Basel’s Baumann & Cie private bank had a fine enough year on an operative level in 2018. But the tailend of the year put a major damper on affairs.
Matthias Preiswerk and Daniel Rueedi, the two personally liable partners of Baumann & Cie, knew by December that the 2018 result wouldn't match the year-earlier performance.
Baumann & Cie posted a profit of 15.4 million Swiss francs ($15.4 million) for 2018, down 12 percent from a year earlier. The decline came about despite the increase in operating profit by 40 percent that the bank achieved thanks to the changeover of procedures, the partners at the bank said at a media briefing in Basel on Monday.
Waiting for Reversal of Fortune
The bank's business with asset stakes contributed greatly to the set-back – a business that traditionally helps the company boost profit. Baumann & Cie posted a major accounting loss on its stake in Polyphor, a Swiss biotech firm active in the development of new antibiotics to treat otherwise restistant bacteria. Since the initial public offering in August of 2018, the shares of Polyphor have lost more than half of their value. Baumann, a long-term investor, wasn’t able to do anything about the losses because it was locked-in for 12 months.
Baumann has taken the setback on the chin but the owners pronounced themselves slightly unhappy about the inability of lead investment banks Deutsche and UBS to shore up the flagging share price.
Excellent Cost-Income Ratio
The bank faced further factors that held the business back: difficult market conditions and penalties on sight deposits imposed by the central bank. Baumann & Cie has a cap of 105 million francs before the penalties kick in, but the bank had some 500 million francs in liquidity lying around. Growth of new money also was also restricted due to changes among staff.
Still, operating costs at the bank are being kept well under control. The cost-income ratio is 51.4 percent. Baumann & Cie has branches in Zurich and Olten in addition to the Basel offices.
Baumann & Cie has significant plans in the pipeline – «Baumann 2020» – a strategy devised for its 100 year anniversary next year.
