Raiffeisen Bank, in turmoil, expects a tense end of year - Eaglesinvestors Eagles

Raiffeisen bank has a troubled period due to criticism of its governance.

The financial markets are feeling it. Raiffeisen bank saw its results retract slightly in the first half, despite higher revenues. The cooperative bank referred to a contrasted semester, marked by the controversy surrounding the corporate governance of the third largest Swiss bank.

Between January and June, operating income rose 0.5% to 1.63 billion swiss francs. Meanwhile expenses fell 0.7% to 1 billion all round. The cost / income ratio was thus reduced to 61.1%, or 70 basis points (bps) better than a year earlier, the bank said in a statement.

On the other hand, operating income declined by 2.7% to 517 million and net profit by 4.1% to 416 million. Raiffeisen bank  registered 20 million value corrections related to the Zurich-based credit card company Aduno.

Raiffeisen bank, when participating products fly away

Despite historically low interest rates, the proceeds of interest-based transactions, from which the Raiffeisen bank derives most of its revenues, increased by 1.6% to 1.14 billion francs. Fees and services generated $ 256 million (3.9%).

The proceeds of the investments increased by more than half to 53 million, due to the unique dividend distribution of Aduno Holding. On the contrary, the item “other ordinary products” has almost halved to 58 million, mainly because of a base effect linked to the introduction of the new central banking system.

On the balance sheet, loans and credits to customers amounted to CHF 184.87 billion at the end of June. It’s up 2.4% comparing to the 2017 closing, of which CHF 176.26 billion (2.1%) in receivables mortgage.

During the period under review, the mass under management increased by 0.5% and now exceeds 210 billion. The net inflow of new money amounted to 2.2 billion.

raiffeisen bank

An eventful semester and redesigned governance at the Raiffeisen bank

Patrik Gisel announced his resignation for the end of the year. “It hurts me a bit to leave a group that is so successful”.

Returning to the turmoil caused by the case Pierin Vincenz, named after his former CEO suspected of having personally enriched when he chaired Aduno, Raiffeisen bank said to have “experienced a turbulent phase.”

Recalling the end of the financial officer (Finma) ‘s in-depth examination procedure for him, the group claims to have already taken most of the improvement measures required.

An extraordinary meeting of delegates is planned on next November 10. The purpose is to elect at least four new members of the Directors board. And also a new president, following the resignation in March of Johannes Rüegg-Stürm.

Economic evolution

After taking over the presidency on an interim basis and affirming his interest in the position at the June General Assembly, former Vice-President Pascal Gantenbein withdrew his candidacy in late July. Just over a week after the announcement of the resignation of Patrik Gisel.

For the continuation of the operations, the Raiffeisen bank management expects a stable conjunctural evolution. The difficult context of the low rates in Switzerland will probably not change any time soon. As a result, the pressure on the interest margins should continue. The sale of the private bank Notenstein to Vontobel, announced in June, will allow a small recovery. Declaring himself “cautious”, Patrik Gisel said he anticipates a positive contribution of 30 million to the income statement.

The divestment will result in the elimination of 50 positions at the Saint-Welsh IT firm Arizon Sourcing, jointly owned by Raiffeisen bank (51%) and the developer of Avaloq banking software (49%). No other cuts planned, assured Patrik Gisel.

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