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Swiss regulator finds 'serious breach' by Raiffeisen Gruppe Switzerland

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Swiss regulator finds 'serious breach' by Raiffeisen Gruppe Switzerland

Swiss financial market supervisory authority Finma said it found major corporate governance failings and a "serious breach of supervisory law" at Raiffeisen Gruppe Switzerland, concluding its enforcement proceedings against the group.

Finma said it found Raiffeisen's handling of conflicts of interest and its board's supervision of former CEO Pierin Vincenz to be inadequate, which potentially enabled him to make a personal financial gain at the bank's expense. Vincenz was recently released from custody by Zurich's public prosecutor's office after 106 days in pretrial detention over a potential breach of trust linked to payments firm Aduno Holding AG and private equity firm Investnet AG, a current and former unit of Raiffeisen, respectively.

Among the measures outlined by the regulator for Raiffeisen to improve its corporate governance are that its board must have at least two members with banking experience, that at least one member must have compliance experience and that members of the group's risk and audit committees must hold appropriate qualifications.

Finma added that it will appoint an audit agent to assess the appropriateness, implementation and effectiveness of the measures and of Raiffeisen's actions to improve its corporate governance. Finma also ordered Raiffeisen to look into the pros and cons of converting into a limited company.

Raiffeisen is carrying out an unbundling strategy that aims to reduce high-risk role concentrations and conflicts of interest, and has also announced or already made changes to its board, Finma noted. The bank has also commissioned an internal probe into its relevant shareholdings, the results of which it plans to act on by year-end.