Financial Results

Julius Baer Reiterates De-Risking Moves After Credit Loss

Editorial Staff 19 March 2024

Julius Baer Reiterates De-Risking Moves After Credit Loss

In its annual report, the Zurich-listed bank laid out the steps it is taking to wind down its private debt business loan book. The bank – as previously announced – is also seeking a new permanent CEO after the predecessor stood down.

Julius Baer, which earlier in March reported a hit to its full-year 2023 financial results from credit losses of SFr606 million ($701 million), and the departure by mutual consent of CEO Philipp Rickenbacher, yesterday reiterated its work in cutting risks and its external hunt for a new chief executive. 

On 11 March, the Zurich-listed bank said the losses stemmed from loans to a European conglomerate, as previously disclosed in late November 2023. As a result of Rickenbacher’s exit, Nic Dreckmann, deputy CEO and chief operating officer, became interim CEO.

“We have taken decisive steps to eliminate all uncertainty around the future impact of the private debt business on our financials by winding down the remaining loan book of SFr0.8 billion (less than 2 per cent of Julius Baer’s total loan portfolio),” the bank said in its annual report. “Going forward, we will refocus our lending activity on traditional areas, which are an important part of our wealth management offering, and will use this opportunity to strengthen our credit framework.”

In November 2023 Julius Baer launched a “comprehensive review” of its remaining private debt loan book. 

The notional value of the remaining private debt book after loan loss allowances at the end of 2023 was SFr800 million, out of a total loan book of SFr38.9 billion, and was now subject to an “orderly wind-down,” the bank said.

At the end of December 2023 the bank had SFr427 billion of assets under management, rising from SFr424 billion a year before. Total client assets were SFr511 billion, up from SFr491 billion. The lender’s cost-income ratio widened last year to 82.2 per cent from 68.9 per cent.

The bank’s board of directors has appointed Richard M Campbell-Breeden as vice chair; he has been a non-executive board member since 2018.

Julius Baer said the board of directors and executive board decided that the CEO and the five members of the executive board directly involved in credit decisions will not receive any variable compensation for 2023. The compensation of the other members of the executive board for 2023 will be “substantially reduced” and entirely share-based and deferred.

The chairman of the board of directors as well as the members of the governance and risk committee, will forego the share-based fees for their current term of office ending at the annual meeting on 11 April 2024 and awarded at the AGM 2023, it said. 

Out of nine board of director members, three are female: Kathryn Shih, Eunice Zehnder-Lai, and Olga Zoutendijk. The male board members are Romeo Lacher, Gilbert Achermann, Richard M Campbell-Breeden, Juerg Hunziker, David Nicol, and Tomas Varela Muina.

Reflecting on the composition of the board, the bank said: “Diversity in culture, ethnicity, and opinion are important aspects of board composition. The female-to-male ratio on the board may vary in any given year; the board, however, is committed to working towards an overall balanced gender representation over the long term.”

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