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.