November 19, 2019 / 6:16 AM / a month ago

Julius Baer warns will miss 2019 net new money target after Kairos outflows

ZURICH (Reuters) - Private bank Julius Baer (BAER.S) said it was unlikely to achieve its target of 4-6% growth in net new money this year due to outflows from funds at its Italian subsidiary Kairos.

Net new money inflows for the first 10 months of the year had grown just under 3%, the bank said.

Switzerland’s third-largest listed lender in August decided to keep the Italian asset manager after having put it under strategic review on the heels of a poor performance in 2018. It noted improved fund results and said it would more closely align Kairos’ wealth management business in Italy with its own.

Baer on Tuesday, however, pointed to continued outflows from Kairos as well as a number of high-level departures over the last four months, resulting in a 90 million euro ($100 million) goodwill impairment this year.

“Asset gathering saw solid momentum in our core markets, although it was partly offset by anticipated temporary headwinds and disappointing outflows from Kairos funds,” new Chief Executive Philipp Rickenbacher said in the group’s first results statement since he assumed the role.

Since Rickenbacher took the helm in September, Julius Baer has reduced the size of its executive board to boost efficiency and client focus, particularly on ultra-wealthy clientele.

Leadership is now working on strategic plans to deliver sustainable medium-term growth, Rickenbacher said. Baer will provide a strategy update in February.

The Zurich-based bank posted a 10% rise in managed assets over the first ten months of 2019 to 422 billion Swiss francs ($426 billion), helped by a positive financial markets performance and inflows across the group’s broader wealth operations.

It said it would launch a new buyback program on Wednesday to purchase up to 400 million Swiss francs of shares, likely through February 2021.

Reporting by Brenna Hughes Neghaiwi and John Miller; Editing by Edwina Gibbs

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