Swiss Private Bank Julius Baer to Exit $926 Million Private Debt Business with CEO Philipp Rickenbacher to Step Down and Nic Dreckmann Appointed as Interim CEO, Swiss Private Bank Julius Baer Reported $678 Million Credit Losses on 1 Single Client, 3 Loans to Austria Billionaire Rene Benko European Conglomerate Signa Holding for Commercial Real Estate & Luxury Retail
1st February 2024 | Hong Kong
Swiss Private Bank Julius Baer has announced to exit the private debt business ($926 million, CHF 800 million) with CEO Philipp Rickenbacher to step down and Nic Dreckmann appointed as Interim CEO, after Julius Baer reported $678 million credit losses on 1 single client, comprising of 3 loans to Austria billionaire Rene Benko European conglomerate Signa Holding for commercial real estate & luxury retail. Signa Holding is Austria largest privately owned real estate company & one of the largest owner of shopping malls in Central Europe. Signa was founded in 2000 by the Austrian René Benko (Age 46). René Benko has an estimated personal fortune of around $2.8 billion. Swiss private bank Julius Baer provides private debt as a structured finance solution exclusively within its holistic wealth management value proposition for UHNW clients (Ultra high net worth). Sovereign wealth funds Singapore GIC (€85 million exposure) & Saudi Arabia Public Investment Fund (PIF, €287 million exposure) had been listed as investors in bankrupt Austria European conglomerate Signa Holding subordinated securities with profit rights. Post-bankruptcy filing, Signa Prime & Signa Development are looking to raise an additional €350 million to restructure the group, by issuing new profit participation securities. In December 2023, Austria billionaire Rene Benko European conglomerate Signa Holding has filed for bankruptcy (Austria) to restructure with self-administration. Swiss private bank Julius Baer had booked a $79.8 million loss provision (CHF 70 million) on a single client with $690 million private debt exposure (CHF 606 million), comprising of 3 loans to Austria billionaire Rene Benko European conglomerate Signa Holding for commercial real estate & luxury retail. European banks including UBS & Credit Suisse are expected to suffer losses from Austria billionaire Rene Benko European conglomerate Signa Holding bankruptcy (Austria) filing to restructure with self-administration. Romeo Lacher, Chairman of Julius Baer Group: “Speaking on behalf of the entire Board of Directors, I deeply regret that the full loss allowance for the largest exposure in our private debt business has significantly impacted our net profit for 2023. Our 2023 results reflect our determination to end any uncertainty regarding our private debt business through this full loss allowance. The results also reflect the continued financial strength of Julius Baer, as expressed by our capitalisation, the solidity of our balance sheet, and our robust underlying profitability. We are refocusing our lending activity on more traditional areas, which are an important part of our wealth management offering.”
“ Julius Baer to Exit $926 Million Private Debt Business with CEO Philipp Rickenbacher to Step Down and Nic Dreckmann Appointed as Interim CEO, Swiss Private Bank Julius Baer Reported $678 Million Credit Losses on 1 Single Client, 3 Loans to Austria Billionaire Rene Benko European Conglomerate Signa Holding for Commercial Real Estate & Luxury Retail “
Sovereign Wealth Funds Singapore GIC Invested €85 Million & Saudi Arabia Public Investment Fund Invested €287 Million in Bankrupt Austria European Conglomerate Signa Holding Subordinated Securities with Profit Rights, Austria Billionaire Rene Benko European Conglomerate Signa Holding Filed for Bankruptcy in 2023 December, Swiss Private Bank Julius Baer Booked $79 Million Loss Provision to Signa Holding with $690 Million Private Debt Exposure for 3 Loans
11th January 2024 – Sovereign wealth funds Singapore GIC (€85 million exposure) & Saudi Arabia Public Investment Fund (PIF, €287 million exposure) had been listed as investors in bankrupt Austria European conglomerate Signa Holding subordinated securities with profit rights. Post-bankruptcy filing, Signa Prime & Signa Development are looking to raise an additional €350 million to restructure the group, by issuing new profit participation securities. In December 2023, Austria billionaire Rene Benko European conglomerate Signa Holding has filed for bankruptcy (Austria) to restructure with self-administration. Swiss private bank Julius Baer had booked a $79.8 million loss provision (CHF 70 million) on a single client with $690 million private debt exposure (CHF 606 million), comprising of 3 loans to Austria billionaire Rene Benko European conglomerate Signa Holding for commercial real estate & luxury retail. Signa Holding is Austria largest privately owned real estate company & one of the largest owner of shopping malls in Central Europe. Signa was founded in 2000 by the Austrian René Benko (Age 46). René Benko has an estimated personal fortune of around $2.8 billion. Swiss private bank Julius Baer provides private debt as a structured finance solution exclusively within its holistic wealth management value proposition for UHNW clients (Ultra high net worth). European banks including UBS & Credit Suisse are expected to suffer losses from Austria billionaire Rene Benko European conglomerate Signa Holding bankruptcy (Austria) filing to restructure with self-administration.
