The Swiss-based private bank Julius Baer reveals its full loan exposure to a «European conglomerate». This is most likely related to the faltering Signa Holding founded by real estate entrepreneur René Benko.
A week ago, Swiss private bank Julius Baer announced that, at the end of October, it created reserves for 70 million francs in its loan portfolio (at that time, the reserves comprised a total of 82 million francs). The shares on the Swiss stock exchange then took quite a hit.
The investors suspected that the loan write-off is a response to the turbulence relating to Signa Holding and real estate entrepreneur René Benko. On the markets, there are speculations that the bank with a long-standing tradition has outstanding loans to Signa of around 600 million francs.
The Largest Single Exposure
In a press release on Monday, Julius Baer confirmed that the amount is the largest single exposure in their private debt loan book but did so without mentioning the name Benko or Signa. As the story goes, this exposure totals a nominal 606 million francs and comprises three loans to different entities within a European conglomerate.
The aggregate exposure to this client group is secured by several security packages in connection with commercial real estate and luxury retail and is now subject to a longer-term restructuring. Julius Baer has taken measures to protect its own interests and maintain the value of the guarantees received and will make further value adjustments where necessary.
Exclusively for Super-Rich Clients
According to the press release, the private bank only offers private debt as a structured financing solution to super-rich clients, so-called ultra-high-net-worth individuals, as part of its wealth management services. At the end of October, this loan portfolio covered 1.5 billion francs as part of the overall loan portfolio of 41 billion francs.
The second largest exposure amounts to 216 million francs, and the third largest to 140 million francs. Neither of these two exposures are related to the real estate industry. The rest of the portfolio is made up of significantly smaller exposures to 19 counterparties with no relation to each other.
Philipp Rickenbacher Regrets
In the press release, CEO Philipp Rickenbacher regretted that «a single exposure has led to the recent uncertainty for our stakeholders». Furthermore, the private bank confirms its dividend policy, which stipulates a distribution rate of around 50 percent of the consolidated profit attributable to the shareholders, and a dividend per share which as much as, or more than, the dividend of the previous year.
