Raiffeisen Switzerland has decided to sell 100% of Notenstein La Roche Private Bank to Vontobel. Vontobel’s acquisition of Notenstein La Roche perfectly complements its above-average organic growth in wealth management for high-net-worth clients and allows it to strengthen its home market with the additional Notenstein La Roche locations while underscoring its position as one of the leading private banks in Switzerland.
Notenstein La Roche currently operates in 13 locations throughout Switzerland and has client assets totalling some CHF16bn in its wealth management and external asset managers businesses. Most of Notenstein La Roche’s clients are in Switzerland. The private bank also serves clients in several other international markets, the most important being Germany. At the end of 2017, Vontobel’s assets under management in combined wealth management (Wealth Management and EAM) in its strong Swiss home market and globally reached a new record level of CHF54.0bn (up from CHF46.8bn in 2016).
Patrik Gisel, chairman of the executive board of Raiffeisen Switzerland and chairman of the board of directors of Notenstein La Roche, explains: “The decision to sell does not represent a move away from Raiffeisen’s diversification strategy. 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.”
The newly defined growth strategy for its investment business entails substantial investments in the investment clients segment over the next five years. A key step in this regard is the expansion of the in-house Investment Office with specialists from Notenstein La Roche who will in future serve the Raiffeisen banks with a client-oriented investment process and research services.
Moreover, it has been decided that the centre of expertise for wealth and tax planning will undergo a major expansion. It was established a number of years ago to support the Raiffeisen banks in relation to succession planning and complex financial advisory services. Investments are additionally planned in expanding the digital client interface, enhancing the advisory process and further developing the product range with an advisory mandate and new investment solutions. These will move forward with Vontobel as a partner, among others.
“This comprehensive service offering puts the 255 operationally independent Raiffeisen banks in a position to make the best possible use of their proximity to clients by offering highly personal and individual advice,” adds Michael Auer, head of Department, Private and Affluent Clients at Raiffeisen Switzerland.
“The acquisition of Notenstein La Roche and its branch network strengthens our service offering on our home market and vindicates our claim to be a leading global wealth manager with solid Swiss roots. Our future clients will benefit from the opportunities and expertise offered by an internationally active Swiss wealth manager that puts clients at the centre of everything it does”, said Vontobel CEO Dr Zeno Staub.
Vontobel Wealth Management has set itself the target of achieving organic net new money growth of 4-6% a year up to 2020, with growth of more than 10% targeted in the Swiss home market and selected others.
Raiffeisen and Vontobel agreed a purchase price of around CHF700m, calculated on the basis of the capital as at closing plus a goodwill multiple of 1.78% related to the assets under management as at signing. Vontobel will finance the acquisition through available capital and an additional Tier 1 bond. Vontobel will provide details of the bond issue in due course. The financing structure concentrates earnings per share and ensures that Vontobel will retain a robust capital ratio in excess of 16%, well above the regulatory requirement, going forward.
Once the transaction is completed, Notenstein La Roche will be integrated into Vontobel, contributing significantly to Vontobel Wealth Management’s earnings as soon as 2019 through the use of synergies.
Subject to approval by the regulatory authorities, the parties hope to complete the transaction in the third quarter of 2018.