Vontobel to buy private bank from Raiffeisen for $700 million

ZURICH (Reuters) - Swiss private bank and asset manager Vontobel <VONN.S> is buying private bank Notenstein La Roche from Swiss cooperative bank Raiffeisen [RFSHW.UL] for 700 million Swiss francs ($705 million), the two parties said on Thursday.

"Notenstein La Roche perfectly complements the strong organic growth we have achieved in wealth management over a number of years," Vontobel Chief Executive Zeno Staub said in a statement. "The enlarged client base gives us an opportunity to make even more effective use of our successful platforms."

The transaction, which the parties expect to be completed in the third quarter of 2018 subject to regulatory approval, would be financed through available capital and a new Tier 1 bond, for which Vontobel said it would provide details "in due course."

Notenstein La Roche holds client assets totalling around 16 billion Swiss francs.

Raiffeisen has recently focused on trimming down Notenstein La Roche and concentrating on clients from its home market and a few others, like Germany. Last year, the private bank shed over 2.1 billion francs in managed assets from Eastern European customers, as it reduced client assets by an overall 17 percent.

This helped boost the unit's profitability by nearly a third.

Raiffeisen, Switzerland's third-largest bank, is currently dealing with the fallout of a breach of trust probe into its former chief executive Pierin Vincenz, who is in investigatory custody in Zurich.

Raiffeisen, primarily a retail bank whose 1.9 million customers are cooperative members, on Thursday said it was selling Notenstein La Roche to free up regulatory capital to grow in its core business and because it was now able to manage its investment business on its own.

"The decision to sell does not represent a move away from Raiffeisen's diversification strategy," Raiffeisen Chief Executive Patrik Gisel said.

(Reporting by Brenna Hughes Neghaiwi; Editing by Mark Potter)