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Julius Baer announces first buyback in 8 years

400 million Swiss franc buyback comes despite booking a writedown on Italy-based wealth manager Kairos

Zurich

JULIUS BAER Group announced its first share buyback in eight years even as inflows slowed as clients pulled money from a struggling Italian subsidiary.

The Swiss private bank presented investors with a mixed bag for the first 10 months of the year, announcing a 400 million Swiss franc (S$549 million) buyback while also saying it would book a writedown on Italy-based wealth manager Kairos.

Net new money for the period was slightly less than 3 per cent, dipping further below a medium-term target.

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Chief executive officer Philipp Rickenbacher is exploring growth opportunities and seeking to put his own stamp on the business after taking over from Bernhard Hodler in September. Like its peers in Europe, Julius Baer is contending with low interest rates, sluggish economies and trade uncertainties that are keeping some investors on the sideline.

Assets under management rose at the end of October to 422 billion Swiss francs from 412 billion francs as at June 30. Outflows at Kairos will lead to a charge of 90 million euros (S$135.6 million), the bank said.

Inflows were also hurt by negative interest rates and clients exiting due to a bank-wide compliance programme.

"Asset gathering saw solid momentum in our core markets, although it was partly offset by anticipated temporary headwinds and disappointing outflows from Kairos funds," Mr Rickenbacher said in the statement. "Our strong financial position enables us to put in place a share buy-back programme."

Julius Baer was hit in September by the departure of a group of investment managers from Kairos, who left to start a new equity hedge fund.

Julius Baer has explored the sale of Kairos - an asset and wealth manager with 8.4 billion euros under management - but in late August said it planned to retain ownership of the company, which suffered outflows in the first half of the year.

In October Mr Rickenbacher cut the number of top executives and increased the power of key managers in his first major management shakeup since taking over the Swiss private bank.

After years under the shadow of a Swiss regulatory probe into its Latin America business and a wide-ranging compliance programme known as Atlas, the bank is now turning its attention to growth. Julius Baer plans a rapid expansion in Latin America to double assets in the region, challenging more established rivals, Americas chief Beatriz Sanchez said in an interview earlier this month.

Credit Suisse Group AG gave downbeat outlook last month, saying that the US-China trade dispute will lead to more cautious spending and investment decisions, while UBS said that market conditions in the last few quarters have been very challenging. BLOOMBERG