A pedestrian umbrella shelter passes by a department of Julius Baer Group Ltd. in Zurich, Switzerland on Tuesday, July 13, 2021.
Stefan Wermuth | Bloomberg | Getty Pictures
Swiss financial institution Julius Baer on Thursday reported enormous internet credit score losses associated to its involvement in actual property group Signa Holding, saying that CEO Philipp Rickenbacher would step down and the corporate would reduce 250 jobs.
Group chairman Romeo Lascher stated he and the board “deeply remorse” internet credit score losses of 606 million Swiss francs ($701 million), properly above consensus expectations, which included a mortgage loss provision of 586 million francs . This led to a 16% drop in working revenue to three.3 billion francs.
Julius Baer in November introduced his partnership with the struggling Austrian firm, which has been hit by rising rates of interest. The corporate stated in January that it supposed to write down off the revelations.
The corporate additionally stated Thursday it might exit its non-public debt enterprise, trimming the rest of its non-public debt portfolio of 800 million Swiss francs, representing 2% of its whole mortgage portfolio. It’s refocusing its lending enterprise on mortgage lending and a specialised type of client loans. Shares jumped about 10% on this information.
A spokesperson confirmed to CNBC that the corporate will reduce 250 jobs this 12 months, affecting about 3% of its 7,425 workers, as a part of an ongoing cost-cutting marketing campaign.
The financial institution reported internet revenue attributable to shareholders of 454 million Swiss francs for the complete 12 months 2023, down 52%, with earnings per share of two.21 francs. Underlying working revenue was barely decrease, even excluding the affect of Signa, with the profit from larger charges offset by a stronger Swiss franc and decrease consumer buying and selling exercise.
Belongings below administration elevated by 1% to three billion francs.
Rickenbacher turned chief govt of the Zurich financial institution in 2019 within the wake of the cash laundering scandal that in the end led to his creation. agree to pay over $79 million in 2021. He might be changed on an interim foundation by Nick Dreckmann, who beforehand served as Deputy CEO.
Rickenbacher stated Thursday that he and the board agreed that his departure could be within the “finest pursuits of the corporate.”
“The opposite measures introduced at present by Julius Baer in relation to our non-public debt enterprise draw a transparent line and pave the best way for us to maneuver ahead and restore the complete confidence of our stakeholders, and I wholeheartedly assist them. The change in administration is my contribution to fulfilling the Group’s obligations. taking possession,” he stated in an announcement.
Buyers appeared calm, with shares opening 2.8% larger.
“Totally de-risking and taking possession of administration adjustments on the CEO degree is crucial to the completion of this specific case,” RBC analyst Anke Reingen stated in a analysis word.
“Nevertheless, extra consideration might must be paid to the truth that the implications of the deductible are restricted ([net new money] developments have been comparatively encouraging), no regulatory motion has been taken and that this can be a one-time occasion that will take time.”