Julius Baer to exit private debt business following $689 million Signa losses

Annual profits plummeted 52 percent
Julius Baer to exit private debt business following $689 million Signa losses
Julius Baer's CEO replaced

Swiss private banking company Julius Baer experienced a significant decline in annual profits, with a 52 percent decrease. The decline was attributed to the company’s exposure to the crisis-hit Signa property group, leading to losses of SFr586 million ($679 million) on loans to Signa. Julius Baer said it would exit the private debt business on Thursday, according to Reuters.

Additionally, the departure of Chief Executive Officer (CEO) Philipp Rickenbacher was confirmed, and he will be temporarily replaced by Nic Dreckmann, deputy CEO and chief operations officer (COO).

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As a result of this crisis, Julius Baer reported a profit of SFr454 million in 2023, compared to SFr950 million the previous year, representing a 52 percent drop. Earnings per share also decreased to SFr2.21. Chair Romeo Lacher expressed regret on behalf of the board of directors, stating that the loss from the largest exposure in their private debt business significantly impacted the net profit for 2023.

Julius Baer is a major lender to Signa, a European luxury developer known for its assets, including a stake in Germany’s renowned department store KaDeWe and the Chrysler Building in New York. In November, Julius Baer disclosed that its largest exposure in the private debt loan book was to Signa, and a provision of SFr70 million was set aside for potential losses. The company also announced a review of its private debt lending business. Subsequently, Julius Baer’s shares declined by 15 percent.

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