Raiffeisen Bank is pursuing two paths in the structured products space. One of these involves extended cooperation with Swiss derivatives developer Leonteq, while it also plans to issue its own derivatives in the future.
The cooperation between Leonteq and Raiffeisen (Switzerland) in structured products dates back to 2013 and was set to run until 2026. This has been extended to 2030, they announced Wednesday.
Additionally, they have realigned the cooperation and terminated the existing credit facility to reflect developments that have taken place within the two companies in the meantime. In terms of outstanding volume, Raiffeisen is now one of Leonteq's largest white-labeling partners.
Raiffeisen's own platform
Raiffeisen is further expanding its pension and investment business as part of its strategic plan. In addition to the cooperation with Leonteq, the cooperative bank envisages issuing, hedging and distributing part of their structured products via a new Raiffeisen platform over the course of the second half of this year.
Leonteq will ensure the connection of the new Raiffeisen platform to Leonteq's existing service and technology platform. The extension of the cooperation agreement until March 2030 is dependent upon the successful implementation of technology by the first quarter of 2023.
Slightly lower earnings for Leonteq
While Leonteq expects a reduction of approximately 1 percent in its annual commission and service revenue due to the cooperation adjustment, there will be no material financial impact. At the same time, Leonteq will be able to further increase the share of its «Balance Sheet Light» business, as part of its strategy.
Since 2019, Leonteq has had an independent investment-grade rating and significantly strengthened its capital position. As a result, all guarantees issued by Raiffeisen to Leonteq counterparties have been terminated over the past years.
Likewise, the credit facility provided by Raiffeisen to Leonteq was terminated early in September 2021, leading to a slight improvement in Leonteq's earnings from the interest business.
