Amid growing concerns about potential insolvencies within Signa’s conglomerate, Julius Baer has been facing increased scrutiny over its financial exposure. Analysts from Vontobel and Morgan Stanley have echoed worries about the Swiss bank’s asset quality, leading to a downgrade of its stock and predictions of significant provisions for potential loan defaults.

Julius Baer’s shares have experienced a sharp decline over the past week, hitting their lowest point in more than a year. This drop follows revelations of the bank’s substantial exposure to Signa, amounting to 606 million Swiss francs. Despite setting aside an early provision of 70 million Swiss francs earlier in November, analysts believe more may be necessary.

Analysts from Vontobel suggested that Julius Baer might need to provision about half of its exposure to Signa. In a similar vein, Morgan Stanley analysts Shah anticipate a specific provision of 50 million Swiss francs by Julius Baer next year due to asset quality concerns, leading to a downgrade of the bank’s stock.

These developments have also prompted Vontobel to cut its target price for Julius Baer shares and project a downturn in their high-margin private debt business operations. While Julius Baer grapples with these challenges, other banks with financial ties to Signa, such as UniCredit SpA, have not yet disclosed their provisioning measures.

The market is closely monitoring the situation as Julius Baer navigates through these financial headwinds, with the bank’s response to the unfolding events being of particular interest to investors and analysts alike.