The powerful rating agency Moody’s has downgraded the credit rating for Bank Julius Bär following the Signa debacle. The reasons cited for the downgrade are the group’s high risk appetite and risk concentration.
Moody’s, the American rating agency, has lowered the credit rating for Julius Bär. The private bank’s credit rating has been downgraded to “A3” from the previous “A2,” and the outlook has changed from “stable” to “negative.”
The outlook for the entire banking group has also been lowered accordingly, although the rating has been maintained at “Baa1.”
The trigger for the reassessment is the provisions made by the bank in its lending business. “The downgrade reflects the unexpectedly high risk appetite of the group and the risk concentrations in its loan book, after the Julius Bär group disclosed large exposures to a European conglomerate that required additional provisions for loan defaults,” commented the agency in a statement.
Julius Bär reported provisions totaling CHF 82 million at the end of November and a week later disclosed a credit exposure of CHF 606 million to a “European conglomerate.” According to media reports, it is confirmed that these exposures are to the struggling Signa Group, in three tranches of approximately CHF 200 million each.
This case is part of a series of control questions and problems that have arisen in the past. The agency refers to deficiencies in the group’s general corporate governance practices regarding the detection and prevention of money laundering, which were identified by Finma in 2020. However, these incidents date back to the predecessors of the current CEO, Philipp Rickenbacher.
While it is believed that these issues have been resolved, the recent provisions indicate new unforeseen risks, the statement further explains.
The rating reflects the higher risk tolerance compared to the closest competitors in private banking. This weakens the otherwise solid credit profile of the group, considering its strong capitalization and liquidity. This also has implications for the ESG rating (Environmental, Social, Governance).
The downgrade also affects the stock price. Julius Bär shares are trading 1.9% lower at CHF 46.70 on Thursday morning in a slightly weaker overall market.
This News Article was automatically generated by Bob the Bot (AI)
| Information | Details |
|---|---|
| Geography | Europe |
| Countries | 🇨🇭 |
| Sentiment | neutral |
| Relevance Score | 1 |
| People | Philipp Rickenbacher |
| Companies | Julius Bär, Moody’s, Signa-Gruppe, Finma |
| Currencies | None |
| Securities | None |
