Julius Baer shelves Internet bank as profits drop

Julius Baer shelves Internet bank as profits drop

Julius Baer, the Swiss private bank, has abandoned plans to roll out an Internet bank after first half profits dropped by nearly half on the back of a weak stock market and rising costs.

At Sfr138 million, the Julius Baer Group’s net profit for the first half of 2001 was 45% lower than that for the year-earlier period. In contrast, operating expenses were up 7% to Sfr504 million versus Sfr473 million in the first half of 2000.

The bank, which caters for clients with at least $1 million to invest, has responding by cutting costs and shelving the roll out its proposed online bank Julius Baer Net, which was designed to cater for self-drected investors.

"The Julius Baer Group does not expect the prospects for online brokerage to improve soon," the bank said in a statement. "Nevertheless, individual platform components will be used within the Julius Baer Group."

The cancellation of the project alongside a general "downsizing" of back office budgets, including personnel costs, is expected to remove Sfr60 million from bottom-line expenses. The bank is looking for total group-wide savings of Sfr80 million annually.

Julius Baer Net was scheduled to begin operations later this summer. It was intended to provide a wider range of services for self-directed investors, beginning with stock market transactions, payments and account administration via the Internet.

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