Julius Baer hit by Signa publication, announcing the departure of CEO and job cuts

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A pedestrian sheltering under an umbrella passes the Julius Baer Group Ltd branch. in Zurich, Switzerland, on Tuesday, 13 July 2021.

Stefan Wermuth Bloomberg | Getty Images

Swiss bank Julius Baer on Thursday reported a large net credit loss related to its exposure to real estate group Signa Holding, while announcing that CEO Philipp Rickenbacher would resign and the company would cut 250 jobs.

Group Chairman Romeo Lacher said he and the board “deeply regret” the net credit loss of 606 million Swiss francs ($701 million), well above consensus expectations, which includes a loan loss allowance of 586 million francs. This caused a slide in operating income of 16%, to 3.3 billion francs.

Julius Baer announced in November that it was open to the struggling Austrian company, which has been hit by the higher interest rate environment. In January they said they planned to cancel the show.

It also said on Thursday that it would exit its private debt businesses, ending the remaining private debt book of 800 million francs, 2% of its total loan book. It refocuses its credit business on mortgage lending and certain types of personal loan loans. About 10% shares appeared on the news.

A spokesperson confirmed to CNBC that they will cut 250 jobs this year, affecting about 3% of their 7,425 employees as part of an ongoing cost-cutting drive.

The bank reported a net profit payable to shareholders of 454 million Swiss francs for the full year 2023, down 52%, with earnings per share of 2.21 francs. Underlying operating income was slightly lower even without the Signa impact, with the perceived benefit from higher rates offset by a stronger Swiss franc and lower customer trading activity.

Assets under management grew by 1%, to 3 billion francs.

Rickenbacher became chief executive of the Zurich-based bank in 2019, following a money-laundering scandal that eventually saw him agree to pay more than $79 million in 2021. Nic Dreckmann, who was previously Vice President, continuing on an interim basis. .

Rickenbacher said Thursday that he and the board agreed it was “in the best interest of the company” for him to step down.

“The further steps Julius Baer announced today regarding our private debt business draw a clear line and pave the way to move forward and regain the full confidence of our stakeholders, and I ‘give them full support. to take possession,” he said in a statement.

Investors appeared unfazed, with shares opening 2.8% higher.

“A full downgrade on the disclosure and accountability with management changes at the CEO level goes a long way to closing this particular issue,” RBC analyst Anke Reingen said in a research note.

“However, greater visibility is likely to be required and the effects of licensing are limited ([net new money] trends were relatively encouraging), regulatory actions are not ongoing and this is a one-off event, which may take time.”

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