Julius Baer writes off Signa loans in full
The bank announces that CEO Philipp Rickenbacher is leaving the bank. It is withdrawing from the private debt business.
Bank Julius Baer is drawing the consequences of its exposure to Austrian real estate entrepreneur René Benko's Signa Group: the bank is making a full impairment of CHF 586 million on what it claims is its largest private debt exposure, with total net credit losses amounting to CHF 606 million. The bank announced this on Thursday morning when presenting its 2023 annual results.
The bank has also announced that it will withdraw from the private debt business. In future, it will focus on mortgage and Lombard loan solutions, where the Group has a long-term track record.
The unsuccessful Signa deal also has personnel consequences: CEO Philipp Rickenbacher is stepping down "by mutual agreement with the Board of Directors", according to Julius Baer. Deputy CEO and Chief Operating Officer Nic Dreckmann will take over the management of the bank on an interim basis. David Nicol, Chairman of the Governance and Risk Committee of the Board of Directors, will not stand for re-election at the 2024 Annual General Meeting.
Chairman of the Board of Directors apologizes
"On behalf of the entire Board of Directors, I express my deep regret that the full impairment of the largest exposure in our private debt business has significantly impacted our net profit for 2023," said Romeo Lacher, Chairman of the Board of Directors of Julius Baer Group. "We are now taking decisive steps to remove all uncertainties related to our private debt business and the future impact of this single credit event on our financial results, and we are exiting this business entirely."
The bank had not only granted Benko loans that were too high and thus created a bulk risk, reports the NZZ. It also failed to demand first-ranking collateral. The fact that Julius Baer is now expecting a total default is likely to come as a negative surprise to the markets, the NZZ continues. Observers had recently assumed that a third of the Benko exposure could still be saved because one of three loan tranches is linked to the valuable luxury trading business and Julius Baer is high up in the creditor hierarchy in this case. A few days ago, however, the German KaDeWe Group, which is an important part of this portfolio, filed for insolvency. (ah)
