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CEO's sudden departure hits Julius Bär share price; more uncertainty expected

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CEO's sudden departure hits Julius Bär share price; more uncertainty expected

The unexpected resignation of Julius Bär Gruppe AG CEO Boris Collardi saw the Swiss private bank's shares drop by nearly 5% in early trading Nov. 27 with analysts saying the negative trend is likely to continue over the near term.

By 2 p.m. CET, its price had fallen 5.8% to CHF56.75 after opening at CHF57.85.

Collardi, who joined Julius Bär in 2006 and became CEO in May 2009 at only 34 years of age, has left the bank with immediate effect and was replaced by Julius Bär's Chief Risk Officer Bernhard Hodler. Hodler, who was named deputy CEO of Julius Bär in September, will head the bank on an interim basis. The board of directors will initiate "an evaluation process" to resolve the long-term leadership of Julius Bär, the bank said in a statement Nov. 27.

Collardi's resignation came as a surprise even for the board, which was informed of the former CEO's decision over the weekend of Nov. 25 and Nov. 26, Tages Anzeiger reported, citing a statement by board chairman Daniel Sauter. Sauter reportedly said Collardi had resigned for personal reasons.

The position at Julius Bär may have nothing more to offer to Collardi after eight years during which time he had doubled the bank's AUM from less than CHF200 billion to almost CHF400 billion, Zürcher Kantonalbank analysts said in a research note Nov. 27. Collardi, who started his career at Credit Suisse's private banking arm in 1995, will co-head the global wealth management arm of Geneva-based Pictet & Cie Group SCA as of the middle of 2018.

While the operating business is not expected to suffer as a result of Collardi's departure, Julius Bär is likely to face more market uncertainty in the short term, the Zürcher Kantonalbank analysts said. "But as soon as the initial smoke clears, we anticipate that the share price will still harbor the potential to outperform the broad market," they noted.

Julius Bär is in "excellent shape" having booked record assets under management of CHF 393 billion in the 10 months to Oct. 31, a year-to-date rise of 17%, Sauter said in the bank's official statement Nov. 27. Net new money inflows for the period were above the bank's 4% to 6% target range and its capital position was strong with a fully-loaded common equity Tier 1 ratio of 13.4% at October-end, well above the bank's own 11% floor and the regulatory minimum of 8%, Julius Bär said in its 10-month trading update Nov. 20.

Baader Helvea equity analyst Tomasz Grzelak was more skeptical about the share price development, expecting the market uncertainty to stay with the stock "for quite some time." Given Collardi's "very strong leadership status inside the bank," the market will now fear an occurrence of "a negative string of events," such as departure of other relationship managers or loss of client assets, Grzelak said.

On the other hand, Grzelak welcomed Holder's appointment as "a solution, which provides for continuity," given the fact that Hodler has been part of Julius Bär's senior executive team for nearly 20 years, since 1998.