Julius Baer to review private debt business

Swiss bank Julius Baer is set to review its private debt business amid ongoing losses resulting from its exposure to Austrian property group Signa.

Julius Baer’s share price fell by 16 per cent last week after it revealed that it was taking a €73m (£63.4m) provision against losses in its credit portfolio stemming from difficulties at Signa.

Signa’s €27bn property portfolio was hit hard by rising interest rates, and the firm is said to be close to insolvency.

Julius Baer’s chief executive Philipp Rickenbacher admitted last week that Signa represents the single largest exposure in the wealth manager’s €628m private loan book.

Read more: DBS Group to originate private credit deals

“We regret that a single exposure has led to the recent uncertainty for our stakeholders,” Rickenbacher said. He added that as a result, “we will review our private debt business and the framework in which it is conducted”.

Signa’s assets include a stake in KaDeWe, Germany’s most famous department store, and the Chrysler Building in New York.

Earlier this month, the property group appointed a new chair to restructure the group, replacing the company’s founder René Benko.

Read more: Nomura taps into private credit boom

Signa is believed to owe approximately €13bn to banks and investors, according to an analysis by JPMorgan.

Vontobel analyst Andreas Venditti said while Julius Baer’s overall capital position was strong, there were still questions about its Signa exposure.

“The key question remains highly uncertain,” Venditti said. “What collateral does Julius Baer hold and how much is it still worth?”

Read more: Citigroup considers new direct lending strategy