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Julius Baer chief executive Philipp Rickenbacher said Switzerland’s second-biggest wealth manager would review its private debt business in the wake of the crisis engulfing Austrian property group Signa.
According to people familiar with the matter, Julius Baer is one of the biggest lenders to Signa, a European luxury developer whose assets include a stake in KaDeWe, Germany’s most famous department store, and the Chrysler building in New York.
Shares in Julius Baer have dropped 16 per cent since it revealed last week that it was taking a SFr70mn ($80mn) provision against losses in its credit portfolio. On Monday, the Swiss lender said this stemmed from its single largest exposure in its private debt loan book, which amounted to SFr606mn.
“We regret that a single exposure has led to the recent uncertainty for our stakeholders,” Rickenbacher said. As a result, “we will review our private debt business and the framework in which it is conducted”.
Founded by René Benko, Signa has amassed a €27bn property portfolio but has been hit hard by rising interest rates. Earlier this month, Signa said it had appointed a new chair to restructure the group and that Benko would be taking a step back from the company.
Signa owes approximately €13bn to banks and investors, according to an analysis by JPMorgan. However, the group’s complicated structure and opacity mean it has been hard for lenders to assess how much risk there is to their capital.
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