Baer: "Investors who think and act rationally are a naïve glorification"

Raymond J Baer (pictured), founding family member and chairman of Julius Baer Group Ltd, launched an impassioned defence of Switzerland as a financial centre at the company's AGM yesterday, but predicted that lessons learned by investors from the financial crisis would not be remembered in the future.

Declaring himself "quite pleased" with the performance of the Group's AUM in 2009, Baer nevertheless said things were not now back to normal. "The world has changed in the last two to three years. The tremors connected with this change have opened deep rifts. The quasi-bankruptcy of the Greek state is only the tip of the iceberg," he explained.

Given this, he said it was "remarkable" that Switzerland was able to reduce its public debt and had exited the financial crisis in a "relatively stronger shape". However, he accused others of being envious of Switzerland's success and causing "intrigue, confusion and vile intent."

In particular he named the OECD for its attempts to define tax evasion as a precursor to money laundering.

However, he also lamented the feeble efforts of the Swiss government to defend the country from "blunt and well-coordinated attacks" against Switzerland as a business location. "Many people are very concerned about the damage to our reputation," he said, stating that "Switzerland bashing" was now an acceptable practice.

In terms of the banking industry, Baer said the traditional Swiss bank-client confidentiality no longer exists "as we have known it". What's more, he predicted that "large amounts" of money would flow to Asia and tax revenues would "definitively" be lost, if the identities of account holders had to be disclosed to governments.

As for investors themselves, Baer claimed they have learned a lesson in the short term, but he was not sure when it came to the medium to long term.

"Investors constantly live in a state between hunger for returns and fear of losses. Investors who think and act rationally and markets that function perfectly are a naïve glorification," he said.

Julius Baer Group was established in 1890 and today has AUM of CHF 154 billion. Last year the Group separated its private banking and asset management businesses into two fully independent entities. (Click here to read our coverage of the story)

Want to get the latest family business/family office news direct to your desktop? Click here to register to receive our weekly newsletter

Are you a member of a multigenerational family business or family office? Click here to subscribe to our magazines