(Bloomberg) -- Julius Baer Group, Switzerland’s third-largest wealth manager, said its affluent Russian clients were less active in the first half of the year amid political tensions in the region.

“The entire eastern European business and in particular, Russia business, is a bit on hold,” Chief Executive Officer Boris Collardi told Bloomberg Television’s Manus Cranny in an interview today. “Russians are waiting to understand in what direction one or other sanctions could be going.”

Russia’s relations with the rest of the world are deteriorating four months after its annexation of Ukraine’s Crimea region sparked a geopolitical crisis. The U.S. and Europe have slapped sanctions against Russia and leaders from London to Washington have warned that President Vladimir Putin risks becoming a pariah.

While Russian nationals have refrained from using the bank’s services such as trading, Julius Baer continues to advise Russian millionaires who typically live outside their home country in places like London and Monaco. Many benefit from U.K. rules allowing wealthy people living in London to be non- domiciled for tax purposes, in exchange for paying an annual fee. Those people typically deposit funds outside the country and remit only what they need within the U.K.

Julius Baer has no plans to discontinue relationships with Russian customers, Jan Vonder Muehll, a spokesman for the Zurich-based company, said in an e-mailed response to questions. “We see clients acting more cautiously and waiting on the sidelines of markets.”


Julius Baer had inflows from Russians at its European booking centers in the first six months, Collardi said at a presentation in Zurich. The bank accepts deposits in seven locations around the world including Switzerland, Guernsey and Monaco.

Russian clients account for a low single-digit%age of Julius Baer’s 274 billion Swiss francs ($305 billion) of assets under management, according to the CEO. The bank also has a representative office in Moscow, which doesn’t accept deposits locally.

International private banks have earmarked eastern Europeans and Russians as one of the faster-growing wealth- management markets, along with areas of Asia, the Middle East and Latin America.

Russian private financial assets may increase more than 80% to $4 trillion by 2018, Boston Consulting Group said in a report last month. By comparison, wealth in Germany -- one of Julius Baer’s more traditional markets -- may increase to $9 trillion by 2018, from $7 trillion at the end of last year, the group said.

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