Raiffeisen kitchen-sinked the scandal over its previous CEO's acquisitions with a hefty write-down of their value. The Swiss bank's profits suffered as a result.
The St. Gallen-based banking cooperative followed up on a recently-disclosed report of the dealings by former CEO Pierin Vincenz with a 200 million Swiss franc ($200.5 million) writedown on past acquisitions.
The bank's line under the Vincenz era cost dearly: profits tanked by nearly half to 541 million francs, the bank said in a statement on Friday. New Chairman Guy Lachappelle had warned that the hit, which seeks to shut the door on a decade of copious dealmaking, could be as high as 300 million francs.
Drop in Revenue
The acquisition write-downs were compounded by a 69 million franc provision for Arizon, a joint venture together with software provider Avaloq. The bank said last month it would buy Avaloq out of the tie-up, reversing course after concluding the «mother of all tech projects» together last year.
The Vincenz scandal doesn't seem to have hit Raiffeisen's ongoing business: income did fall following the sale of private bank Notenstein La Roche to Vontobel last year, but Raiffeisen also hoovered up 6.3 billion in new client assets.
Mortgage Powerhouse
Raiffeisen, which draws roughly 70 percent of its income through mortgage lending and other interest income, expanded its market share of home equity loans in Switzerland to 17.6 percent. Ratings agencies have in the past fretted over Raiffeisen's dominance, especially as Swiss property values surge.
New CEO Heinz Huber said 2019 would be a year of transition, and that Raiffeisen would also devote itself to digitization projects. He didn't elaborate on whether Raiffeisen would demand some kind of restitution either from Vincenz, who is the subject of a criminal investigation, or from Patrik Gisel, who stepped down hastily as CEO three months ago and isn't accused of wrong-doing.
Ex-CEO Restitution?
Lachappelle, who took over as part of a near-complete overhaul of board and management last year, had flagged potential measures against former management and oversight, ordering a review to evaluate the feasibility.
The criminal investigation, which saw Vincenz remanded in custody for nearly months last year, will show whether Raiffeisen has the grounds for a claw-back against the ex-CEO, or against auditor PWC. Vincenz hasn't been charged by prosecutors.
