St. Gallen, 12. August 2014

St.Galler Kantonalbank (SGKB) acquires Vadian Bank AG from the Ortsbürgergemeinde St. Gallen. St.Galler Kantonalbank takes over all 26 employees and 100% of the shares. In the course of the next twelve months, the bank and its client relationships will be fully integrated into St.Galler Kantonalbank. The performance of St.Galler Kantonalbank in the first semester 2014 was as expected; the client volume recorded encouraging growth. The net profit by 30 June 2014 amounted to approximately CHF 73 million (+ 13%) and reflects the solid financial position of the Bank.

St.Galler Kantonalbank acquires Vadian Bank AG from the Ortsbürgergemeinde St. Gallen. Vadian Bank AG is a bank based in St. Gallen with 26 employees (21 FTE), managing client assets of approximately CHF 700 million and a loan portfolio of around CHF 400 million. The Bürgerrat has decided early on from a position of strength to find a safe and longterm solution for clients and staff for the future. The President of the Ortsbürgergemeinde, Arno Noger, remarked: "We are happy to have met the optimal solution with St.Galler Kantonalbank. The bank provides for the clients and employees of Vadian Bank a strong, reliable partner, which is committed to their sustainable welfare and to the prosperity of our region." Vadian Bank fits optimally to St.Galler Kantonalbank says CEO Roland Ledergerber: "For St.Galler Kantonalbank, the purchase is consistent with the last year initiated strategic focus on the domestic market in Eastern Switzerland. At the same time, we are underscoring our leadership role in the region." Vadian Bank will be fully integrated within the next twelve months into St.Galler Kantonalbank. All employees and all client relationships are acquired by St.Galler Kantonalbank. The purchase price was not disclosed.

Successfully driven strategy adjustment

One year after the announcement of the strategic adjustment, St.Galler Kantonalbank has completed the associated structural adaptions. The bank has largely withdrawn from the cross-border wealth management business and will focus on the domestic market in Eastern Switzerland, and additionally, on the markets rest of Switzerland and Germany. The enforcement of the tax transparency strategy for foreign clients is also making good progress and will be completed by the end of 2015. The ensuing outflow of client assets was lower than expected, reflecting the great confidence in St.Galler Kantonalbank and its compelling services.

The strategic decisions - focusing on domestic market and tax transparency of foreign clients - are having strong influence on financial reporting, which is why it is not directly comparable with the previous year. Due to the divestment of the former subsidiaries St.Galler Kantonalbank recorded a decrease of total CHF 4 billion of client business volumes and a reduced operating income of CHF 17 million.

Half-year results 2014: Solid increase in client volumes

Loans to clients recorded a solid growth of CHF 172.7 million (+ 0.7%) to CHF 23.2 billion in the first half of 2014. The mortgage business experienced a downturn in owner-occupied residential property. In contrast, the risk situation remains good, which is reflected in the low level of loan loss provisions. The increase in Managed Assets is well above expectations. They increased as a result of successful acquisitions and positive development on the stock markets by 0.4% to CHF 36.2 billion. Net New Money amounted to CHF 0.6 billion.

Net interest income is in line with expectations due to the solid credit business. The continued low interest rates, in which especially interest rates with longer maturity decreased again significantly, is reflected in the net interest income (CHF 147.8 million,
-3.4%).

Net fee and commission income (CHF 58.1 million, -19.3%) was - also in consideration of the restructuring effects - below our expectations. This was due to the restrained investment activity of investors compared to the relatively strong first semester of 2013. Nevertheless, new and innovative service packages for the investment business, launched last year, contributed significantly to the fact, that the proportion of clients with asset management mandates increased significantly. Thereby, the clients benefited from the very good performance, which could also be achieved with the bank's own funds. Operating administrative expenses amounted to CHF 126.6 million (-8.3%) in the first semester. This reflects the positive effects of the strategic adaptation as well as the high cost discipline of the bank. The low value adjustments and provisions reflect the excellent quality of the credit portfolio. In sum, there resulted an operating profit of CHF 90.5 million (+ 0.8%), and a Group net profit of CHF 73.2 million (+ 12.8%).

US-program: scheduled progress

As announced in December 2013 the St.Galler Kantonalbank participates in the US program to settle the tax dispute of Switzerland and the United States. The classification in Category 2 was made for reasons of prudence and of legal certainty and with the aim to achieve a rapid and definitive settlement. The work is proceeding according to plan and the deadlines can be met. St.Galler Kantonalbank assumes that negotiations with the U.S. authorities are held in the second half of 2014 and can be completed by year-end.

Outlook 2014

The year 2014 will remain for St.Galler Kantonalbank further marked by the concentration on its core markets and the simultaneous enforcement of tax transparency for foreign clients. St.Galler Kantonalbank maintains its forecast, according to which it expects a net profit in the range of the fiscal year of 2012, being significantly higher than the previous year.



Downloads
  • Download media release
distributed by