With markets having taken a toll on actively-managed funds, the Swiss bank has warned that it will suffer more impairment of goodwill on its majority stake in Italy-based Kairos Investment Management.

Julius Baer yesterday warned that it will suffer more impairment of goodwill on its stake in Italy-based Kairos Investment Management than previously stated.

While net new money has been positive since the governance changes announced at the end of 2020, the Zurich-listed bank said the impairment followed an “unprecedented difficult year for the asset management industry and in particular active asset managers” as markets slid.

The bank said that its goodwill impairment, together with the impairment of the remaining amortisable customer relationships, will cause a pre-tax non-cash charge of SFr57 million ($60.9 million), to be reflected in Julius Baer’s 2022 financial results.

The announcement highlights how asset management, as a business, can be vulnerable – at least in the short run – to dramatic market downturns.

As per year-end 2022, no more intangible assets related to Kairos will be reflected in the consolidated financials of Julius Baer, the private banking group said. 

Julius Baer has a majority stake in Kairos – management of that business retains a stake of about 35 per cent stake. Kairos has about SFr5 billion in assets under management.

“While market conditions in 2022 provided significant headwinds for the industry, Kairos will continue to strengthen the foundations for the future long-term growth of the business,” Julius Baer said.