Analyst Estimates Potential Losses of $460 Million for Julius Baer Due to Signa

Analyst Estimates Potential Losses of $460 Million for Julius Baer Due to Signa

Analyst Estimates Potential Losses of $460 Million for Julius Baer Due to Signa

“An analyst stated on Monday that Julius Baer’s (BAER.S) potential losses linked to the collapsed property group Signa could surpass the provisions made by the Swiss wealth manager.

Zuercher Kantonalbank analyst Michael Klien noted in a client memo, “We have revised our anticipation for credit losses to 400 million Swiss francs ($460.7 million) on the mentioned exposure.” Klien, who initially estimated the loss at 300 million francs, explained that the increased figure accounts for the fact that private debt often lacks direct recourse to tangible assets.

Analyst Estimates Potential Losses of $460 Million for Julius Baer Due to Signa

Julius Baer revealed last month that it had exposure amounting to 606 million Swiss francs—its largest in the private debt loan book—to a European conglomerate. The bank had also booked 70 million francs in loan provisions against its credit portfolio after October 31.

Over the past month, concerns about Julius Baer’s connections to the property and retail group Signa, controlled by Austrian magnate Rene Benko and recently declared insolvent, led to a roughly 15% decline in the bank’s share price.

Klien, following a meeting with Julius Baer finance chief Evie Kostakis, expressed belief that the exposure is likely to remain contained. He acknowledged existing risks, such as a FINMA investigation, potential reputational damage, and management changes, but stated, “we believe that these are already more than reflected in the current valuation.”

Julius Baer declined to provide comments on the matter.”

Source: Reuters

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