The private bank Julius Baer is disclosing how much debt the real estate entrepreneur René Benko’s Singa Group has with it. Benko has hit the headlines in recent weeks as his Singa Group has faltered due to the rising interest rate environment. Julius Baer has has already made provisions and therefore fears that it could lose money in the Benko case.
The largest single position within the private debt loan book amounts to 606 million francs, Julius Baer said, without mentioning Benko’s name. The bank also confirmed that the 70 million in provisions made since the beginning of November “significantly” fell on this position.
According to the bank, the total private debt loan book amounts to 1.5 billion francs. The next largest positions after Benko are 216 million and 140 million francs. These loans did not go to real estate entrepreneurs. The remaining portfolio consists of 19 significantly smaller positions.
Julius Baer would not fall
According to the bank, the shaky commitment to Benko includes three loans to different entities “within a European conglomerate,” it said. The loans are secured by multiple packages of collateral linked to commercial real estate and luxury retail. The commitment will now be restructured in the long term.
The financial institution emphasized that Julius Baer had taken measures to protect its interests and preserve the value of the collateral provided. If further value adjustments are necessary, these will continue to be booked “prudently,” emphasized Julius Baer.
Legend: The entrepreneur and globe owner René Benko. KEYSTONE/DPA/Marcel Kusch
Even in a hypothetical scenario of a total loss, the pro forma ratio of common equity Tier 1 capital (CET1 capital) would have been over 14 percent at the end of October 2023, the bank calculates. Julius Baer would therefore have remained significantly profitable.
The loans to Signa are at risk because the heavily nested and indebted real estate group is fighting for survival. Some subsidiaries have already had to file for bankruptcy.
“We regret that an individual commitment has led to the current uncertainty among our stakeholders,” CEO Philipp Rickenbacher was quoted as saying in the statement. The private debt business and the framework in which it is operated will now be examined.
Shareholders should not be punished
At the same time, the bank is trying to smooth over the resulting waves: Julius Baer confirms its capital distribution policy, it said in the communiqué.
Specifically, the bank is aiming for a dividend payout ratio of around 50 percent of the adjusted consolidated profit attributable to shareholders. In addition, the dividend per share should be at least as high as in the previous year.
There is also a possible share buyback. Julius Baer wants to distribute the common equity core capital, which significantly exceeds the quota of 14 percent, via a share buyback the following year. The condition is that no attractive acquisition opportunities arise.