Zurich-based Julius Baer is set to disclose the damages from its Signa-linked loans while CEO Philipp Rickenbacher is reportedly stepping down.
Julius Baer CEO Philipp Rickenbacher is set to exit the bank, according to a «Financial Times» (behind paywall) report citing unnamed sources, with deputy Nic Dreckmann earmarked to replace him.
Board member David Nicol, who led the governance and risk committee, will also step down. Richard Campbell-Breeden, another board member, will be named vice chair.
Full Exposure Writedown
The reshuffle occurs as the bank prepares to unveil the damages linked to 606 million francs ($702 million) in exposure to René Benko’s Signa.
Julius Baer will write off the full exposure, the report said, rather than the 400 million francs previously estimated by analysts and is also considering legal action to recoup losses from the European property group.
Reverse Course
Moving forward, Julius Baer will likely shift its business model to focus more on wealth management, returning to its roots as a pure-play private bank.
In addition to the leadership changes, the bank will exit its private debt business – the source of lending to Signa – the «Financial Times» report added. Staff linked to the business with Signa will also receive no bonus for 2023.
UHNW Segment
Rather than doubling down on non-wealth management lending, Julius Baer is taking a prudent step to sharply shift its strategic direction. While this could help improve risk and stability for the bank, it is not without tradeoffs.
The most notable downside is the potential loss of current and future business linked with ultra-high net worth (UHNW) clients seeking to tap balance sheets for their business needs.
Future Growth Drivers
Although a move back to pure-play mode could divert some UHNW demand, Julius Baer still has other drivers to rely on for scalable growth. Firstly, it will benefit from Credit Suisse outflows with the continuous acquisition of new talent and assets from the fallen rival.
According to a previous Citi estimate, Julius Baer will be the primary beneficiary of the fallout and is forecasted to capture at least 10 billion francs in outflows.
Secondly, Julius Baer could intensify focus on external asset managers, as it already has an established business and base of clients. This is a segment that incoming CEO Dreckmann is also relatively experienced in, having served as the bank’s head of intermediaries since 2020.
