Julius Baer towards management change after loan losses

A change is ready for the top management of the Swiss bank Julius Baer. The group is considering replacing one or more members of its management team, including CEO Philipp Rickenbacher, due to the bank's involvement in the collapse of the Signa real estate empire.

According to initial rumours relayed by international agencies yesterday, no formal conclusion has yet been reached on the future of the top team, although a decision could come soon.

The company is also considering other ways to empower executives and may still decide to maintain its current line-up while it assesses how the group has built up exposure to Signa. One solution, however, could be to cut bonuses: the Swiss newspaper SonntagsZeitung reported that Julius Baer is exploring the possibility of cutting variable pay for the top team.

The group's asset manager has been in the crosshairs since it emerged in November that the company had accumulated a $700 million exposure to real estate developer Rene Benko's Signa companies. Regulators' doubts about risk controls and a rating downgrade have added to the uncertainty surrounding the bank's response to the scandal.

In November, Rickenbacher had stated that the bank would review the private debt business at the centre of its activity with Benko. The bank then warned that, after setting aside a total of CHF 82 million, of which CHF 70 million related to Signa's loans, the profit for the whole year would probably fall. The shareholders pay, but the management probably gets the bill.