Julius Baer faces US$156 million loan loss charge
[ZURICH] Julius Baer Group said it's booking another large loss from property developments it helped finance, just as the Swiss wealth manager is emerging from a crisis triggered by its exposure to Rene Benko's Signa real estate empire.
The Zurich-based bank disclosed late Tuesday (May 20) that it's taking a loan-loss charge of US$156 million related to its private debt business and selected positions in its mortgage operation.
As part of a review of its credit portfolio, Baer is discussing writing down a loan related to a real estate project in the German city of Hanover that's on the cusp of default and is also facing a loss from another development, Bloomberg reported earlier on Tuesday, citing people familiar with the matter.
The report prompted the company to release an interim management statement ahead of schedule.
That report showed assets under management of 467 billion Swiss francs (S$731.7 billion), a 6 per cent decrease from the end of 2024, according to a statement, as the strong Swiss franc had a currency impact of 28 billion francs. The bank posted net new money of 4.2 billion francs for the same period, coming from clients in Asia and Western Europe, it said.
The bank also said it was on track to achieve the additional 110 million francs in cost savings it announced in February, and that this was expected to start benefiting profitability later this year.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Sign Up
Sign Up
'We expect investors to react negatively to disappointing net new money,' Citigroup analyst Nicholas Herman wrote in a note to clients, adding that the loan loss is also 'disappointing on several levels.'
'This follows a series of mis-steps prior to the arrival of CEO Stefan Bollinger,' he said, citing the Signa loss, the attempt to acquire Swiss rival EFG, flows and interest margins.
Chief risk officer Oliver Bartholet will retire, the bank added, in another departure from the executive board since loans to defunct property tycoon Rene Benko helped cut 2023 profit in half. Bartholet will hand over his responsibilities on July 1 to Ivan Ivanic, who joined Julius Baer in February as chief credit officer.
The executive board, which was slashed to five from 15 following the arrival of newly appointed chief executive officer Stefan Bollinger, will be expanded to include a chief compliance officer, with an announcement 'in due course.'
Bollinger and chairman Noel Quinn, HSBC Holdings' former CEO, are seeking to clean up the balance sheet and set the firm back on a growth path. The two are expected to present a strategy update in June as they look to shore up investor confidence.
Baer, Switzerland's second-largest listed wealth manager, wrote off US$700 million in loans and shut down its private-debt business after Benko's conglomerate unravelled in late 2023.
The wealth manager said it has made progress on the wind-down of its private-debt loan book, with the remaining notional exposure now well below 0.2 billion Swiss francs, a more than 50 per cent reduction since the end of 2024, it said. The remaining book stands at 0.4 per cent of the total loan book, according to the statement.
Last week, it emerged that Julius Baer has been ordered to hand over 4.4 million Swiss francs because of alleged failings in money-laundering controls. The previously undisclosed 'enforcement proceeding' is separate from an existing Finma probe into the Benko fallout. BLOOMBERG
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Times
34 minutes ago
- Business Times
Walmart to pay US$10 million to settle US FTC lawsuit over money transfer fraud
[NEW YORK] Walmart has agreed to pay US$10 million to settle a US Federal Trade Commission (FTC) civil lawsuit accusing the world's largest retailer of ignoring warning signs that fraudsters used its money transfer services to fleece consumers out of hundreds of millions of US dollars. The settlement was filed on Friday (Jun 20) in Chicago federal court, and requires approval by US District judge Manish Shah. Walmart also agreed not to process money transfers it suspects are fraudulent, or help sellers and telemarketers it believes are using its services to commit fraud. 'Electronic money transfers are one of the most common ways that scammers tell consumers to send them money, because once it's sent, it's gone for good,' said Christopher Mufarrige, director of the FTC's consumer protection bureau. 'Companies that provide these services must train their employees to comply with the law and work to protect consumers.' The Bentonville, Arkansas-based retailer did not admit or deny wrongdoing in agreeing to settle. Walmart said that it was pleased to settle and shared the FTC's goal of protecting consumers from fraudsters, including from fraud-induced money transfers. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up In its June 2022 complaint, the FTC accused Walmart of turning a blind eye to fraudsters who used its money transfer services to cash out at its stores. Walmart acts as an agent for money transfers by companies such as MoneyGram, Ria and Western Union. Money can be hard to trace once delivered. The FTC said fraudsters used many schemes that included impersonating Internal Revenue Service agents, impersonating family members who needed money from grandparents to avoid jail, and telling victims they won lotteries or sweepstakes but owed fees to collect their winnings. Shah dismissed part of the FTC case last July but let the regulator pursue the remainder. Walmart appealed from that decision. Friday's settlement would end the appeal. REUTERS
