Julius Baer Faces $156 Million Loan Loss Charge

(Bloomberg) — Julius Baer Group Ltd. said it’s booking another large loss from property developments it helped finance, in a fresh setback for new Chief Executive Officer Stefan Bollinger as he attempts to stabilize the Swiss wealth manager.

The Zurich-based bank disclosed late Tuesday that it’s taking a loan-loss charge of 130 million Swiss francs ($156 million) related to its private debt business and selected positions in its mortgage operation. The bank’s shares fell as much as 7% after the open in Zurich on Wednesday and were down 5% as of 9:35 a.m.

Baer is discussing writing down a loan related to a real estate project in the German city of Hanover that’s on the cusp of default and is also facing a loss from another development, Bloomberg reported earlier Tuesday, citing people familiar with the matter.

Stefan Bollinger, who took over as Chief Executive Officer in January, is reviewing the bank’s credit book after loans to bankrupt property developer Rene Benko’s Signa companies went sour in 2023, cutting profit in half. The fresh loan loss however signals that the bank hadn’t managed to get its risks under control in the year and a half since the Benko hit emerged.

 “We do not expect to uncover additional risks that could lead to further losses,” Bollinger said in a call with media on Wednesday. The bank said its Chief Risk Officer, Oliver Bartholet, will retire and the executive board will be strengthened by a new compliance officer role, to be announced in due course.

Chief Financial Officer Evie Kostakis added that the fresh loss “has nothing to do” with the Signa losses, and instead come from several clients across the private debt book and the mortgage book.

Bollinger and new Chairman Noel Quinn, HSBC Holdings Plc’s former CEO, are expected to present a strategy update in June as they look to shore up investor confidence. 

The Bloomberg report on Tuesday prompted the company to release an interim management statement ahead of schedule. 

That report showed assets under management of 467 billion Swiss francs, a 6% decrease from the end of 2024, according to a statement, as the strong Swiss franc had a currency impact of 28 billion francs. The bank posted net new money of 4.2 billion francs for the same period, driven by clients in Asia and Western Europe, it said. 

The bank also said it was on track to achieve the additional 110 million francs in cost savings it announced in February, and that this was expected to start benefiting profitability later this year.

“We expect investors to react negatively to disappointing net new money,” Citigroup analyst Nicholas Herman wrote in a note to clients, adding that the loan loss is also “disappointing on several levels.” 

“This follows a series of mis-steps prior to the arrival of CEO Stefan Bollinger,” he said, citing the Signa loss, the attempt to acquire Swiss rival EFG, flows and interest margins. 

Clean Slate

Bartholet, head of risk since 2018, will hand over his responsibilities on July 1 to Ivan Ivanic, who joined Julius Baer in February as chief credit officer. 

Baer, Switzerland’s second-largest listed wealth manager, wrote off $700 million in loans and shut down its private-debt business after Benko’s conglomerate unraveled in late 2023.

The wealth manager said it has made progress on the wind-down of its private-debt loan book, with the remaining notional exposure now well below CHF 0.2 billion, a more than 50% reduction since the end of 2024, it said. The remaining book stands at 0.4% of the total loan book, according to the statement. 

Last week it emerged that Julius Baer has been ordered to hand over 4.4 million Swiss francs because of alleged failings in money-laundering controls. The previously undisclosed “enforcement proceeding” is separate from an existing Finma probe into the Benko fallout.

–With assistance from Steve Dickson.

(Updates with shares in second paragraph)

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