Baer says exposure to single group tops 600 million francs, as Signa crisis deepens

ZURICH (Reuters) -Julius Baer, which has been expected to write down some loans to troubled property group Signa, said on Monday it has nominal exposure totalling 606 million Swiss francs ($684.36 million) to a European conglomerate.

The 606 million francs was extended over three loans to different entities within the conglomerate, the Swiss private bank said, without identifying the client.

A source familiar with the matter told Reuters that the group was Signa.

"The aggregate exposure towards this client group is secured by multiple collateral packages related to commercial real estate and luxury retail and is now subject to a longer-term restructuring," Julius Baer said in a statement.

The exposure is the largest in the bank's private debt loan book, which amounted to 1.5 billion francs at the end of October, the bank said.

"If and when appropriate, the Group will remain prudent in booking further valuation adjustments as required," Julius Baer said.

A source told Reuters last week that Julius Baer has exposure to Signa and was expected to write down some of those loans.

"We regret that a single exposure has led to the recent uncertainty for our stakeholders," Julius Baer CEO Philipp Rickenbacher said in Monday's statement, referring to recent speculation of Baer's exposure to Signa, which helped send the bank's shares down sharply last week.

Financing is an inherent part of the wealth management proposition to Baer's clients, Rickenbacher said, but together with the board of directors, the private debt business and the framework in which it is conducted would be reviewed.

Julius Baer shares were down 0.2% in Zurich as of 0837 GMT.

Analysts said the disclosure should help reduce the headline risk and ease market fears of higher write-downs.

Vontobel analyst Andreas Venditti said the key question is what collateral does the bank hold and how much is it still worth.

Swiss newspaper SonntagsZeitung previously reported that Julius Baer gave Signa and the Central Group a credit of around 600 million francs to buy the up-market retailer Globus.

Last week Baer's shares slumped to their lowest this year as the bank dampened profit expectations after loan provisions amounting to 82 million Swiss francs.

Of the 82 million francs, 70 million francs were booked against its credit portfolio after Oct. 31, 2023, without identifying the loans in question.

"The overall quality of the loan book and the balance sheet remains unaffected, with a consistently strong capitalisation and high liquidity providing ample capacity to absorb any risks resulting from the group's business," Julius Baer said in an interim update for the first 10 months of 2023.

($1 = 0.8855 Swiss francs)

(Reporting by Noele Illien, Editing by Rachel More, Kim Coghill and Susan Fenton)