Julius Baer’s Rickenbacher to Exit, Dreckmann to Be Interim CEO
(Bloomberg) — Julius Baer Group Ltd. Chief Executive Officer Philipp Rickenbacher is to step down as a consequence of the bank’s exposure to the collapse of the Signa property empire, people familiar with the matter said.
Baer’s Deputy CEO Nic Dreckmann will take over the role until a permanent appointment can be made, one person said. The people asked not to be named as the matter isn’t public. The bank is due to release 2023 earnings on Thursday morning.
The wealth manager has been in the cross-hairs since it emerged in November that the firm had run up a $700 million exposure to Rene Benko’s Signa companies, with shares losing some 15%. Regulator doubts over risk controls and a rating downgrade have compounded the uncertainty surrounding the bank’s response to the scandal.
A spokesman for Julius Baer declined to comment on the matter. Bloomberg reported earlier Wednesday that the bank was considering replacing Rickenbacher. Reuters reported the decision on the CEO role, the Financial Times on the replacement.
In November, Rickenbacher said that the bank would be reviewing the private-debt business at the heart of the business with Benko. The lender warned then that full year profit would probably decline after taking a total of 82 million Swiss francs in provisions, 70 million francs of which related to the Signa credits.
Read More: Julius Baer Downgrade, Billion-Euro Claim Show Signa Contagion
Analysts at Zurcher Kantonalbank estimated in December that the bank could be forced to write down as much as 400 million Swiss francs on the Signa loans.
While potential losses on the Benko loans themselves may hurt profits, the questions raised over weak collateral and faulty risk procedures have undermined confidence more broadly. Rickenbacher took over as CEO in 2019 in part to restore stability amid a money-laundering probe that saw previous chief executive Boris Collardi issued with a reprimand.
Read More: Ex-Julius Baer CEO Collardi Reprimanded in Laundering Probe
Rickenbacher, 52, moved early in his tenure to put his own stamp on the business, downsizing the executive leadership team. He also cut down on the number of regional divisions, and took steps to clean up money-laundering issues in the Latin America business. He cut 5% of the workforce and revised bankers pay to tie it more closely to profitability.
Rickenbacher was not a high-profile executive in Zurich’s financial circles at the time of his ascent at the helm of the bank. An early career post was as a consultant at McKinsey & Company, before joining Baer. He only left the bank once in 2008 to work for Swiss asset manager GAM Holding AG, where he was head of structured Investments for about a year. In total, he has been at Julius Baer for 19 years, including seven on the management board.
His time as CEO has also been marked by forays into non-traditional businesses for the Swiss wealth manager, including an investment in a crypto bank and moves to offer clients services in digital assets.
Finma Investigation
Financial supervisor Finma opened an investigation last year into the reporting lines of the bankers responsible for structuring loans for private clients such as Benko. Those lead to the same person as the teams managing credit risk, Bloomberg reported in December. Both units are ultimately overseen by Chief Financial Officer Evie Kostakis, while a typical setup would see the risk team report into the chief risk officer.
The change in leadership add to a turbulent period for Swiss finance, after the collapse and emergency takeover of Credit Suisse by UBS Group AG last year. The government has signaled that it plans to overhaul financial oversight and is set to make further proposals in the spring.
Read More: Julius Baer Mulls Leadership Change With Benko Hit in Focus
(Updates with background throughout)
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