Julius Baer shares fall further on the Swiss stock exchange
Published: Tuesday, Nov 28th 2023, 16:00
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Julius Baer shares continued their slide on the stock market on Tuesday, which began at the beginning of last week. Investors remain highly unsettled by the private bank's large loans to the struggling Signa real estate empire. Other analysts are critical of the private bank's situation.
On Tuesday afternoon, the shares of the Zurich-based asset management bank were already down 5.3 percent at 43.26 francs. Since Monday of last week, when the shares fell by around 12 percent in one day due to the Signa loans, Bär shares have fallen on every trading day - the price decline in the last seven trading days alone now totals over 22 percent.
Further write-downs possible
At the beginning of the week, Julius Baer's management put the outstanding loans to the endangered real estate group of Austrian entrepreneur Rene Benko at CHF 606 million. The private bank had already written off around CHF 70 million in November. The details are also "helpful", but until there is more clarity, the concerns are likely to continue to weigh on Bear shares, commented analysts at the US investment bank Morgan Stanley, who lowered their trading recommendation for Julius Baer shares to "Underweight" on Tuesday.
Observers also believe it is possible that further write-downs will follow: MS analyst Vishal Shah, for example, expects write-downs of CHF 50 million in 2024. Vontobel expert Andreas Venditti also assumes in a commentary that Julius Baer will have to make further write-downs on the Signa loans: He expects that Julius Baer will have to make a value adjustment of around 50 percent of the Signa exposure.
Zu grosses Engagement
The Vontobel banking expert also does not see the financial impact of the Signa matter on Baer's results as the main problem. The granting of a loan of around CHF 600 million to a debtor such as Signa is simply too large, he criticizes: this sum corresponds to around 18 percent of the private bank's core capital (CET1).
The current share price reflects not only the uncertainty surrounding the Signa loans, but also a reassessment of the risk profile. According to Venditti, this is likely to lead to higher capital costs for the bank. He is lowering his price target for Bär shares to CHF 50 from the previous CHF 55.
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