Inadequate control structures at Zurich private bank: Julius Baer in Finma’s sights due to Signa collapse

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The collapse of the Austrian Signa Group concerns the financial market regulator Finma. A Finma spokesman said on Thursday that it was “in intensive contact with various supervised entities” and also stressed that it was taking measures at an early stage. The “Bloomberg” news agency had previously reported on a Finma investigation into Bank Julius Baer.

When asked by the AWP, a spokesman for the supervisory authority said Finma does not comment on the details of supervisory activities at individual institutions. In principle, supervised financial institutions must “appropriately manage” their risks. “If Finma finds deficiencies in this area, it investigates them and takes precautions if necessary.”

Inadequate control structures at Julius Baer

According to a “Bloomberg” article published Thursday evening, the Finma investigation is supposed to be related to inadequate control structures at Julius Baer. According to inside information, the investigation is said to have started before the Signa crisis. It is based on the suspicion that operating and control functions are not sufficiently separated from each other. The high volume of potential defaults on Julius Baer’s Signa is likely to blame, Bloomberg writes, citing people with knowledge of the matter.

Zurich private bank Julius Baer announced at the end of November that the institute had granted a loan worth 606 million francs to a “European conglomerate”. That debtor, insiders say, is Austrian investor René Benko’s troubled Signa Group.

Loans passed through three risk committees

According to Bloomberg, the consensus within the bank is that no one can be held responsible. Loans to Benko went through three different risk committees. However, structural errors in the management of credit risk were the main reason for the loan to Signa.

The private bank’s share price is currently in a downward trend. On Wednesday, ratings agency Moody’s downgraded Julius Baer’s long-term issuer rating over its Signa loans. Its share fell by 1.2 percent. The bank has lost approximately 15 percent of its value since November, when it first set aside provisions for Signa loans. (sak/SDA)

Source :Blick