ZURICH - Julius Baer chief executive Philipp Rickenbacher will leave the bank, the Swiss wealth manager said on Feb 1, as it reported net credit losses of 586 million Swiss francs (S$910 million) linked to its exposure to property and retail giant Signa Holding.
The write-off was significantly more than the 400 million Swiss franc Signa-related loss that analysts and a newspaper in Switzerland had estimated the bank would post from its ties to Austrian entrepreneur Rene Benko’s Signa, which recently declared insolvency.
Julius Baer also said it would exit the private debt business and refocus its lending activities on mortgage and Lombard lending. In general terms, Lombard lending is a specialised form of personal lending in which banks grant secured credit to their private wealth management clients.
Mr Rickenbacher, who has led the bank since 2019, steps down in mutual agreement with the board of directors, the bank said.
His deputy Nic Dreckmann, who is also the current chief operating officer, will take over while an external search for a successor is launched.
The bank will also cut 250 jobs in 2024, some 3 per cent of its workforce, a spokesperson for Julius Baer confirmed, but said it was part of a previously announced cost-cutting drive.
“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,” chairman Romeo Lacher said in a statement.
“We are refocusing our lending activity on more traditional areas, which are an important part of our wealth management offering.”
On Feb 1, the bank reported a net profit attributable to shareholders of 454 million francs for the full year, down 52 per cent from 950 million francs in 2022.
The bank had already dampened profit expectations and caught investors by surprise when it said it had booked 70 million francs against its credit portfolio after Oct 31, in an interim update for the first 10 months of 2023.
The decision to wind down the private debt business will likely impact the bank’s margin and profit, Vontobel analyst Andreas Venditti said.
Julius Baer’s chief financial officer Evie Kostakis said the wind down will by and large be completed by 2026.
Clients have not been pulling their money from the bank in the light of the exposure, she said in a call with journalists.
“In November and December, we had further inflows and our deposits remained very, very stable,” she added. REUTERS
