Julius Baer attempts to emerge from the Signa debacle
- 01 Feb 2024 1:40 pm CET
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Bank Julius Baer wants to put the Signa debacle behind it with a stroke of liberation. CEO Philipp Rickenbacher is stepping down and the impaired loans to the insolvent Austrian real estate group have been written off in full at the expense of the annual profit.
On Thursday morning, the former Julius Baer CEO spoke out once again. Rickenbacher said at the presentation of the Zurich-based private bank's 2023 annual results that he was taking his personal responsibility to the bank seriously by stepping down. His departure was no longer a surprise at this point: the news had already been leaked to various domestic and foreign media on Wednesday evening.
Julius Baer will now be managed on an interim basis by the current Deputy CEO Nic Dreckmann. The search for a permanent successor has already begun, explained Chairman of the Board of Directors Romeo Lacher to the media. An external solution is apparently being sought.
Due to the complete write-off of all private debt loans to the Signa Group of Austrian investor René Benko, the Zurich-based bank has now recorded credit losses of CHF 606 million in its 2023 annual result. As a result, consolidated profit for 2023 fell by half and now amounts to CHF 454 million.
The impairment was intended to "eliminate any uncertainty in relation to the private debt business", said Lacher. Julius Baer now wants to exit the business with private debt loans that are collateralized by future cash flows or unlisted company shares.
Shareholders are to receive an unchanged dividend of CHF 2.60 per share despite the lower annual profit. In addition, the Board of Directors is at least holding out the prospect of a new share buyback program: this will be considered "later in the year."
The Julius Baer managers will also feel the effects of the Signa bankruptcy in their wallets. The CEO and five members of the Executive Board directly involved in credit decisions will not receive any variable compensation at all. Chairman Lacher and other members of the Board of Directors will also waive their share-based compensation.
In the current year, however, the bank will also further accelerate its ongoing savings program after the cost situation deteriorated last year, even excluding the large credit loss. This is bad news for employees: The plan is to cut 250 jobs, a spokeswoman confirmed.
Further inflows of new money
Julius Baer's clients have evidently not yet been swayed by the Signa headlines. Overall, the bank recorded an inflow of new money of CHF 12.5 billion last year (previous year: CHF 9 billion), which corresponds to new money growth of 2.9 percent. According to CFO Evie Kostakis, there were also further inflows of money to the bank in the last two months of 2023.
At the end of the year, the bank managed total assets (assets under management AuM) of CHF 427 billion, which corresponds to an increase of 1 percent over the course of the year. In addition to new money, AuM benefited from the positive performance of the equity markets, while the strength of the Swiss franc slowed things down considerably.
The news was generally well received on the stock market on Thursday. The share was up 4.6 percent at CHF 49.46 shortly before 2.30 pm. The full credit value adjustment and the CEO's assumption of responsibility are important steps towards restoring the company's reputation, according to the market.