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ZURICH (Reuters) – Julius Baer Chief Executive Philipp Rickenbacher said on Thursday that he would be charged 586 million Swiss francs (679 million francs) in connection with his exposure to real estate and retail giant Cigna Holding. The Swiss asset manager announced he was leaving the bank after reporting a net credit loss of $1 million.
The write-off is significantly higher than the 400 million Swiss francs that analysts have compiled for Cigna-related losses, and which Swiss newspapers expect the bank to book due to its ties to René Benko’s Cigna, which recently declared bankruptcy. Ta.
Julius Baer also said it would exit its private debt business and refocus its lending operations on mortgages and Lombard lending.
The bank announced that Rickenbacker, who has led the bank since 2019, will step down by mutual agreement with the board of directors.
His deputy and current chief operating officer, Nick Dreckman, will succeed him, and an external search will begin.
A Julius Baer spokesperson confirmed the bank plans to cut 250 jobs, or about 3% of its workforce, in 2024, but said this was part of previously announced cost-cutting efforts. .
“We deeply regret that the full amount of loss reserves on our largest exposure in our private debt business had a material impact on our 2023 net income,” Chairman Romeo Lasher said in a statement.
“We are refocusing our lending activity on more traditional areas, which are an important part of our wealth management services.”
The bank announced on Thursday that its full-year net profit attributable to shareholders was CHF454 million, down 52% from CHF950 million in 2022.
The bank had already lowered its profit forecast and surprised investors by announcing in its interim update for the first 10 months of 2023 that it had booked CHF70 million on its credit portfolio from October 31.
Vontobel analyst Andreas Venditti said the decision to scale back its private debt business was likely to impact the bank’s margins and profits.
Evie Kostakis, Julius Baer’s chief financial officer, said the downsizing will be largely complete by 2026.
In a call with journalists, he said customers were not withdrawing funds from banks in light of the exposure.
“Deposits remained very stable with further inflows in November and December,” she said.
(1 dollar = 0.8634 Swiss Franc)
(Reporting by Noele Illien; Editing by Kirsti Knolle; Editing by Christopher Cushing and Shri Navaratnam)
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