remains on track with its 2026 to 2028 strategic cycle and its medium term objectives. It has also applied to FINMA for permission to launch a share buyback programme.

That application now sits against the regulator's distribution restriction. Until FINMA approves distributions, the bank cannot treat dividends or buybacks as an ordinary shareholder decision. Capital retention will remain linked to the regulator's assessment of the bank's progress and financial position.

The bank's balance sheet gives it room to continue operating, but the order limits flexibility. Management must fund its strategy, satisfy supervisory expectations and convince FINMA that its control reforms justify a return to normal capital distributions.

Three former Julius Bär employees now face FINMA proceedings, keeping individual responsibility in view after the regulator closed its main compliance procedure against the bank.

FINMA said the individuals may have breached supervisory law or internal guidelines. It did not name them or announce a finding of liability. The proceedings will determine whether their conduct contributed to the weaknesses identified in the Signa lending or money laundering matters.

For Julius Bär, the immediate task is operational. The bank says it has left private lending, revised its compliance and risk systems, strengthened governance and appointed a new management team. Those changes will be measured against the restrictions announced on September 29 and against the bank's request to buy back shares.

The decision also sits within a wider Swiss debate about how banks control complex exposures and international client relationships. Switzerland's private banking model depends on confidence in due diligence, risk assessment and senior oversight. Repeated enforcement procedures can raise questions for investors, clients and policymakers even when a bank retains substantial capital.

Julius Bär will continue its 2026 to 2028 strategic cycle under tighter conditions. The next milestones will include the progress of the individual proceedings, FINMA's decision on distributions and evidence that the bank's new framework has changed how risks are approved, monitored and escalated.