Preface

Guy Lachappelle, Chairman of the Board of Directors of Raiffeisen Switzerland

Heinz Huber, Chairman of the Executive Board of Raiffeisen Switzerland

Last year was challenging for the Raiffeisen Group in a number of ways. The criminal proceedings against Dr Pierin Vincenz, the former Chairman of the Executive Board, and the FINMA enforcement procedure against Raiffeisen Switzerland drew a lot of attention. Both proceedings adversely affected the entire Group's reputation – and set off a process of renewal. We look back on an intense but operationally highly successful year.

However, 2018 was also a year of new beginnings. Raiffeisen Switzerland laid a solid foundation for its future trajectory by conducting an independent investigation, unbundling ownership structures and overhauling the Executive Board.

Dealing with the past: An independent investigation led by Prof. Dr Bruno Gehrig was launched and completed in 2018. The investigation uncovered deficiencies in the acquisition and management of shareholdings as part of the diversification strategy, particularly from 2012 to 2015. To correct past mistakes and address the increasingly complex challenges of the banking business at the same time, the Board of Directors of Raiffeisen Switzerland launched a comprehensive set of measures, including the promotion of a strong culture of responsibility, improved management and control, and optimised governance. Raiffeisen Switzerland also devoted tremendous effort to implementing various initiatives that will correct the corporate governance deficiencies identified by FINMA.

Extensive unbundling: By rigorously pursuing this strategy, Raiffeisen aims to simplify ownership structures and reduce potential conflicts of interest.

Growth in Raiffeisen's investment activities has accelerated significantly in recent years. The Raiffeisen Group has proven that it can effectively expand investment activities on its own, which is why Raiffeisen decided to realign the Investment Clients business segment and sell Notenstein La Roche Private Bank Ltd to Bank Vontobel Ltd. The sale was completed on 2 July 2018.

Board overhauls: Raiffeisen Switzerland overhauled the Board of Directors and initiated the overhaul process in the Executive Board. At their meeting on 16 June 2018, the delegates of Raiffeisen Switzerland initiated the overhaul of the Board of Directors by electing two new members. At the extraordinary Delegate Meeting on 10 November 2018, four new members were elected, as was Guy Lachappelle as the new Chairman of the Board of Directors of Raiffeisen Switzerland. The new Board of Directors appointed Heinz Huber as the new Chairman of the Executive Board. He assumed his post on 7 January 2019.

In the fourth quarter, an analysis of the current situation was conducted with the owners – paving the way for better teamwork within the Group. The Group's reform efforts were combined into the joint "Reform 21" programme, which is being developed in a participatory process between the Raiffeisen banks and Raiffeisen Switzerland.

Raiffeisen's cooperative culture has always been characterised by intensive dialogue – both within the Group and with our clients and other stakeholders.

Reaching out to clients in the community has more benefits than just allowing us to provide financial advice in every situation in life – it also creates trust. The numbers speak volumes: Clients remained loyal to the Raiffeisen banks in the past year. Customer deposits continued to grow in 2018.

The mortgage business is also performing strongly and proving to be highly successful and solid. The Raiffeisen banks' very good operating profit is overshadowed solely by one-time effects at Raiffeisen Switzerland. The sustained profitability and above-average equity ratio of the Raiffeisen Group have been maintained. Raiffeisen remains a very well-capitalised bank. Additional security for our clients is provided by the Raiffeisen business model, business policy and the cooperative members' ability to participate in the decision-making process.

Another milestone in ensuring the Group's future viability was attained in 2018: Since early January 2019, all 246 Raiffeisen banks have been perating on a modern IT platform. The new core banking system has laid the foundation for an agile and client-friendly banking experience at the Raiffeisen Group.

We have a strong desire to change. Indeed, our Group must constantly evolve and adapt to fluid market conditions if we want to successfully manage our Group and enrich Switzerland's banking industry with our cooperative model in future.

Let us broaden dialogue, making it binding. Dialogue, conducted on equal terms with a valued partner, is what turns a good bank into a preferred bank.

Local entrepreneurship, comprehensive services and, above all, client intimacy – these traits are what have made Raiffeisen great. Our past shows us the way to the future.

Guy Lachappelle
Chairman of the Board of Directors of Raiffeisen Switzerland

Heinz Huber 
Chairman of the Executive Board of Raiffeisen Switzerland