Press release: Leonteq statement on today's announcement by FINMA

PRESS RELEASE | LEONTEQ STATEMENT ON TODAY’S ANNOUNCEMENT BY FINMA

Zurich, 12 December 2024 | Ad hoc announcement pursuant to Art. 53 LR

FINMA today announced the completion of proceedings against Leonteq and has decreed a profit disgorgement of CHF 9.3 million. Leonteq has fully cooperated with FINMA and regrets the shortcomings identified. The company has already taken comprehensive organisational measures over the past years, as also acknowledged by FINMA. Leonteq will implement the additional measures ordered by FINMA with high priority. Leonteq now expects profit before taxes for 2024 to be in the single-digit millions.

The Swiss Financial Market Supervisory Authority (FINMA) has ordered a range of organisational measures to remediate shortcomings identified at Leonteq in the distribution of its financial products through a few distributors abroad. Among others, Leonteq will in future only conduct business with distributors that are subject to regulation and has discontinued distribution relationships with a few unregulated distributors which today account for less than 0.5% of Leonteq’s annual net fee income.

The profit disgorgement decreed by FINMA relates to transactions with two former distributors in the period from January 2018 to June 2022.

FINMA's probe was triggered by a disclosure by the company as well as allegations raised by the media and third parties. Various of these allegations have turned out to be unfounded and in particular there remains no indication that Leonteq intentionally participated in any potential money laundering or tax fraud.

Comprehensive measures undertaken before and during the investigation

As already presented in the context of the half-year 2024 results, Leonteq undertook a comprehensive programme over the last few years to strengthen its global compliance and risk management framework. The company made new appointments to key leadership and expert positions and reduced the number of target markets. This programme addressed many of the weaknesses identified by FINMA. Leonteq notes that FINMA has expressly acknowledged these measures in its assessment.

Leonteq enhanced its internal control system by introducing new policies, adding additional controls and widening the scope of its monitoring activities.

The effectiveness of the internal control functions have been significantly improved through substantial investments in staff – with headcount in compliance and risk control more than doubled in recent years – as well as in processes, technology and data analysis. In addition, significant investments have been and continue to be made in enhancing transaction monitoring and monitoring of Leonteq’s distribution chain.

Further measures ordered by FINMA are being implemented with high priority.

“The deficiencies in our risk management in the face of rapid growth should not have happened,” stated Lukas Ruflin, CEO of Leonteq. “We regret the shortcomings identified and will continue to further strengthen our internal control system.”

Christopher Chambers, Chairman of the Board of Directors at Leonteq, added: “Leonteq put strong focus on enhancing our compliance and risk management processes. We will continue to invest forcefully in these areas and will implement the additional measures decisively, recognizing that a strong governance framework will further reinforce Leonteq as a sustainable and profitable business.”

Business update for the first eleven months of 2024

From July to November 2024, Leonteq processed more than 108,000 client transactions (up 34% year-on-year), and total turnover amounted to approx. CHF 9.8 billion, an increase of 27% compared to the same period last year, which is testimony to Leonteq’s strong client franchise. Similar to the first half of 2024, the competitive market environment continued to impact margins, which amounted to 68 basis points in the July to November period. Overall, net fee income amounted to approx. CHF 199 million in the first eleven months of 2024, representing a 1% increase compared to the same period last year.

Net trading result amounted to approx. CHF 12 million from July to November 2024, reflecting positive contributions from hedging activities on the back of short-term market volatility in August, negative hedging contributions due to an operational risk event in October as well as a continued reduction in market volatility in November 2024 following the US elections. Overall, net trading result decreased to approx. CHF 23 million in the first eleven months of 2024 compared to CHF 36 million in the prior-year period.

Taking into account these developments as well as the profit disgorgement of CHF 9.3 million, Leonteq revises its guidance and now expects profit before taxes for the full year 2024 to be in the single digit millions.

Leonteq continued to maintain strong shareholders’ equity totalling approx. CHF 800 million at end-November 2024, compared to CHF 780 million at end-December 2023.

Leonteq will publish its full-year 2024 results on 6 February 2025.

CONTACT
Media Relations 
+41 58 800 1844
media@leonteq.com 

Investor Relations 
+41 58 800 1855
investorrelations@leonteq.com

LEONTEQ

Leonteq is a Swiss fintech company with a leading marketplace for structured investment solutions. Based on proprietary modern technology, the company offers derivative investment products and services and predominantly covers the capital protection, yield enhancement and participation product classes. Leonteq acts as both a direct issuer of its own products and as a partner to other financial institutions. Leonteq further enables life insurance companies and banks to produce capital-efficient, unit-linked pension products with guarantees. The company has offices and subsidiaries in 13 countries across Europe, the Middle East and Asia. Leonteq AG has a BBB credit rating by Fitch Ratings, was assigned with an AA ESG rating by MSCI and is listed on the SIX Swiss Exchange (SIX: LEON). www.leonteq.com

DISCLAIMER

This press release issued by Leonteq AG (the “Company”) serves for information purposes only and does not constitute research. This press release and all materials, documents and information used therein or distributed in the context of this press release do not constitute or form part of and should not be construed as, an offer (public or private) to sell or a solicitation of offers (public or private) to purchase or subscribe for shares or other securities of the Company or any of its affiliates or subsidiaries in any jurisdiction or an inducement to enter into investment activity in any jurisdiction, and may not be used for such purposes. Copies of this press release may not be made available (directly or indirectly) to any person in relation to whom the making available of the press release is restricted or prohibited by law or sent to countries, or distributed in or from countries, to, in or from which this is restricted or prohibited by law.

This press release may contain specific forward-looking statements, e.g. statements including terms like “believe“, “assume“, “expect“, "target" “forecast“, “project“, “may“, “could“, “might“, “will“ or similar expressions. Such forward-looking statements are subject to known and unknown risks, uncertainties and other factors which may result in a substantial divergence between the actual results, financial situation, development or performance of the Company or any of its affiliates or subsidiaries and those explicitly or implicitly presumed in these statements. These factors include, but are not limited to: (1) general market, macroeconomic, governmental and regulatory trends, (2) movements in securities markets, exchange rates and interest rates and (3) other risks and uncertainties inherent in our business. Against the background of these uncertainties, you should not rely on forward-looking statements. Neither the Company nor any of its affiliates or subsidiaries or their respective bodies, executives, employees and advisers assume any responsibility to prepare or disseminate any supplement, amendment, update or revision to any of the information, opinions or forward-looking statements contained in this press release or to adapt them to any change in events, conditions or circumstances, except as required by applicable law or regulation.