Top wealth manager Julius Baer caught in property write-off storm as CEO steps down


A pedestrian sheltering beneath an umbrella passes a Julius Baer Group Ltd. department in Zurich, Switzerland, on Tuesday, July 13, 2021.

Stefan Wermuth | Bloomberg | Getty Images

Swiss financial institution Julius Baer on Thursday reported hefty web credit score losses tied to its publicity to actual property group Signa Holding, as it introduced CEO Philipp Rickenbacher would step down and the corporate will reduce 250 jobs.

Group Chair Romeo Lacher stated he and the board “deeply remorse” web credit score losses of 606 million Swiss francs ($701 million), properly above consensus expectations, which embody a mortgage loss allowance of 586 million francs. This led to a slide in working revenue of 16%, to three.3 billion francs.

Julius Baer in November introduced its publicity to the struggling Austrian firm, which has been hit by the upper rate of interest setting. In January it stated it supposed to put in writing off the publicity.

It additional stated Thursday it could exit its non-public debt companies, winding down its remaining non-public debt guide of 800 million million Swiss francs, 2% of its whole mortgage guide. It will refocus its credit score enterprise on mortgage lending and a specialised type of private lending loans.

A spokesperson confirmed to CNBC it should reduce 250 jobs this 12 months, impacting round 3% of its 7,425 staff as a part of an ongoing cost-cutting drive.

The financial institution reported web revenue attributable to shareholders of 454 million Swiss francs for the full-year 2023, down 52%, with earnings per share of two.21 francs. Underlying working revenue was barely decrease even excluding the Signa influence, with the profit it noticed from greater charges offset by a stronger Swiss franc and decreased consumer buying and selling exercise.

Assets beneath administration grew 1%, to three billion francs.

Rickenbacher turned chief government of the Zurich-based financial institution in 2019, in the wake of a cash laundering scandal that ultimately noticed it agree to pay greater than $79 million in 2021. He might be changed on an interim foundation by Nic Dreckmann, beforehand deputy CEO.

Rickenbacher stated Thursday that he and the board collectively agreed it was in the “finest curiosity of the corporate” for him to step down.

“The different measures Julius Baer introduced immediately concerning our non-public debt enterprise draw a transparent line and pave the way in which to maneuver ahead and regain the complete confidence of our stakeholders, and I wholeheartedly assist them. The change in management is my contribution to the Group’s dedication of taking possession,” he stated in a press release.

Investors appeared unrattled, with shares opening 2.8% greater.

“A full mark down of the publicity and taking accountability with administration modifications on the CEO degree goes a protracted solution to get closure on this explicit case,” RBC analyst Anke Reingen stated in a analysis word.

“However, extra visibility is prone to be wanted that franchise implications are restricted ([net new money] developments had been comparatively encouraging), no regulatory actions comply with and that this can be a one-off occasion, which could take time.”



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