Pierin Vincenz used to be a top Swiss banker, a figurehead of a proud industry. He built an financial empire based on his Raiffeisen Group. Now, it’s deconstruction time.

It was a news item that went by barely read by anybody: Raiffeisen Switzerland divested its stake in Helvetia insurance (in German) last week. Rather unspectacular of course, but a further sign that the empire built by Pierin Vincenz is no more.

The Third Force of Switzerland

The former chief executive officer of Raiffeisen in Switzerland was rather successful in his quest to develop the cooperative bank into something rather more substantial – today, Raiffeisen is the third-largest banking group behind the two big banks UBS and Credit Suisse.

At his time, Vincenz became an important representative of what banking in Switzerland used to be, because UBS had been broken by the financial crisis, forced to ask the government to bail it out.

Private Banking Adventure

His vision of a Swiss universal bank based on the cooperative core business had a visionary strength and his plan to diversify across the financial market became popular as the industry was undergoing a major crisis.

When the U.S. judiciary dismantled Switzerland’s oldest private bank, Wegelin, Vincenz saw the chance to reach the next level. Raiffeisen acquired the non-U.S. customers of Wegelin and created Notenstein private bank as a harbor for those clients.

The cooperative bank thus had made the big step from small retail banking in rural Switzerland to doing business with seriously rich customers. He even eyed up Basel-based Sarasin, but the company eventually was bought by Safra from Brazil.

Diversification Strategy

Having successful established a private-banking business, the next step was asset management. Raiffeisen launched TCMG, an investment company with a number of boutiques under its wings.

Vincenz also added stakes in Leonteq (almost 30 percent), a derivatives developer, Helvetia insurance company (4 percent) and Avaloq (10 percent), a banking software firm.

How successful this conglomerate became as a business is open for debate. Vincenz must have had his doubts, because he started to tweak. First, he shut TCMG down, moving parts of it to Notenstein, which later divested Vescor, the remaining parts of it, to Vontobel.

Notenstein itself never took off properly. Having acquired La Roche early on, the combined force never managed to establish itself as an independent force in Swiss private banking. Numerous bankers left the firm in recent months and there’s little to suggest that the bank will hit the winning streak soon. Selling the bank may be a way out and has been a constant in the rumor mill in Swiss banking circles.

A Vision Takes Leave

Vincenz in January 2015 announced that he would leave as CEO of Raiffeisen in March 2016. Eventually, he stepped down in September of 2015 and the days of his empire were past. Today, the cooperative bank is very much eager to emphasize its core business and wants to have little or nothing to do with all the rest.

Vincenz in 2016 became chairman of Leonteq, a position that he will relinquish later this year after mounting pressure due to a serious crisis that had the share price plummet last year. Patrik Gisel, Vincenz' successor at Raiffeisen, doesn’t exclude shedding the stake in Leonteq: «Selling a smaller part of Leonteq to a strategic investor – who has an interest in Leonteq and adds value – isn’t unthinkable,» he told finews.com in an interview.

The official wording regarding the stake in Avaloq is not dissimilar. «This is a financial investment undertaken to help Avaloq extend its capital base and enable it to fully acquire B-Source. Taking a bigger stake is neither in ours nor in the interest of Avaloq,» Gisel said. «Over time, we will rather reduce the stake.»

Back to Normal Retail Banking

Raiffeisen’s intention to concentrate on its core business became apparent last week when it sold the Helvetia stake. The bank said that would concentrate more on its traditional banking business given the increase in regulatory demands.

So, instead of diversification and fantasies about an alternative big banking force in Switzerland, Raiffeisen is back to where it used to be – a Swiss retail bank.

Challenges Ahead

It won’t be easy for the new old Raiffeisen. It is the biggest force in the mortgage business with a stake of 20 percent in Switzerland. But it is questionable how much growth there is in this business.

Margins are under pressure as competition is getting tougher – pension funds and independent providers have become active investors due to a lack of lucrative alternative investment opportunities. Even Helvetia, where Vincenz became chairman, offers mortgages to clients.

Signs therefore are that Raiffeisen scaled back its ambitions. But that may be exactly what it really wants, after its stint imperial ways.