The logo of Swiss private bank Julius Baer is seen at their headquarters in Zurich, Switzerland February 2, 2022.
The logo of Swiss private bank Julius Baer is seen at their headquarters in Zurich, Switzerland February 2, 2022. Reuters / ARND WIEGMANN

Swiss wealth manager Julius Baer has halted any new business with wealthy Russians, two sources familiar with the bank's operations said, as European lenders try to limit their exposure to Russia's elite amidst tightening sanctions.

Wealth managers in Europe have sought to distance themselves from the economic and political fallout of Russia's invasion of Ukraine, and Julius Baer this week began blocking any new business with Russian clients, the people said.

The European Union last week imposed sanctions blocking Russian citizens and residents from making new deposits above 100,000 euros ($109,160) into European bank accounts. However, Russian residents of an EU member state and dual citizens of a member state were exempted from that ban.

Switzerland on Monday followed the European Union's lead in imposing sanctions against Russia, and on Friday broadened its sanctions to include other financial restrictions already covered by the EU's moves.

That included blocking deposits above 100,000 Swiss francs ($108,885) from Russian citizens or from individuals and legal entities residing in Russia, as well as requiring banks to report on existing deposits from Russian clients above 100,000 francs.

However, already ahead of that move, Swiss wealth managers have sought to limit their exposure to Russian clients after previously finding themselves in the crosshairs of U.S.-imposed sanctions, including against Russia in 2014 and 2018.

"As a global company, we are used to operating in different jurisdictions and are obliged to comply with all applicable regulations. At the same time, we are well used to operating in neutral territory as a Swiss company," Zurich-based Julius Baer said, adding it took appropriate measures as necessary.

Wealth managers say European banks are currently taking an even more cautious approach than dictated by European sanctions by declining any new business with Russian clients, regardless of where they reside or whether sanctions apply to their money.

"If you go out to various custodian banks in Europe, nobody wants to touch a Russian contact," said one London-based wealth manager, who asked not to be named. "They're fine with their existing Russian client base and the assets that they hold. (But) if you go to all the obvious players, they'll immediately say no (to taking on any new Russian clients)."

The uncertainty has caused a number of Russian clients who already bank in Europe to seek out new relationships, the person said.

"In the last few weeks, we've had inquiries from a number of Russian families asking if they could work with us," the London-based wealth manager, who typically works with clients in the $30 million-$50 million range, said. "And we would never generally get inquiries from Russian families. It's not the area we operated in."

In Switzerland, the world's largest centre for offshore wealth, major wealth managers are aligned in shying away from taking on business with any new Russian clients, another person said, adding business with existing Russian clients - including wealthy individuals not on the sanctions list - could also presently be "challenging".

Julius Baer, which conducts business out of Zurich and Moscow as well as operating a Russia desk out of Dubai, declined to identify the size of its exposure to Russian clients.

"Russia is one of Julius Baer's core markets, along with numerous other major countries. We have been serving clients from Russia for over two decades. In Moscow, we are represented by Julius Baer CIS Ltd, an investment advisory firm licensed by the Central Bank of Russia," the bank said in a statement.

($1 = 0.9184 Swiss francs)

($1 = 0.9161 euros)