Julius Baer booked Rene Benko's Signa empire as many borrowers, not one

Julius Baer's private-debt arm built up a large book of loans to entities within Signa Group, the Austrian property and retail conglomerate controlled by Rene Benko, owner of Berlin's KaDeWe department store and a stake in Selfridges. Internally, credit exposures to the different Signa companies were booked as separate borrowers rather than as essentially the same one — so no single limit ever flagged how concentrated the bank had become in one over-leveraged group.

One loan, worth around 150 million euros, was secured against Oberpollinger, a Munich department store owned by Signa Prime Selection, but the collateral was a share pledge rather than the building itself. When Signa filed for one of Europe's largest corporate insolvencies in November 2023, that structure gave Julius Baer far less to recover than a direct claim on the property would have.

Julius Baer initially set aside only 70 million Swiss francs against the exposure. By February 2024 it had recognised a full loss allowance of roughly 586 million francs (about $679 million) on its Signa-linked private debt, an amount that cut its 2023 net profit by more than half.

Chairman Romeo Lacher told shareholders that 'the evolution of the private debt business outpaced the adjustment of its framework' — the unit had grown faster than the risk controls meant to govern it, and risk managers did not have a full handle on the complexity of the Benko loans.