2008 Annual Report Julius Baer Holding Ltd. - Julius Bär Gruppe

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Foreword 2 Dear Reader 2008 was a year of almost unprecedented turmoil in the financial markets, severely affecting not only our industry but also the real economy globally, the full implications of which will only become visible in the months to come. As a dedicated wealth manager with a low, tightly managed risk profile, solid balance sheet and strong capital base, the credit crisis affected our Group primarily via the negative performance of the global financial markets and investors’ heightened risk aversion. While this also resulted in lower profits for the year, Julius Baer continues to show strong overall profitability supported by wellpositioned and well-regarded businesses. These events were overshadowed at the beginning of December by the unexpected death of our esteemed colleague and dear friend Alex W. Widmer, CEO of Bank Julius Baer and leading architect behind the new thrust for the private banking business of Julius Baer. The Board of Directors is extremely grateful that Hans de Gier immediately agreed to take over the leadership of Bank Julius Baer. Having served as Group CEO until September 2008, he is very well known to all our stakeholders. Hans de Gier will continue the successful private banking strategy, which resulted in record net new money inflows again in 2008, and also ensure the Bank’s proper adaptation to the fundamentally different market and business environment. To that end, it was decided to further sharpen the private client focus of Bank Julius Baer by realigning all client-oriented wealth and relationship management functions while reintegrating the Julius Baer branded investment fund and institutional mandate business into the reporting segment Asset Management. GAM, the Group’s active and alternative investment manager, was confronted with heightened risk aversion among investors, particularly in the private client segment, amid a hedge fund industry deprived of most of its core financing mechanisms. Unaffected by the market’s major casualties in 2008 and aided by its managers’ swift and decisive adjustment to the new circumstances, many of GAM’s core strategies stood out on the basis of strong relative performance and liquidity management, capitalising on proven manager selection and risk management processes. Separately, given its distinct business focus, in mid-February we announced our intention to list our US asset management business. Rebranded Artio Global by mid-year, its international equity-oriented products continued to appeal particularly to institutional investors, again supported by outstanding track records.
Total client assets of the Julius Baer Group amounted to CHF 338 billion at the end of 2008. Assets under management totalled CHF 275 billion, down from CHF 405 billion at the end of 2007. This decline reflects the severity of the downward pressure on asset prices last year in almost all investment categories, further aggravated by strong exchange rate fluctuations. In addition, assets under custody amounted to CHF 63 billion. With operating income negatively affected by the lower asset levels, all our businesses intensified their efforts to adjust their cost bases. Given the structural rigidity of most expenses in the medium term, this resulted in a 30% lower net profit for our shareholders of CHF 661 million for the year (including* in both years integration and restructuring expenses as well as the amortisation of intangible assets). Based on the good result and the strong capitalisation of our Group as evidenced by the BIS Tier 1 ratio of 13.6% at the end of 2008, the Board of Directors proposes to the Ordinary Annual General Meeting on 8 April 2009 an unchanged dividend of CHF 0.50 per registered share, representing a dividend payout of CHF 103 million. In addition, the Group repurchased own shares in the amount of CHF 299 million between the inception of the buyback programme in April 2008 and the end of the year. The programme will be continued, but take account of the targeted BIS Tier 1 ratio of 12% and the market environment. With their distinct fields of activities, own operating platforms and strong management teams, all our individually branded businesses are well positioned to weather the turbulent markets, by adjusting workflows and capacity to the realities of lower business volumes, and to seize opportunities for further expansion in those areas of the financial industry we consider attractive. In doing so, all of them can count on experienced and loyal employees whose commitment during the past very difficult months deserves the Board’s sincerest thanks. I would also like to take this opportunity to thank our Group’s clients and shareholders for their trust and continued support in 2009. Raymond J. Baer Chairman Zurich, February 2009 * Excluding these positions, the net profit for the shareholders of Julius Baer Holding Ltd. for 2008 amounted to CHF 852 million, down 25% from 2007. Foreword 3
Page 1 and 2: 2008 Annual Report Julius Baer Hold
Page 3: Content 2 Foreword 6 Corporate Gove
Page 8 and 9: Corporate Governance Corporate gove
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Page 32 and 33: Consolidated statement of comprehen
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Page 38 and 39: Summary of significant accounting p
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Notes The following table provides
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12 000 000 10 000 000 8 000 000 6 0
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Notes 6. Liquidity and financing ri
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Notes The following table shows an
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Notes - to assess all operational r
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Notes Capital adequacy Hybrid Tier
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Notes The following table gives an
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Notes 3 Net trading income 66 JULIU
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Notes 7 Income taxes 68 JULIUS BAER
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Notes 8 Reporting by segment 70 JUL
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Notes 9 Earnings per registered sha
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Notes 10c Allowance for credit loss
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Notes 12a Financial investments ava
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Notes 78 JULIUS BAER GROUP Balance
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Notes 14 Future annual commitments
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Notes 17 Debt issued 82 JULIUS BAER
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Notes 19 Provisions 84 JULIUS BAER
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Notes Additional information 21 Rel
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Notes 22 Pension plans and other em
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Notes 6. Defined benefit pension pl
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Notes 24 Derivative financial instr
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Notes 25a Financial instruments by
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Notes The following methods are use
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Notes Sensitivity of fair values to
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Notes 100 JULIUS BAER GROUP Head Of
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Notes 102 JULIUS BAER GROUP Head Of
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Notes 28 Share-based payments Equit
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Notes Movements in options granted
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Notes Assets in own-managed collect
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110 JULIUS BAER GROUP
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112 JULIUS BAER GROUP
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Income statement 114 JULIUS BAER HO
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Notes 116 JULIUS BAER HOLDING LTD.
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Compensation, loans and share- and
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120 JULIUS BAER HOLDING LTD. 31.12.
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Compensation of the members of the
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Proposal of the Board of Directors
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126 JULIUS BAER HOLDING LTD.
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JULIUS BAER HOLDING LTD. Bahnhofstr
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02/2009 Publ. No. 5 © JULIUS BAER
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Content 1 Introduction 2 2 Capital
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2 Capital adequacy 2.1 Capital rati
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2.3 Minimum capital requirement The
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The securities lending and repo tra
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3.3 Credit risk by region In the ta
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3.5 Credit risk after deduction of
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JULIUS BAER HOLDING LTD. Bahnhofstr
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2008 Annual Report Julius Baer Holding Ltd. - Julius Bär Gruppe

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