Raiffeisen has decided to sell its Notenstein La Roche private bank to Vontobel. What are the reasons behind the step?
It didn’t come as a great surprise when Raiffeisen early on Thursday said that it would part ways with the Notenstein La Roche private bank. With assets under management of 16.5 billion Swiss francs, the bank for sure would always struggle to make a decent living in a competitive Swiss market.
Raiffeisen in the media release conceded that Notenstein La Roche might have a greater chance to live up to its potential in a classic private-banking environment such as the one provided by Vontobel.
Dismantling an Empire
Since its inception six years ago, Notenstein never yielded what Raiffeisen had hoped for. The private bank is what remained of Bank Wegelin, which folded as a consequence of the tax dispute with the U.S. Raiffeisen had hoped that Notenstein would provide the Raiffeisen banking group with a steady stream of new clients.
With the acquisition of Notenstein La Roche, Pierin Vincenz, the former and now disgraced CEO of Raiffeisen, had wanted to open a new business line to reduce the company’s dependence on interest income, the biggest contributor to the bank’s earnings.
Investments in Growth
Despite the decision to offload the private bank, Raiffeisen wants to stick to the diversification strategy, said current CEO Patrick Gisel according to the release on Thursday: «The decision to sell does not represent a move away from Raiffeisen’s diversification strategy,» Gisel said. «On the contrary, we want to focus on our established client base, which also includes wealthy private clients, and expand it together with our Raiffeisen banks by offering an even broader and more effective range of products and services.»
Raiffeisen said it will embark on a growth strategy which entails spending substantially into the investment client segment. The bank will use the proceeds from the sale of Notenstein to finance the strategy. Today’s transaction will provide Raiffeisen with 700 million francs in cash plus free up capital that was tied up due to regulatory reasons.
Working With Vontobel
Raiffeisen will build its own investment office with the help of Notenstein La Roche experts. The office will provide the Raiffeisen member banks with a client-oriented investment process and research products.
The bank also plans to strengthen the competence center for wealth- and tax-planning and expand the digital interface for customers. Raiffeisen will work with Vontobel as a partner to reach the targets of its strategy.
