Swiss bank Julius Baer to settle US tax probe for $547 mn

31 Dec 2015


One of the leading Swiss banks Julius Baer Group AG is set to reach a deal with US authorities over a tax probe by paying $547 million early next year.

Julius Baer, Switzerland's third-largest wealth manager after UBS and Credit Suisse has been under criminal investigation since 2011 by the US department of justice (DOJ) on how it helped Americans to evade taxes.

''The bank has reached an agreement in principle with the US attorney's office for southern district of New York with respect to a comprehensive resolution regarding its legacy US cross-border business,'' Zurich-based Julius Baer said in a statement.

The lender has kept a total provision $547 million for the settlement, which is $197 million more than the $350 million kept aside earlier in June.

The fine will be charged to the bank's 2015 full-year results, the bank said. Despite the adjustment, it still expects to make an adjusted net profit for the year.

The final deal, that has to be approved by the DOJ, is expected to close in the first quarter of 2016.

The bank said that it will remain adequately capitalised with a total capital ratio of 18.6 per cent as at the end of October, well above the set target of 15 per cent.

Julius Baer is not the only Swiss lender targeted by the US authorities for aiding tax evasion. The DOJ had opened investigations into numerous offshore banks located in Switzerland, India, Israel and elsewhere in 2008, and about 14 Swiss banks are included in the probes.

The fine is lower than the $900-million penalty anticipated by analysts. Swiss banking giant Credit Suisse Group AG had to pay a whopping fine of over $2.5 billion on similar charges in May 2014. (See: Credit Suisse pleads guilty to US tax evasion charges, fined $2.5 bn)

It is believed that the lighter fine is likely due to the bank's earlier efforts to disclose details of US accounts to the DOJ, which was thwarted by the Swiss financial regulator. In 2013, the Swiss parliament approved a legislation that allowed banks' cooperation with US tax investigations.

Julius Baer said it has been cooperating proactively with the DOJ investigation.

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