JULIUS Baer Group is discussing replacing one or more members of its senior leadership team including chief executive officer Philipp Rickenbacher, as a result of the bank’s entanglement in the collapse of the Signa property empire.

No formal conclusions have yet been drawn about the future of the top team, though a decision could happen soon, people familiar with the matter said, who asked not to be named discussing private details.

The firm is also considering other ways to hold executives accountable and could still decide to keep its current line-up as it assesses how it built up exposure to Signa. One common way to do that is to cut bonuses, with the Swiss newspaper SonntagsZeitung reporting earlier that Julius Baer is exploring cutting variable pay for the top team.

A spokesman for Julius Baer declined to comment on the matter. Julius Baer shares fell after the report, trading at 47.55 Swiss francs (S$74) as of 3.21 pm in Zurich.

The wealth manager has been in the cross-hairs since it emerged in November that the firm had run up a US$700 million exposure to Rene Benko’s Signa companies, with shares losing some 15 per cent.

Regulator doubts over risk controls and a rating downgrade have compounded the uncertainty surrounding the bank’s response to the scandal.

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In November, Rickenbacher said that the bank would be reviewing the private-debt business at the heart of the business with Benko.

The lender warned then that full year profit would probably decline after taking a total of 82 million Swiss francs in provisions, 70 million francs of which related to the Signa credits.

The Zurich-based lender is due to report full-year earnings for 2023 on Thursday. Analysts at Zurcher Kantonalbank estimated in December that the bank could be forced to write down as much as 400 million Swiss francs on the Signa loans.

While potential losses on the Benko loans themselves may hurt profits, the questions raised over weak collateral and faulty risk procedures have undermined confidence more broadly.

Rickenbacher took over as CEO in 2019 in part to restore stability amid a money-laundering probe that saw previous chief executive Boris Collardi issued with a reprimand.

Financial supervisor Finma opened an investigation into the reporting lines of the bankers responsible for structuring loans for private clients such as Benko. Those lead to the same person as the teams managing credit risk, Bloomberg reported in December. Both units are ultimately overseen by chief financial officer Evie Kostakis, while a typical setup would see the risk team report into the chief risk officer.

Any changes would add to a turbulent period for Swiss finance, after the collapse and emergency takeover of Credit Suisse by UBS Group last year. The government has signalled that it plans to overhaul financial oversight and is set to make further proposals in the spring.

“I believe Julius Baer will be able to continue its risk appetite and risk capacity as we have on average in the last few years,” Rickenbacher said on Nov 29.

“Every time whenever we had losses – and this is certainly a significant case – every time we take the learnings and look deeply into it and we want to emerge stronger.” BLOOMBERG