EFG Financial Products Holding AG (SIX:FPHN), the Zurich-based integrated structured investment service provider, today announces the conclusion of a significant new white-labeling agreement with Notenstein Private Bank, representing a step change in the implementation of its core white-labeling strategy. With its envisaged issue volume of structured investment products to be guaranteed by Aa2-rated Raiffeisen Switzerland, Notenstein Private Bank will become EFG Financial Products’ most important white-labeling partner going forward. The subscription phase for a first investment product issued by Notenstein Private Bank begins tomorrow.
EFG Financial Products has also acknowledged that Notenstein Private Bank will raise an already existing equity stake of 2.5 % in the company to 22.75 % by acquiring EFG International’s stake of 20.25 % in EFG Financial Products, at a price of CHF 70.2 million. Pending certain conditions, the completion of this transaction is expected to take place in the first half of 2013. After a transitional phase, EFG Financial Products will change its legal name, and shareholders will be asked to approve proposed changes to the board of directors reflecting the new ownership structure. EFG International will remain a white-labeling partner of EFG Financial Products, enabling the bank to continue to offer structured investment products to its clients.
Under the new white-labeling agreement, St. Gallen-based Notenstein Private Bank will act as the issuer of structured investment products, while Raiffeisen Switzerland, a cooperative of banks also based in St. Gallen, will be the guarantor of the products with its very solid Aa2 rating. Notenstein Private Bank, a fully-owned subsidiary of Raiffeisen Switzerland, has CHF 21 billion in assets under management and more than 20 years of experience in the area of structured products in the Swiss market. With CHF 168.1 billion, Raiffeisen is the third-largest banking group in Switzerland by total assets; it has CHF 10.5 billion in equity capital and a market share of more than 16 % of the Swiss mortgage lending business.
EFG Financial Products will provide a broad range of services along the entire value chain under the new white-labeling cooperation, including structuring, product documentation, hedging of the derivative components, market-making, life-cyclemanagement and processing. In addition, EFG Financial Products will now also offer products issued by Notenstein Private Bank to its clients, thus providing them with a larger diversification of issuers. The issuing process and the interface between Notenstein Private Bank and EFG Financial Products are laid out on a scalable basis, so that a high volume of products can be processed and a wide variety of payoff profiles can be established. The subscription phase for a first investment product issued by Notenstein Private Bank begins tomorrow.
EFG Financial Products has taken note of the signing of a share purchase agreement under which Notenstein Private Bank will acquire EFG International‘s remaining equity stake of 20.25 % in the company at a price of CHF 70.2 million or CHF 52 per share. The completion of the transaction is subject to certain conditions, especially regulatory approvals, and is expected to take place in the course of the first half of 2013. Including an existing stake of 2.5 %, Notenstein Private Bank will subsequently hold 22.75 % of EFG Financial Products.
Notenstein Private Bank and the founding partners of EFG Financial Products have signed a shareholders’ agreement which amongst others grants the parties certain rights with regard to their respective stakes in the company. In an extraordinary general meeting after closing, two members of Notenstein Private Bank will be proposed for election as members of the board of directors of EFG Financial Products. John Williamson (CEO), Giorgio Pradelli (CFO) and Frederick Link (CRO) as representatives of EFG International will step down from their roles as members of the board at closing. Patrick de Figueiredo, CRO of EFG Group, will remain on the board as a second representative of the founding partners.
The unsecured credit facilities provided to date by EFG International will be terminated after the completion of the transaction, and EFG Financial Products will in future be provided with a new credit line by Raiffeisen Switzerland. EFG Financial Products will be deconsolidated from EFG International at closing, and will not be consolidated by Notenstein Private Bank in future. EFG International will continue to provide transitional support to EFG Financial Products until the end of 2013. Furthermore, EFG International will remain a white-labeling partner of EFG Financial Products, enabling it to continue to offer its clients structured investment products within the scope of its open architecture approach.
After the completion of the transaction and a transitional period until end-2013 the latest, EFG Financial Products will change its legal name. The new independent name and corporate design will be presented at a later date.
Jan Schoch, CEO of EFG Financial Products: “We are very pleased that we have gained a further, very significant whitelabeling partner with Notenstein Private Bank, a member of the Raiffeisen group. This indeed represents a step change in the implementation of our core white-labeling strategy with banking partners. I am certain that this collaboration will result in significant added value for all of the involved parties as well as for the structured products market in Switzerland. Furthermore, the board of directors and the executive committee all welcome the new ownership structure, which will be conducive to the further development of EFG Financial Products as an independent platform for product issuers. Many thanks go to EFG International, which has shown us full support and commitment from the founding of EFG Financial Products in 2007 and throughout the process of growing the business, the IPO and the transaction announced today.”
Please also note the press releases sent out at the same time today by the following companies: