ZURICH (Reuters) -Swiss private bank Julius Baer is facing significant credit losses after financing real estate projects linked to Germany’s now-insolvent Degag Group, the Handelsblatt newspaper reported on Monday. The bank has filed claims for 48 million euros ($55.74 million), which exceeds its 2023 profit in Germany, the paper said, citing a preliminary report to the insolvency administrator.
The matter is a blow for Julius Baer, which last year reported losses of 586 million Swiss francs on loans to collapsed property company Signa.
“Julius Baer granted a private group of companies mortgage loans totalling a higher double-digit CHF million amount to finance residential properties in Germany,” Julius Baer said in a statement to Reuters.
“Some of the borrowers in this group are now facing financial difficulties.”
NEW CEO VOWS TO REDUCE BANK’S RISK PROFILE
Julius Baer ousted its Chief Executive Philipp Rickenbacher last year in the wake of the Signa losses, with new CEO Stefan Bollinger pledging to reduce the bank’s risk profile by focussing more on wealth management.
The report said Julius Baer was the most important bank lender to Degag, once a key player in Germany’s residential property market and now at the centre of a financial scandal.
The group is reportedly indebted by up to 1.1 billion euros, with thousands of private investors facing the prospect of total losses.
Prosecutors in Hanover have launched investigations into several former executives, the newspaper said.
Julius Baer said it had announced an increase in loan loss allowances of 130 million Swiss francs ($161.87 million) on May 20.
“These allowances were related to clients in Switzerland and other European countries and across certain selected positions in the mortgage book and the remaining private debt loan book, which Julius Baer has significantly reduced since 2024,” the bank said.
($1 = 0.8612 euros)
($1 = 0.8031 Swiss francs)
(Reporting by John Revill; Editing by Bernadette Baum)
