A pedestrian sheltering below an umbrella passes a Julius Baer Group Ltd. department in Zurich, Switzerland, on Tuesday, July 13, 2021.
Stefan Wermuth | Bloomberg | Getty Pictures
Swiss financial institution Julius Baer on Thursday reported hefty internet credit score losses tied to its publicity to actual property group Signa Holding, because it introduced CEO Philipp Rickenbacher would step down and the corporate will minimize 250 jobs.
Group Chair Romeo Lacher stated he and the board “deeply remorse” internet credit score losses of 606 million Swiss francs ($701 million), nicely above consensus expectations, which embrace a mortgage loss allowance of 586 million francs. This led to a slide in working earnings 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 surroundings. In January it stated it meant to write down off the publicity.
It additional stated Thursday it will 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 should refocus its credit score enterprise on mortgage lending and a specialised type of private lending loans. Shares popped some 10% on the information.
A spokesperson confirmed to CNBC it’s going to minimize 250 jobs this 12 months, impacting round 3% of its 7,425 workers as a part of an ongoing cost-cutting drive.
The financial institution reported internet 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 earnings was barely decrease even excluding the Signa influence, with the profit it noticed from increased charges offset by a stronger Swiss franc and diminished shopper buying and selling exercise.
Property below administration grew 1%, to three billion francs.
Rickenbacher grew to become chief government of the Zurich-based financial institution in 2019, within the wake of a cash laundering scandal that ultimately noticed it agree to pay greater than $79 million in 2021. He can be changed on an interim foundation by Nic Dreckmann, beforehand deputy CEO.
Rickenbacher stated Thursday that he and the board collectively agreed it was within the “finest curiosity of the corporate” for him to step down.
“The opposite measures Julius Baer introduced as we speak relating to 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.
Traders appeared unrattled, with shares opening 2.8% increased.
“A full mark down of the publicity and taking accountability with administration adjustments on the CEO stage goes a protracted approach to get closure on this explicit case,” RBC analyst Anke Reingen stated in a analysis observe.
“Nevertheless, 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 it is a one-off occasion, which could take time.”
