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The integration of Notenstein La Roche has not been an easy one for Vontobel. And it is not the first experience with an acquisition that has proved more challenging than expected.

When Vontobel swooped for Notenstein La Roche private bank in 2018, Chief Executive Zeno Staub and Georg Schubiger, head of wealth management, were praised for a coup: even if 700 million Swiss francs ($697 million) seemed steep for 16.5 billion francs in assets under management, the takeover was deemed sensible.

Staub, previously criticized for his prudence in matters of consolidation, was applauded for a daring swoop. finews.ch called Schubiger a superstar when the wealth management business reported a jump in earnings for 2018.

Leaking No End

Lately, the deal of the year 2018 has lost some of its luster. Most of the key relationship managers have left. In Bern, François Baumeler and Lorenz Burkhalter departed shortly after the deal was sealed and in Basel, a whole team joined Mirabaud.

Four erstwhile partners of La Roche – Christoph and Urs Gloor, Mathis Buettiker and Philip Baumann – left in a way that looked like and was intended as a statement. And Vontobel currently is releasing further ex-Notenstein bankers.

A Failure?

At the end of 2018, 13.1 billion francs of the original 16.5 billion francs in assets under management remained and the leaking hasn’t yet stopped. Today, the 700 million francs Vontobel paid for the bank look exorbitant, with 50 million francs added in integration costs.

It all begs the question whether the integration of Notenstein La Roche was a failed enterprise. The answer is not so straightforward.

A People's Business

A sober view of banking consolidation suggests that an acquisition is successful if the buyer has to take on as few members of staff as possible, while assuming the maximum amount of assets.

In wealth management, this way of looking at the numbers won’t wash. Private banking and asset management are very much a people’s business. Relationship managers are key for a bank's bid to achieve sustainable success. It is vital to properly integrate the relationship managers in the new organization.

Sober Thinking

Some of the former Notenstein and La Roche bankers suggest that Staub is prone to take the sober view of the takeover business. They also say that he and Schubiger didn’t show enough appreciation of their work and that communication was deficient. The accusations may stem from a different understanding of corporate culture, something that often is the reason for a failed merger or acquisition.

Vontobel in the past has had its troubles integrating new businesses. In 2006, Staub was still head of investment banking, Vontobel bought the brokerage and corporate finance of Lombard Odier. Half a year later, four out of five ex-Lombard Odier staff had left, people familiar with the integration told finews.com.

Earlier Disappointment

A short time earlier, Vontobel had bought hedge fund provider Harcourt – a business with 4 billion francs in client assets – for 80 million francs. Two years later, the market for the business collapsed. Harcourt was fully integrated and the name has ceased to exist.

In 2009, Vontobel assumed the business of Commerzbank Switzerland, an acquisition doomed from the word start. A large proportion of the client assets of 4.5 billion francs had been untaxed.