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Press Release

Friday, March 13, 2009

Julius Baer: Information for Investors and Analysts, 13 March 2009

Switzerland to comply with OECD standards on tax matters

Banking Secrecy to remain in place - no automatic exchange of information

Today, the Swiss Government decided to comply with the global OECD rules on international cooperation in tax matters. This move is in line with other major financial centres. In detail it means:

  • The Swiss banking secrecy and the protection of personal privacy including financial privacy for foreign and domestic clients in Switzerland will remain in place.
  • Any automatic exchange of information with foreign authorities continues to be excluded.
  • Only in inpidual cases where there is a reasonable and sufficiently qualified suspicion that a tax offence has been committed will an exchange of information be enforced. So called fishing expeditions will not be possible, also going forward.
  • There will be a level playing field internationally as territories such as Austria, Belgium, Luxem­bourg, Guernsey, Liechtenstein, Singapore and Hong Kong have announced a similar decision to comply with the same rules.
  • The implementation of the OECD rules will be part of inpidual double-taxation treaties with other countries which will be renegotiated and ratified on an inpidual basis.
  • In addition, today's offer will be subject to a number of conditions including the non-retroactive effect of the new regime and the provision of transition terms allowing clients to orderly regularise their tax affairs under the new regime via tax amnesties or similar measures.

Switzerland's banks, particularly dedicated wealth managers such as Julius Baer will continue their long-standing tradition of serving sophisticated clients from around the world. In doing so, they have the advantage of building on a strong and homogeneous Swiss home base characterised by

  • a mentality driven by targeting the highest quality standards and an addiction to precision;
  • a long-standing and deeply rooted culture of respecting the privacy of the affairs of inpiduals; and
  • the stability of the Swiss political and economic environment.

As a result of applying and refining these characteristics over many decades of Swiss banking, our industry differentiates itself globally by

  • extensive knowledge and expert advice in international wealth management;
  • a superior product and service offering provided by loyal, multicultural and experienced employees; and
  • close proximity to clients, further underlined by a broad international presence.

What does it mean for Julius Baer?

  • With a world market share of 27%, Switzerland is the leading country in international wealth management and will, despite competitiveness-driven predictions by certain other financial centres, continue to be the major player in this area.
  • Julius Baer is the leading dedicated wealth manager in Switzerland. Over the last few years, we have expanded our international presence substantially, and today Julius Baer employs a staff of over 4,000 in more than 20 countries and 40 locations.
  • Julius Baer has a persified portfolio of businesses which also includes the Asset Management (GAM, Artio, Asset Management Europe) and the Private Label Fund business which in principle are not affected by the Swiss government's decision to comply with OECD rules.
  • As far as our Private Banking business is concerned, roughly one quarter of our clients are onshore and three quarters international clients, which primarily bank with us for reasons of excellency in wealth management. Also, we have successfully built a major client base in emerging markets which is hardly affected by the discussion. Most clients appreciate the privacy afforded by the Swiss legal system but do so for perse but not tax-driven reasons.
  • The decision of the Swiss government, announced today, will be subject to a number of conditions. Such conditions will include a lack of retroactivity and the provision of transitional terms, allowing affected clients to regularise their tax affairs under the new regime recognising legitimate interests of both the clients and relevant authorities.
  • Altogether, we consider the overall impact on the Group's assets under management as being very manageable indeed.
  • We believe that the certainty which this announcement brings is a positive development for the Swiss financial centre, for Julius Baer and for our clients and shareholders since it will allow all international banks working from the Swiss platform to continue to compete on a basis of known strengths.
  • With a level playing field, we are starting from the pole position having all key ingredients in place: financial infrastructure, decades of experience in expert wealth management, multicultural staff and political stability. In addition, our longstanding generational relationships will continue also into this new phase.