Thirteen weeks into the job as CEO of Julius Baer, Philipp Rickenbacher not only wrote off part of the value of the Swiss private bank's Italian money manager, Kairos – only to be presented with the next crisis stemming from a 2005 deal.

The bank will take an 153 million Swiss franc ($155 million) write-down against this year's profits following a Swiss court decision, it said in a statement late on Thursday. The issue goes back to the collapse of Communist-ruled German Democratic Republic (GDR) in 1990. It landed with Julius Baer through its acquisition of private bank Ehinger & Armand von Ernst Ltd. from UBS 14 years ago.

Thirty-Year Legacy

The most recent Swiss court decision reverses an earlier one which favored Julius Baer. An agency for rooting out east German assets make a claim for assets held by Cantrade, an Ehinger subsidiary, in eastern Germany between 1990 and 1992. East German officials had maintained foreign accounts in order to tap foreign currencies and underpin its exports.

Julius Baer has fought the issue in Swiss and German court – largely successfully, until now. The bank said it would appeal the decision to Switzerland's highest court. If it loses, Julius Baer said, it would in turn claim reimbursement from UBS. 

Ignored Duty of Care

At the time, Cantrade bankers had ignored relatively elementary duties of care and taken suspicious transactions and payments without question, a Swiss court ruled in February. The decision meant Julius Baer had to replace all funds related to east Germany.

The decision will torpedo the first profit statement for CEO Rickenbacher, who is in the midst of reviewing Julius Baer's strategy with the help of McKinsey, as finews.com reported last month. Julius Baer is nearing the end of a grueling two-year, 90 million franc review of each client following a major Venezuelan oil money scandal.