Julius Bär takes CHF99 million hit on ailing Italian unit

Julius Bär has fallen short of expectations for new assets it can attract from the wealthy. Keystone / Steffen Schmidt

Swiss wealth manager Julius Bär has downgraded its expectations for attracting new assets from rich clients and announced a CHF99 million ($100 million) write-down on its troubled Italian subsidiary Kairos.

Julius Bär issued the warning on Tuesday, less than three months into the tenure of new CEO Philipp Rickenbacher. Although assets under management have grown 10% so far this year (CHF422 billion), net new money has weighed in with a disappointing 3% growth.

“It is therefore unlikely that the group will achieve its medium-term target this year,” the bank said it a statementExternal link, referring to targets of 4-6% of new assets deposited by wealthy clients.

The bank also quantified the extent of its problems with subsidiary Kairos. Since completing the buyout of the Italian asset management company last year, Julius Bär has seen top managers leave the unit, taking clients with them.

Assets under management have fallen from CHF11.8 billion at the end of 2018 to a current total of CHF8.4 billion. This has resulted in a non-cash goodwill impairment of €90 million (CHF99 million) for the group as a whole. This means that the bank will not recover the premium it paid to acquire Kairos.

Julius Bär did offer one sweetener to shareholders in the shape of a CHF400 million share buy-back that will run from November 20 to the end of February 2021. The bank also said its cost-cutting programme was running on track to bring savings.