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Mr Huber, SonntagsBlick ran the following headline last week: “Maximizing profits in the cooperative bank.” You disagree with this statement. How come?
Heinz Huber: As a cooperative bank, Raiffeisen relies on making profits. However, we keep more than 90 percent of our profits within the company, thus making our bank safer and more stable. This is in the interest of both our members and customers, as well as the financial centre. Therefore, it is wrong to talk about profit maximization.
It is unquestionable that Raiffeisen must make a profit. But what is suspicious is that you have increased this by an incredible 90 percent since 2013.
During this period, our business volume increased significantly. Moreover, we are now a systemically important bank and therefore have to constantly increase liquidity and equity capital.
The volume of customer funds and loans increased by only 50 percent. Therefore, as a cooperative member, I say: Instead of continuing to increase profits, you should finally offer better conditions again.
Conditions aren’t everything. It is just as important that we meet the requirements placed on us by the regulator. This year, we increased interest rates 4 times. However, interest rate adjustments always occur with a delay. The situation was the same in 2008, when interest rates were reduced. Back then, customers were taking advantage of this. Only 0.07 percent of our customers have paid negative interest in recent years, but we could ask many more of our customers to do so.
Instead of imposing negative interest rates, they simply increased fees.
The majority of our customers are members and do not pay account fees. We also have approximately 800 branches, 1,600 ATMs and e-banking, which are accessed by approximately 700,000 people every day. All this comes with costs. We have not increased wages in general. We have reduced or eliminated these in some regions.
Overall, your wage income has increased greatly.
You need to break down individual fee items. Some of the increase comes from the card business, for example. Raiffeisen now issues the cards himself. People also traveled more and used cards more. This is one reason why wage income is increasing.
Why do I pay 50 francs a year for my card as a Raiffeisen member? Or to withdraw money from ATM? You can easily eliminate these fees.
No, there are costs in this area too. As I said: We need profits to meet the needs of systemically important banks. The CS case shows how important liquidity and equity are.
Raiffeisen has more than enough equity capital. How much are you aiming for?
We have already met the requirements we need to achieve by 2026. In the wake of the CS crisis, there are also political proposals requiring 20 percent or even 30 percent equity capital.
Heinz Huber (58) has been Raiffeisen’s boss since 2019. He steered the cooperative bank back into calm waters after the scandal involving long-time CEO Pierin Vincenz, 67. He previously served as managing director of Thurgauer Kantonalbank for five years. Huber is married and has three children.
Heinz Huber (58) has been Raiffeisen’s boss since 2019. He steered the cooperative bank back into calm waters after the scandal involving long-time CEO Pierin Vincenz, 67. He previously served as managing director of Thurgauer Kantonalbank for five years. Huber is married and has three children.
The financial market regulator does not do this. As a result, you cannot claim that you had to retain your profits due to capital requirements.
We not only want to comply with the regulations, but we also want to have a buffer. Customers not only expect the best conditions, they also want to entrust their money to a safe bank that will be safe tomorrow as well.
According to the charter, you run your business “in the spirit of the collaborative ideas of Friedrich Wilhelm Raiffeisen, with mutual personal assistance.” What does this mean for you?
Nowadays, self-help also means personal responsibility. We are a bank without the influence of the state. That’s a freedom we have, and that’s why we’re so conservative when it comes to risk.
Mr. Raiffeisen understood that self-help meant the best possible conditions for poor farmers. Is this no longer valid?
I have never heard Mr Raiffeisen talk about “the best possible conditions”.
He talked about helping people help themselves. Its aim was to enable the poor rural population to receive loans under favorable conditions.
This is your interpretation. The truth is that in the 19th century, large banks mostly financed large and lucrative infrastructure projects. Therefore, the question arose of how the rural population also obtained money. It was against this background that Raiffeisen and the cantonal banks emerged. But today they are all universal banks.
So, is the cooperative principle no longer needed in the 21st century?
However. But it’s not just about low wages and high interest rates. Raiffeisen consists of 219 local banks. They all have cooperative members who need to answer and can have a say. This is collaborative thinking!
Overall you are now in second place in Switzerland. Are you really a big bank now?
We are a big bank.
What is missing to become a big bank?
We don’t want to be a big bank. We are 219 small regional banks.
Wouldn’t it be in Switzerland’s interest if you had the courage to say: We now want to become a big bank and take over the functions performed by CS? UBS now has a partial monopoly, especially when it comes to SME financing.
Today, one in three SMEs has a business relationship with Raiffeisen. If someone wants two columns and has worked at both major banks before, we are ready. But I don’t think we need to reposition ourselves. Our values have proven themselves.
CS leaves a huge gap when it comes to export finance and large syndicated loans, that is, loans granted jointly by several banks. Why isn’t Raiffeisen involved?
Export financing requires an international correspondent network. This would make our business model much more complex, and we don’t want that. We currently receive individual tranches of syndicated loans.
However, in syndicated loans you only play a passive role, you are not the leading bank reviewing companies and projects. Will you be doing more of this in the future?
If you’re ahead, you’ll often have to self-finance a very large tranche of the loan initially. In some cases this amounts to several hundred million francs. Does Raiffeisen have this risk appetite? We said no. We don’t want to change our risk profile just because someone is no longer there. We do not want to be the leading bank in large syndicated loans.
The “too big to fail” arrangement has been proven not to work in CS. Do adjustments need to be made?
First, we need to thoroughly analyze why CS no longer exists. If we conclude that regulations are necessary, we will not exclude ourselves from this discussion. However, it is important to make arrangements according to the business model. Raiffeisen has no investment banking and no business units abroad. The bottom line is we don’t need the same regulation as a big bank.
One requirement is: 20 percent equity. What are you thinking?
To achieve this, banks in Switzerland will need billions of dollars of additional capital. It is doubtful whether this money can be collected. If I cannot find this capital, I will have to reduce the balance sheet. So I will have to tell my mortgage clients that they need to pay off their mortgages early. This would be an economic disaster. That’s why we need to be very careful about additional regulations. Finally, we need the same level of control as other countries.
Speaking of equally long tables: Raiffeisen no longer pays bonuses since 2021. Has this made it difficult to find staff?
No, we’re still finding good staff. People who share our values come to us. Our employees want a secure job, not a crazy bonus.
Were bonus incentives in CS part of the problem?
I can’t speak for others. We introduced bonus waivers to encourage teamwork and community spirit. Not everyone should always think that they will get a bigger share if they provide better numbers.
You get a lot of applications from CS bankers. Do these fit your system?
We look at each of these. You have to get used to this system and we look to see if someone is a cultural fit.
Source :Blick
I’m Tim David and I work as an author for 24 Instant News, covering the Market section. With a Bachelor’s Degree in Journalism, my mission is to provide accurate, timely and insightful news coverage that helps our readers stay informed about the latest trends in the market. My writing style is focused on making complex economic topics easy to understand for everyone.
