Julius Baer profits drop as Signa clean-up continues

Julius Baer profits drop as Signa clean-up continues

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Julius Baer was hit with a 15 per cent drop in net profit in the first half of the year, in a period marked by the departure of its chief executive after the Swiss banking group wrote off its entire exposure to failed property group Signa.

The bank and wealth manager reported SFr452mn ($514mn) in net profit on Thursday, blaming a drop in revenues for the decline. Its operating income was down 4 per cent, as higher interest expenses offset increased levels of client activity.

However, Julius Baer reported an 11 per cent increase in assets under management to SFr474bn, thanks mainly to rising stock markets, a weaker Swiss franc and SFr3.7bn of net new money.

“After a challenging start to the year, Julius Baer is now regaining its momentum,” said interim chief executive Nic Dreckmann.

Six months ago, Julius Baer reported a 52 per cent fall in annual profits as the lender was forced to close down its private debt business following the implosion of Signa, the unit’s largest client.

The biggest crisis for Julius Baer in five years led to the departure of chief executive Philipp Rickenbacher, who left after the bank wrote down its full SFr606mn exposure to Signa.

On Thursday, the bank said its total private debt loan book had come down from SFr800mn to SFr600mn since February and that the wind-down was on track to be completed by the end of 2026.

The business, which was set up five years ago to provide existing clients with loans for their unlisted companies, became increasingly exposed to Signa, the heavily indebted property empire of René Benko, whose assets included Selfridges Group, the company behind the upmarket London shop, and KaDeWe, Germany’s famous department store.

But Signa began to collapse last year as interest rates rose, leading to an investigation into the relationship by Swiss regulator Finma over Julius Baer’s internal risk controls.

In the face of rising pressure from shareholders and regulators, Julius Baer closed the specialist lending business and Rickenbacher left after five years in the job.

The bank’s share price fell almost 9 per cent in early trading on Thursday.

Earlier this week, Julius Baer announced that it had hired Goldman Sachs private banker Stefan Bollinger as its new chief executive.

Bollinger, who is co-head of Goldman’s private wealth management business for Europe, the Middle East and Africa, will take over at the Swiss group by February.