European Banks Including UBS & Credit Suisse Expected to Suffer Losses from Austria Billionaire Rene Benko European Conglomerate Signa Holding Bankruptcy Filing to Restructure with Self-Administration, Swiss Private Bank Julius Baer Booked $79 Million Loss Provision to Signa Holding with $690 Million Private Debt Exposure for 3 Loans
8th December 2023 – European banks including UBS & Credit Suisse are expected to suffer losses from Austria billionaire Rene Benko European conglomerate Signa Holding bankruptcy (Austria) filing to restructure with self-administration. Swiss private bank Julius Baer had booked a $79.8 million loss provision (CHF 70 million) on a single client with $690 million private debt exposure (CHF 606 million), comprising of 3 loans to Austria billionaire Rene Benko European conglomerate Signa Holding for commercial real estate & luxury retail. Signa Holding is Austria largest privately owned real estate company & one of the largest owner of shopping malls in Central Europe. Signa was founded in 2000 by the Austrian René Benko (Age 46). René Benko has an estimated personal fortune of around $2.8 billion. Swiss private bank Julius Baer provides private debt as a structured finance solution exclusively within its holistic wealth management value proposition for UHNW clients (Ultra high net worth).
Austria Billionaire Rene Benko European Conglomerate Signa Holding Files for Bankruptcy to Restructure with Self-Administration, Swiss Private Bank Julius Baer Booked $79 Million Loss Provision to Signa Holding with $690 Million Private Debt Exposure for 3 Loans
1st December 2023 – Austria billionaire Rene Benko European conglomerate Signa Holding has filed for bankruptcy (Austria) to restructure with self-administration. Swiss private bank Julius Baer had booked a $79.8 million loss provision (CHF 70 million) on a single client with $690 million private debt exposure (CHF 606 million), comprising of 3 loans to Austria billionaire Rene Benko European conglomerate Signa Holding for commercial real estate & luxury retail. Signa Holding is Austria largest privately owned real estate company & one of the largest owner of shopping malls in Central Europe. Signa was founded in 2000 by the Austrian René Benko (Age 46). René Benko has an estimated personal fortune of around $2.8 billion. Swiss private bank Julius Baer provides private debt as a structured finance solution exclusively within its holistic wealth management value proposition for UHNW clients (Ultra high net worth).
