Julius Baer CEO exits bank over losses on private loans to bankrupt property firm Signa

By Louis Goss

Julius Baer on Thursday said its CEO will leave his job at the Swiss bank after taking responsibility for the huge losses suffered by the firm due its exposure to Austria's largest privately owned real estate company, Signa Holding, following its bankruptcy in Nov. 2023.

In a statement, the Zurich bank's CEO Philipp Rickenbacher said he had decided to leave Julius Baer in order to restore the confidence of its stakeholders, as the firm outlined plans to exit the private debt business entirely due to the losses it suffered on its loans to the Austrian group.

Shares in Julius Baer (CH:BAER) increased 7% on Thursday. The Swiss bank's share price plunged 22% in November due to concerns around its exposure to Signa via private credit loans.

Julius Baer also said the five members of the Swiss bank's board who were involved in its private credit business will be stripped of their 2023 bonuses, and said the chair of its risk and governance committee, David Nicol, will also step down following the end of his term.

The Swiss bank said it lost CHF586 million ($678 million) on loans to its top private debt client, Signa, which was plunged into bankruptcy proceedings at the end of November after it failed to secure a fresh round of funding needed to pay off EUR5 billion ($5.4 billion) in debts.

The bank's private credit losses saw its net profits drop 52% year-on-year, to CHF454 million, as it said it will now pursue an orderly winding up of its CHF800 million private credit book following its larger than expected losses from Signa.

Julius Baer's loans to Signa had previously come under scrutiny from Switzerland's financial sector watchdog Finma due to concerns over the Austrian property company which owns stakes in the Chrysler building, London's Selfridges, and Berlin's KaDeWe luxury department store.

Problems for Signa, which was set up by Austrian property magnate René Benko in 2000, began in 2023 after sharp European Central Bank interest rate hikes caused a downturn in Germany's property market.

Rickenbacher took up his position as CEO in 2019, succeeding former chief executive Boris Collardi, who left two years earlier to join Julius Baer's main Swiss rival Pictet Group.

Former McKinsey consultant Rickenbacher had previously spent more than a decade working for Julius Baer before taking over from Collardi. He will now be succeeded by company veteran Nic Dreckmann, who will act as interim CEO before a permanent successor is found.

The private bank said compensation paid out to all remaining board members, outside of those who have had their bonuses taken away from them, will also be "substantially reduced and entirely share-based and deferred."

-Louis Goss

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02-01-24 0720ET

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