Julius Baer exits private debt and CEO departs after Signa exposure
Julius Baer’s chief executive and the chair of the governance and risk committee are both stepping down after the Swiss bank saw its full-year profits almost halve due to exposure to troubled Austrian property group Signa.
The bank has taken a CHF 586m (€628m) hit from loans to the property developer, which has stakes in KaDeWe, Germany’s most famous department story, and the Chrysler Building in New York.
Julius Baer has announced that it is now exiting from its private debt business entirely and is winding down its remaining private debt book of CHF 0.8bn.
It will be refocusing its credit business on “areas of historical strength” for the company, which it said are Lombard loans – which use liquid assets as collateral – and mortgage lending.
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The bank reported a 55 per cent year-on-year drop in adjusted net profit of CHF 472m in its 2023 results.
It said this reflected net credit losses of CHF 606m, which includes the CHF 586m loss from its exposure to Signa.
Julius Baer said that chief executive Philipp Rickenbacker is stepping down, with Nic Dreckmann, deputy chief executive and chief operating officer, to become interim chief executive.
Read more: Signa collapse set to impact European commercial property sector
David Nicol, chair of the governance and risk committee of the board of directors, will not stand for re-election at the 2024 annual shareholder meeting.
“Speaking on behalf of the entire board of directors, I deeply regret that the full loss allowance for the largest exposure in our private debt business has significantly impacted our net profit for 2023,”said Romeo Lacher, chairman of Julius Baer Group
“Our 2023 results reflect our determination to end any uncertainty regarding our private debt business through this full loss allowance. The results also reflect the continued financial strength of Julius Baer, as expressed by our capitalisation, the solidity of our balance sheet, and our robust underlying profitability. We are refocusing our lending activity on more traditional areas, which are an important part of our wealth management offering.”
Julius Baer is one of the biggest lenders to Signa. It said last November that it was reviewing its private debt business amid ongoing losses relating to its exposure to the developer.
Signa fell into trouble last year amid wider challenges in the commercial property market. It declared insolvency at the end of November with around €5bn of debts, after eleventh-hour attempts to secure new funding failed.