Swiss Private Bank Julius Baer Booked $79 Million Loss Provision on a Single Client with $690 Million Private Debt Exposure, 3 Loans to Austria Billionaire Rene Benko European Conglomerate Signa Holding for Commercial Real Estate & Luxury Retail
29th November 2023 – Swiss private bank Julius Baer has booked a $79.8 million loss provision (CHF 70 million) on a single client with $690 million private debt exposure (CHF 606 million), comprising of 3 loans to Austria billionaire Rene Benko European conglomerate Signa Holding for commercial real estate & luxury retail. Signa Holding is Austria largest privately owned real estate company & one of the largest owner of shopping malls in Central Europe. Signa was founded in 2000 by the Austrian René Benko (Age 46). René Benko has an estimated personal fortune of around $2.8 billion. Swiss private bank Julius Baer provides private debt as a structured finance solution exclusively within its holistic wealth management value proposition for UHNW clients (Ultra high net worth). Julius Baer: “Julius Baer announced in its Interim Management Statement for the first ten months of 2023 on 20 November 2023 that it had booked provisions of CHF 70 million against the Group’s credit portfolio after 31 October 2023. The Group confirms that this amount was primarily related to the single largest exposure in its private debt loan book. This nominal exposure amounts to CHF 606 million, comprising three loans to different entities within a European conglomerate. The aggregate exposure towards this client group is secured by multiple collateral packages related to commercial real estate and luxury retail and is now subject to a longer-term restructuring. Julius Baer has taken measures to protect its interests and to preserve the value of its collateral and, if and when appropriate, the Group will remain prudent in booking further valuation adjustments as required.”
Philipp Rickenbacher, CEO of Julius Baer Group: “Julius Baer is very well capitalised and has been consistently profitable under all circumstances. We regret that a single exposure has led to the recent uncertainty for our stakeholders. Together with investing and multi-generational wealth planning, financing is an inherent part of the wealth management proposition to our clients. On this basis, together with the Board of Directors, we will review our private debt business and the framework in which it is conducted.”
Swiss Private Bank Julius Baer Booked $79 Million Loss Provision on a Single Client with $690 Million Private Debt Exposure
27th November 2023 – Julius Baer announced in its Interim Management Statement for the first ten months of 2023 on 20 November 2023 that it had booked provisions of CHF 70 million against the Group’s credit portfolio after 31 October 2023. The Group confirms that this amount was primarily related to the single largest exposure in its private debt loan book. This nominal exposure amounts to CHF 606 million, comprising three loans to different entities within a European conglomerate. The aggregate exposure towards this client group is secured by multiple collateral packages related to commercial real estate and luxury retail and is now subject to a longer-term restructuring. Julius Baer has taken measures to protect its interests and to preserve the value of its collateral and, if and when appropriate, the Group will remain prudent in booking further valuation adjustments as required.
- Julius Baer has a strong capital position with a CET1 capital ratio of 16.1% as of 31 October 2023, significantly above the Group´s own floor of 11% as well as the regulatory requirement of 8.2%. Even under a hypothetical total loss scenario, the Group’s pro-forma CET1 capital ratio at 31 October 2023 would have been in excess of 14% and Julius Baer would have remained significantly profitable.
- Julius Baer offers private debt as a structured finance solution exclusively within its holistic wealth management value proposition for UHNW clients. As of 31 October 2023, the private debt loan book amounted to CHF 1.5 billion as part of a total loan book of CHF 41 billion. The above-mentioned exposure is the largest in the private debt loan book. The remaining portfolio comprises loans to unrelated counterparties and various sectors with strong asset quality. The second largest private debt exposure amounts to CHF 216 million and the third largest to CHF 140 million, neither of which is related to the real estate sector. The rest of the portfolio consists of exposures of a considerably smaller size to 19 unrelated counter-parties.
Capital policy reconfirmed
Julius Baer reconfirms its capital distribution policy, under which it targets a dividend payout ratio of ~50% of adjusted net profit attributable to shareholders of Julius Baer Group Ltd., with the dividend per share at least equal to the previous year’s dividend per share. In addition, under this policy, CET1 capital that is meaningfully in excess of a CET1 capital ratio of ~14% at the end of a financial year will be distributed through a share buy-back programme launched in the subsequent year, unless acquisition opportunities arise that are strategically consistent and financially attractive.
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