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 Photos
Swiss financial institution Julius Baer on Thursday reported hefty web 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 lower 250 jobs.
Group Chair Romeo Lacher mentioned he and the board “deeply remorse” web credit score losses of 606 million Swiss francs ($701 million), properly 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 atmosphere. In January it mentioned it meant to jot down off the publicity.
It additional mentioned Thursday it will exit its non-public debt companies, winding down its remaining non-public debt guide of 800 million 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 would lower 250 jobs this yr, 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 full-year 2023, down 52%, with earnings per share of two.21 francs. Underlying working earnings was barely decrease even excluding the Signa affect, with the profit it noticed from increased charges offset by a stronger Swiss franc and lowered consumer buying and selling exercise.
Property below administration grew 1%, to three billion francs.
Rickenbacher grew to become chief govt of the Zurich-based financial institution in 2019, within the wake of a cash laundering scandal that finally noticed it comply with pay greater than $79 million in 2021. He can be succeeded on an interim foundation by Nic Dreckmann, beforehand deputy CEO.
Rickenbacher mentioned Thursday that he and the board collectively agreed it was within the “greatest curiosity of the corporate” for him to step down.
“The opposite measures Julius Baer introduced at the moment relating to our non-public debt enterprise draw a transparent line and pave the best way to maneuver ahead and regain the total confidence of our stakeholders, and I wholeheartedly help them. The change in management is my contribution to the Group’s dedication of taking possession,” he mentioned 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 degree goes a protracted solution to get closure on this specific case,” RBC analyst Anke Reingen mentioned in a analysis notice.
“Nevertheless, extra visibility is prone to be wanted that franchise implications are restricted ([net new money] developments have been comparatively encouraging), no regulatory actions comply with and that this can be a one-off occasion, which could take time.”