Business Times
an hour ago
- Business Times
Japan scraps US meeting after Washington demands more defence spending: report
[WASHINGTON] Japan has cancelled a regular high-level meeting with its key ally, the United States, after the Trump administration demanded it spend more on defence, the Financial Times (FT) reported on Friday (Jun 20). US Secretary of State Marco Rubio and Defence Secretary Pete Hegseth had been expected to meet their Japanese counterparts in Washington on Jul 1 for annual 2+2 security talks. But Tokyo scrapped the meeting after the US side asked Japan to boost defence spending to 3.5 per cent of GDP, higher than an earlier request of 3 per cent, the paper cited unnamed sources familiar with the matter, including two officials in Tokyo, as saying. A US official who did not want to be identified confirmed Japan had 'postponed' the talks but said the decision was made several weeks ago. The source did not cite a reason. A non-government source familiar with the issue said he had also heard Japan had pulled out of the meeting, but not the reason for it doing so. US State Department spokesperson Tammy Bruce said she had no comment on the FT report when asked about it at the regular briefing, and the Pentagon also had no immediate comment. Japan's embassy in Washington did not respond to a request for comment. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up The Financial Times said the new higher spending demand was made in recent weeks by Elbridge Colby, the third-most senior Pentagon official, who has also recently upset another key US ally in the Indo-Pacific by launching a review of a project to provide Australia with nuclear-powered submarines. In March, Japanese Prime Minister Shigeru Ishiba said that other nations do not decide Japan's defence budget after Colby called in his nomination hearing to be under secretary of defence for policy, for Tokyo to spend more to counter China. Japan and other US allies have been engaged in difficult trade talks with the United States over US President Donald Trump's worldwide tariff offensive. The FT said the decision to cancel the Jul 1 meeting was also related to Japan's Jul 20 Upper House elections, at which the ruling Liberal Democratic Party is expected to suffer a loss of seats. It comes ahead of a meeting of the US-led Nato alliance in Europe next week, at which Trump is expected to press his demand that European allies boost their defence spending to 5 per cent of GDP. REUTERS
Straits Times
2 hours ago
- Straits Times
Japan scraps US meeting after Washington demands more defence spending
Japanese Prime Minister Shigeru Ishiba gives his opening speech at the beginning of the meeting with US Secretary of Defense Pete Hegseth at his office in Tokyo, in March. PHOTO: REUTERS WASHINGTON - Japan has cancelled a regular high-level meeting with its key ally the United States after the Trump administration demanded it spend more on defence, the Financial Times (FT) reported on June 20. US Secretary of State Marco Rubio and Defence Secretary Pete Hegseth had been expected to meet their Japanese counterparts in Washington on July 1 for annual 2+2 security talks. But Tokyo scrapped the meeting after the US side asked Japan to boost defence spending to 3.5 per cent of GDP, higher than an earlier request of 3 per cent, the paper cited unnamed sources familiar with the matter, including two officials in Tokyo, as saying. A US official who did not want to be identified confirmed that Japan had 'postponed' the talks but said the decision was made several weeks ago. The source did not cite a reason. A non-government source familiar with the issue said he had also heard Japan had pulled out of the meeting, but not the reason for it doing so. US State Department spokesperson Tammy Bruce said she had no comment on the FT report when asked about it at regular briefing, and the Pentagon also had no immediate comment. Japan's embassy in Washington did not respond to a request for comment. The Financial Times said the new higher spending demand was made in recent weeks by Mr Elbridge Colby, the third-most senior Pentagon official, who has also recently upset another key US ally in the Indo-Pacific by launching a review of a project to provide Australia with nuclear-powered submarines. In March, Japanese Prime Minister Shigeru Ishiba said that other nations do not decide Japan's defence budget after Mr Colby called in his nomination hearing to be under secretary of defence for policy for Tokyo to spend more to counter China. Japan and other US allies have been engaged in difficult trade talks with the United States over US President Donald Trump's worldwide tariff offensive. The FT said the decision to cancel the July 1 meeting was also related to Japan's July 20 Upper House elections, at which the ruling Liberal Democratic Party is expected to suffer a loss of seats. It comes ahead of a meeting of the US-led NATO alliance in Europe next week, at which Mr Trump is expected to press his demand that European allies boost their defence spending to 5 percent of GDP. REUTERS Join ST's Telegram channel and get the latest breaking news delivered to you.
