Switzerland’s Raiffeisen terminates fund alliance with Vontobel

Dispute centres on Raiffeisen’s sustainability arm Notenstein

Swiss cooperative banking giant Raiffeisen plans to terminate a deep fund alliance with Bank Vontobel in June 2017, meaning that Raiffeisen will have to source most of the mutual funds it distributes in Switzerland from another asset manager.

Under an alliance started in 2004, Raiffeisen, Switzerland’s third-largest bank, distributes a wide array of Vontobel-managed mutual funds through its network of more than 1,000 branches. It’s a white label arrangement, where the funds, including six sustainable products (two equity, two bond and two strategy funds), are sold under the Raiffeisen brand name.

Vontobel also provides Raiffeisen with back office services under the alliance, to include clearing and settlement for the funds. The alliance was cemented by a cross-shareholding arrangement in which the cooperative bank took a 12.5% stake in Vontobel.

The alliance has, however, been under great strain since November 2012, when Vontobel decided to sue Raiffeisen over the existence of Notenstein, the Swiss private bank and asset manager that the cooperative giant acquired earlier that year.In its lawsuit, Vontobel charged that Raiffeisen violated their agreement by sourcing funds and back office services from Notenstein. Raiffeisen countered that Notenstein, which specialises in sustainable funds, was not covered by the agreement. A Swiss court is expected to rule on Vontobel’s lawsuit at the end of the year.

The outcome of the suit notwithstanding, Raiffeisen said last Friday the alliance would end three years from now and that Marcel Zoller, the bank’s chief financial officer, would step down from Vontobel’s board immediately. Vontobel, which said it “regretted” Raiffeisen’s decision, will also buy back the 12.5% stake held by the cooperative holding. That stake is valued at CHF250m (€205m).

Asked if Notenstein would, from June 2017, become Raiffeisen’s sole supplier of funds, a spokeswoman said the bank had not yet made any decisions on the matter. As the year began, Notenstein launched 10 sustainable funds as part of its plan to lift assets under management (AuM) to as much as CHF10bn from CHF4bn currently. Meanwhile, Raiffeisen has formed a joint venture with Swiss software firm Avaloq to build up back office services that are currently provided by Vontobel.