Moody's cuts Bank Julius Baer

Moody's Investors Service said it downgraded the long-term bank deposit rating of Bank Julius Baer & Co. AG by one notch to A1 from Aa3 and downgraded the standalone bank financial strength rating to C+.

In addition, Moody's affirmed Bank Julius Baer's Prime-1 short-term deposit rating and downgraded the long-term issuer rating of Julius Baer Group to A2 from A1 - which is one notch below Bank Julius Baer's A1 deposit rating - reflecting the structural subordination of the group.

All ratings, except Bank Julius Baer's short-term rating, were placed under review for further downgrade.

Moody's said the downgrade follows the group's announcement of its intention to acquire Merrill Lynch's international wealth-management business outside the U.S. from Bank of America, and reflects the continued and increased franchise pressures on traditional Swiss private banking franchises, stemming from: (a) the necessary recalibration of private banking models towards on-shore from off-shore centers; (b) declining gross margins from lower client-risk appetite and trading activities; and (c) operating expense pressures, including pressure from a strong Swiss franc.

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