Liechtenstein Bank Eyes Asia After Stemming Tax-Related Outflows

(Bloomberg) -- VP Bank AG, the Liechtenstein-based private bank, is expanding its wealth management operations in Asia as it draws a line under four years of losing clients in Europe due to tax compliance issues.

VP Bank has been adding headcount in Singapore and Hong Kong, and is eyeing partnerships with a view to gaining more wealthy Chinese clients, according to Chief Executive Officer Alfred W. Moeckli. “We’re looking at various possibilities” to tap into the China market, Moeckli said in an interview last week in Singapore.

As it grows in Asia, the bank has finally seen an end to outflows from clients who were unable to comply with new global tax transparency rules, Moeckli said. The exodus mainly involved customers from European countries, especially Germany, he added.

“We have this all behind us, so we can now look forward and don’t have this tax compliance issue of our clientele any more,” according to Moeckli, who noted that the bank lost about a third of its customers since 2014 due to the tax issue.

Liechtenstein, a small European principality once famous for its banking secrecy laws, signed up for global financial disclosure standards in 2014 as it tried to shed its reputation as a tax haven. The country’s banks -- which include LGT Bank AG and Liechtensteinische Landesbank AG -- were required to stop doing business with foreign clients who were unwilling to come clean on their tax affairs.

Asset Growth

Despite the outflows, VP Bank has seen an increase in assets under management, which stood at 40.4 billion Swiss francs ($40.9 billion) in December, excluding custodian accounts, compared with 35.8 billion francs a year earlier. Assets held by Asian clients are approaching 10 billion francs, Moeckli said.

He reiterated that the bank wants to boost AUM to 50 billion francs by 2020 via the growth in Asia and recent acquisitions in Europe, where VP Bank purchased the Luxembourg-based private banking operations of HSBC Trinkaus & Burkhardt in 2013, and acquired Centrum Bank AG in Liechtenstein the following year.

Asia has become a sweet spot for global private banks, as it mints millionaires at a faster rate than other regions. Assets held by high-net-worth individuals in the Asia-Pacific region jumped almost 15 percent to $21.6 trillion in 2017, according to a Capgemini SE report published last month.

VP Bank has set aside $400 million for further acquisitions and Moeckli said a private bank in Asia, Switzerland or Luxembourg would be among the likely targets. Though nothing has been decided, a further purchase could help meet the bank’s asset growth plans.

“We can do it without, but it’d be good icing on the cake. We’d love to have one,” said Moeckli, referring to a possible acquisition.

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