Julius Baer has recently taken significant steps to emerge from a crisis. The Swiss bank made headlines due to the collapse of Rene Benko‘s Signa Group, resulting in a reported loss of approximately CHF 586 million ($679 million). This incident has already tarnished its reputation. Now, Julius Baer is on the hunt for a new CEO, and former UBS and ING CEO Ralph Hamers is reportedly in the running. However, given his controversial past, Hamers may not be the right person for the job.
Ralph Hamers’ Troubled Track Record
Ralph Hamers‘ tenure at ING and UBS has been marred by several high-profile controversies, raising serious questions about his suitability for the CEO position at Julius Baer. While serving as CEO of ING, Hamers faced allegations of money laundering that led to a €775 million settlement by the bank in 2018. The Dutch Court of Appeal in The Hague later ordered a criminal investigation into Hamers for his role in the scandal, emphasizing that bank directors should be held accountable for serious regulatory violations committed under their leadership.
Despite these unresolved issues, Hamers moved to UBS in November 2020. His stint at UBS was also less than stellar. Shortly after taking over as CEO, Hamers faced ongoing scrutiny from Dutch authorities.
No charges have yet been brought. It is rumored in the Amsterdam scene that ING and Hamers are using their connections to avoid an indictment despite the court’s decision. The decision to investigate Hamers came after an activist foundation, SOBI, successfully challenged the original settlement, arguing that directors who have acted wrongly should not be able to escape personal prosecution by agreeing to large fines only for the company.
Pieter Lakeman, the SOBI chairman, pointed out via LinkedIn (screenshot right) just a few weeks ago that a refusal by the Public Prosecution Service to probe Hamers despite the court’s instructions would be unprecedented. But many things are possible in Amsterdam. It is not for nothing that Amsterdam is considered a hotspot for money laundering and financial crime.
The Payvision Legacy and Other CyberFinance Troubles
Hamers’ tenure at ING also included questionable decisions in the realm of cyber finance. 2018, under his leadership, ING acquired the Amsterdam-based FinTech company Payvision for €360 million. Payvision was known for processing high-risk transactions from merchants in the porn and gambling sectors and even facilitated illegal online trading platforms operated by convicted cybercriminals. This acquisition, widely criticized for its lack of due diligence, was a financial disaster for ING. By October 2021, ING had to announce the closure of Payvision, leading to a write-off of between €400 million and €500 million.
At UBS, Hamers oversaw another misstep in the cyber finance sector. The planned $1.4 billion acquisition of Wealthfront, intended to mark UBS‘s significant entry into the US market, was terminated by mutual agreement in September 2022. The decision was influenced by concerns over FinTech valuations at the time, which have since rebounded, making the failed acquisition a missed opportunity.
Julius Baer’s Recent Troubles
Julius Baer has been trying to recover from the reputational damage caused by its involvement with the bankrupt Signa Group. The bank reported a CHF 586 million loss due to its exposure to Signa, significantly impairing its private lending business. This debacle has already shaken investor confidence and highlighted the need for strong, stable leadership.
Despite presenting respectable results for the first quarter of 2024, with better-than-expected performance in assets under management and gross margin, Julius Baer has not fully convinced analysts, particularly regarding net new money inflows.
The Verdict: Hamers is Not the Right Fit
After the merger with Credit Suisse, Hamers was replaced as CEO of UBS in March 2023. Sergio Ermotti, the former UBS CEO who held the position for nine years until 2020, was brought back to the top of the company after UBS took over Credit Suisse.
Given Julius Baer‘s current situation and the need for a CEO to restore confidence and steer the bank clear of further controversy, Ralph Hamers does not seem the right choice. His history of unresolved money laundering charges, controversial acquisitions, and mixed performance at UBS and ING suggests that he might bring more problems than solutions to Julius Baer.
Julius Baer needs a leader with a clean track record and a strong vision for the future, free from the shadow of past scandals and legal troubles. As the bank looks to solidify its recovery and growth, it would be wise to consider a candidate with a proven ability to navigate complex financial landscapes without Hamers’s baggage.
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