Julius Baer is prepared to pay a fine to escape an escalating U.S. crackdown on offshore bank accounts after last week's indictment of smaller rival Wegelin raised tension among Swiss private bankers.
"We expect we will probably have to pay a fine, but have the resources to satisfy a solution," Baer chief executive Boris Collardi told a news conference as the bank announced 2011 results and a share buyback on Monday.
"We've taken an early, proactive approach with the U.S., taken measures including the U.S. exit in 2009 at our own decision, and have an ongoing constructive dialogue," Collardi said, adding he did not expect the bank to be indicted.
He did not say when a resolution was expected, nor how much Baer might have to pay.
U.S. officials have in recent months been piling pressure on Swiss private banks like Baer whose clients include wealthy Americans with hidden offshore accounts. That culminated in the indictment on Thursday of Wegelin, Switzerland's oldest private bank, which had broken itself up the week before in anticipation in order to protect other parts of the business.
Shares in Julius Baer fell 4.8 percent to 37.05 Swiss francs at 1100 GMT, underperforming a 1.2 percent slide on the European banking sector index.
Dirk Becker, analyst at Kepler Capital Markets, noted that Baer traded at a significant premium to other banks at 1.7 times book value compared to a sector average of 0.6 times.
"Julius Baer is one of the most defensive in our coverage of European banks, but also not free of problems," he said. "The resolution of the U.S. tax matter could potentially be very expensive."
Larger rival Credit Suisse, which reports 2011 numbers on Thursday, is also caught up in the U.S. investigation. The bank said in November it had taken a 295 million Swiss franc charge against third-quarter earnings in connection with the probe, but noted that the final settlement could exceed that.
Baer financial head Enkelmann said after paying 2011 dividends and buying back shares the bank still has roughly 900 million Swiss francs in excess capital, from which Collardi said any fine would be paid.
($1 = 0.9191 Swiss francs)
(Additional reporting by Caroline Copley; Editing by Emma Thomasson, Hans-Juergen Peters and Sophie Walker)
