By Ed Frankl
Julius Baer Group said its chief executive officer will step down after it reported major losses related to its exposure to Austria’s Signa Group.
The Swiss wealth manager said Thursday that Philipp Rickenbacher would step down, with Nic Dreckmann, current deputy CEO and chief operating officer, to become interim CEO while the board launched an external search for a successor, to be concluded in due course.
This comes as the company released full-year 2023 results that were hit by net credit losses of 606 million Swiss francs ($703 million), including a single loan-loss allowance of CHF586 million for a large private-debt exposure disclosed in November last year.
Julius Baer didn’t name the client, but The Wall Street Journal and others reported that they were backed by Austrian property group Signa, once steered by tycoon Rene Benko. Signa filed for insolvency late in 2023.
Shares have barely recovered since diving more than 20% in November last year after it confirmed some of the first provisions for bad loans.
Benko invested in a number of holdings in recent years, including stakes in Manhattan’s Chrysler Building, Swiss department-store chain Globus and London luxury retailer Selfridges. But as interest rates ramped up, Signa found itself with rising debts. Its subsidiary, German retailer chain Galeria Karstadt Kaufhof, filed for insolvency earlier in January.
Julius Baer’s exposure comprised “three loans to different entities within a European conglomerate active in commercial real estate and luxury retail,” it said.
“Speaking on behalf of the entire board of directors, I deeply regret that the full loss allowance for the largest exposure in our private-debt business has significantly impacted our net profit for 2023,” the lender’s chairman said.
Rickenbacher, who has been CEO since September 2019, and five executives directly involved in credit decisions won’t receive bonuses for 2023, the company said. The board’s chair of governance and risk, David Nicol, will also not stand for re-election at the company’s 2024 annual general meeting.
The company also said it would exit its private debt business, the source of Signa’s loans, to refocus all lending activities on mortgage and credit businesses, where it has a successful long-term track record, it said.
It will wind down its remaining private debt book of around CHF800 million, or 2% of its total loan book.
For its full-year results, Julius Baer made a profit of CHF454 million, down 52% compared with the prior year, and declared a dividend of CHF2.60. It had net new money inflows of CHF12.5 billion across the year, despite continued client deleveraging, it said, taking advantage of some of the turmoil as its domestic peer Credit Suisse collapsed early in 2023.
Write to Ed Frankl at edward.frankl@wsj.com
