Swiss structured products provider Vontobel and bank Raiffeisen have ended a cooperation agreement through which Vontobel provided back-office functions to Raiffeisen and Raiffeisen distributed Vontobel’s structured investment solutions.

The scope of the partnership, which had been in force since 2004 and was extended until 2017 in 2009, gave Raiffeisen access to products and services from Vontobel while the Swiss bank was responsible for conducting securities processing and management for the Raiffeisen Group.

“Vontobel has acknowledged with regret Raiffeisen’s latest decision with regard to the cooperation agreement,” said Vontobel in a statement. “In the interests of Raiffeisen’s clients, Vontobel will still continue to provide and ensure the contractually agreed services as part of the existing cooperation, while maintaining the same high-quality standards. The cooperation will now expire as of the end of June 2017.”

Vontobel said it intends to repurchase the entire 12.5% shareholding for the purpose of cancelling the shares as part of the agreement and that the price paid would be based on the average share price over the last 60 days. Based on Vontobel’s current share price, the stake would be valued at around CHF250m ($280m).

“This will enable Vontobel to increase its flexibility in managing its capital structure going forward,” said Vontobel.

Retail banking platform
Raiffeisen simultaneously announced a joint venture with Avaloq to launch a new company for the implementation and operation of Raiffeisen’s retail banking platform. Raiffeisen will replace its previous front-end system in 2017 and migrate securities processing to new Avaloq-based banking software.

“Due to the changes in the technological environment and the advanced diversification, Raiffeisen is cancelling its cooperative agreement with Vontobel as of mid-2017 in line with the proper notice period,” said Raiffeisen. “Raiffeisen intends to modernise and further harmonise its IT platform by means of increased integration of Avaloq. The bank is thus relying on autonomous software solutions in its overall IT strategy and is ensuring the autonomy of Raiffeisen banks.”

Raiffeisen, which will own the majority of the new company, said that it will replace the previous front-end systems for clients and client advisers and transfer them to the new IT platform and that securities processing will be technically integrated at the same time.

“The joint technology company will enable us to optimally meet the technological requirements of the financial centre, allowing Raiffeisen to further expand its position as a leading Swiss retail bank,” said Pierin Vincenz, chair of the executive board of the Raiffeisen Group.

Diversification
Raiffeisen also said that the move responds to the firm’s strategic plans to increase the provision of services within the group by leveraging its own capabilities in the production of products and services, the creation of an economic research team and the strengthening of its investment business.

“The advanced diversification strategy and the changes in the technological environment create a new strategic basis for Raiffeisen to provide products and services within the internal group network,” it said. “The continuation of the existing partnership with Vontobel is thus no longer expedient.

Arbitration proceedings
The agreement showed signs of strain in November 2012 over whether Notenstein Privatbank, which Raiffeisen bought in January 2012, should be included in the cooperation agreement, which prompted Vontobel to bring Raiffeisen before the court of arbitration in November 2012.

“The arbitration proceedings will continue irrespective of this termination of the agreement, particularly since these proceedings are to clarify matters of interpretation relating to the currently valid cooperation agreement between Raiffeisen and Vontobel,” said Raiffeisen.

The cancellation of the contract will take place regardless of the outcome of the ongoing court of arbitration proceedings for which a verdict is expected at the end of the year.

To coincide with the cancellation of the agreement, Raiffeisen Group CFO Marcel Zoller is also stepping down from the board of directors of Vontobel Holding with immediate effect.

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