Shares in Julius Baer experienced a boost after the announcement that Chief Executive Officer Philipp Rickenbacher would be stepping down in the wake of significant losses linked to its exposure to Austria’s Signa Group.
As of 1146 GMT, the company’s shares were trading 7.1% higher at CHF50.66.
Despite the recent surge in stock price, Julius Baer’s shares still remain approximately 10% below their pre-warning levels from November when the company announced that its earnings would be impacted by its involvement with private debt.
While the client responsible for the losses has not been named, The Wall Street Journal and other sources have reported that the debt was backed by Austrian property group Signa, which filed for insolvency late in 2023.
In addition to Rickenbacher’s resignation, a loan-loss allowance of 586 million Swiss francs ($680.4 million) has been established to address the exposure to private debt. According to JPMorgan analysts Kian Abouhossein and Amit Ranjan, this action helps to resolve the assumed exposure to Austria’s Signa Group and shift attention back to Julius Baer’s operations.
Analyst Anke Reingen from RBC Capital Market commended the company for taking accountability for the issue, stating that it “goes a long way to get closure on this particular case.”
The departure of Rickenbacher was anticipated given the significant losses incurred from the Signa exposure and the subsequent decline in market value, according to analysts at Citi.
“We believe new leadership could have a positive impact, but we caution that there may be short-term uncertainty,” noted the Citi analysts.
Julius Baer reported attracting CHF12.5 billion in net new money in 2023, representing a 43% increase compared to the previous year. This performance was seen as reassuring by the analysts at Citi.