Switzerland’s third-largest bank, which the regulator FINMA is investigating for bad corporate governance controls and conflicts of interest, has lost its chairman to the developing controversy.

Johannes Rüegg-Stürm, the chairman of the board of directors, has resigned with immediate effect, just a week after reassuring investors that he would stay in his post for another two years. The terse press release states that Pascal Gantenbein will lead the board of the Swiss bank ad interim. The press release refers to the resignation as "an important decision to preserve the credibility of Raiffeisen Switzerland in the long term."

FINMA cut short a 'fitness and probity' investigation into Raiffeisen ex-CEO Pierin Vincenz in late December, but only because he resigned as the chairman of Helvetia, the only financial institution through which FINMA could scrutinise him for that purpose. Very recently the authorities in Zurich, who suspected him of indulging in corporate fraud, arrested him and are confining him to quarters to stop him from communicating with other potential defendants. FINews reports that new details of dealings by Vincenz and an associate, Beat Stocker, are emerging day by day. The news service goes on to accuse Raiffeisen Bank of coping with the matter clumsily last year, downplaying the importance of Vincenz's transactions even when it knew that FINMA had started to investigate.

The regulator has told Compliance Matters that it is going to continue to investigate the bank's corporate governance arrangements and a report is expected at some stage. Vincenz is denying every allegation.