Julius Baer's Future E-Bank Faces New Rule On Account Opening

Ulrika Lomas, Tax-news.com, Brussels

07 March 2001

Julius Baer, the Swiss banking group which specialises in asset management for both private and institutional clients, announced last year that it planned to meet client demands for swift and secure online services by launching an independent online bank "Julius Baer Net". The new bank will be geared to self-directed investors who wish to essentially go it alone when it comes to making investment decisions. However, Julius Baer is now saying that it may seek a partner for the online bank if Swiss rules call for all bank customers including "virtual" ones to register their accounts in person.

Speaking in an interview with Reuters, the bank's chief executive, Walter Knabenhans, said the group's decision to set up an online bank has been complicated by what is expected to be a new national ruling which would mean that potential bank customers will not be able to register anonymously online, but will have to present themselves, and their passports, at a physical office.

A final decision on the new rule has not yet been taken and bankers and regulators are still vigorously debating the pros and cons of the know-your-customer way of doing things (something the Swiss are now having to take on board). The word is that if the rule comes into force, it will apply to e-banking as well as the more traditional mode of banking. Mr Knabenhans said it now appears possible that in future 'the customer will have to be identified on the basis of ... showing up with a passport, and the bank taking a copy of the passport'.

He added: 'That is, generally speaking, a major burden for e-banking in Switzerland and clearly has an impact on our project.' Hence the idea of linking up with a partner, said Mr Knabenhans, who is still committed to the project, despite the announcement last week that fellow Swiss private bank Vontobel had scrapped plans for its online offering, y-o-u bank, citing cost and time issues. Mr Knabenhans said: 'We have been able to develop our project at a very reasonable cost, we think that we have a solution that is very scalable. It is very much automated'. He added that setting up a standalone Internet bank would probably be more workable than integrating online banking into the bank's existing services.

Julius Baer's online bank is likely to sell a range of products, including mutual funds domiciled in jurisdictions such as Switzerland, Luxembourg and Ireland, but not in the more "exotic" locations, said Mr Knabehans. The bank will will also offer funds from its competitors.

Recommended