VP Bank Group is divided into four business segments: Client Business Liechtenstein, Client Business International, Chief Operating Officer and Corporate Center. 

The business segment Client Business Liechtenstein encompasses the universal banking business in the home market Liechtenstein and Switzerland as well as the international private-banking and intermediaries businesses located in Liechtenstein. The business units of Verwaltungs- und Privat-Bank Aktiengesellschaft which are in direct client contact are allocated to this business segment.

The business segment Client Business International encompasses the private-banking business in international locations. VP Bank (Switzerland) Ltd., VP Bank (Luxembourg) S.A., VP Bank (BVI) Limited, VP Bank (Singapore) Ltd. and VP Wealth Management (Hong Kong) Ltd. are allocated to this business segment. Recharges of services are made on the basis of actual invoices and are included in general and administrative expenses.

The business segment Chief Operating Officer (COO) is responsible for banking operations. It encompasses the business units Group Investment & Trading Center, Group Operations, Group Information Technology and Logistics & Security of the entire VP Bank Group. In addition, the companies IFOS Internationale Fonds Service Aktiengesellschaft, Vaduz, and VPB Finance S.A., Luxembourg, are allocated to the COO.

Corporate Center encompasses the areas Group Business Development, Group Human Resources Management, Group Communications & Marketing, Group Finance, Group Risk, Group Legal, Compliance & Tax. Those revenues and expen­ses that have no direct relationship to the operating divisions as well as variable salary components and consolidation adjustments are also reported under the Cor­porate Center. In addition, in 2012, the non-recurring credits resulting from the conversion of the pension fund from a defined-benefit to a defined-contribution scheme as well as from the early adoption of IAS 19R were recorded in this business segment. The ongoing impact of IAS 19R is directly allocated to the segments. Revenue-generating activities of the segment Corporate Center arise in connection with the Group Treasury function. The results of the Group’s own financial investments, the structural contribution and the results of hedging operations are disclosed in this segment.

During the process of strategic redirection, the Board of Directors decided to dispose of the Group’s own trust and fiduciary companies. The subsidiary company, IGT Inter­gestions Trust reg. in Vaduz was disposed of by VP Bank Group as part of a management buyout; all employees were transferred to the existing company. VP Bank Group also simplified the structures of its umbrella holding company VP Bank and Trust Company (BVI) Limited in Tortola on the British Virgin Islands, which was a joint venture with the Liechtenstein-based Allgemeines Treuunternehmen (ATU). VP Bank Group acquired the entire capital of VP Bank (BVI) Limited, and the remaining participations were transferred to Allgemei­nes Treuunternehmen (ATU), Vaduz. The discontinued business operations were reported in the past under Client Business International (VP Bank and Trust Company (BVI) Limited) as well as under the Corporate Center (IGT Intergestions Trust reg.). 

Geographic segment reporting

Segment reporting follows the principle of branch accounting.

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Business segment reporting 2013

The recharging of costs and revenues between the business units takes place on the basis of internal transfer prices, actual recharges or on prevailing market conditions. Recharged costs within the segments are subject to an annual review and are amended to reflect new economic conditions, where necessary. 

Discontinued operations were disclosed in the past under Client Business International (VP Bank and Trust Company (BVI) Limited) as well as under the Corporate Center (IGT Intergestions Trust reg.). 

On 1 July 2013, a new organisational structure was introduced at VP Bank Group and the methods of intersegmental recharging were amended. Segment reporting was restated retroactively. 

Business segment reporting 2012

1. All adjustments arising from the conversion of the Treuhand-Personalstiftung from a defined-benefit to a defined-contribution scheme as well as the early adoption of the revised standard IAS 19 flow into the Corporate Center segment.

The recharging of costs and revenues between the business units takes place on the basis of internal transfer prices, actual recharges or on prevailing market conditions. Recharged costs within the segments are subject to an annual review and are amended to reflect new economic conditions, where necessary.

Discontinued operations were disclosed in the past under Client Business International (VP Bank and Trust Company (BVI) Limited) as well as under the Corporate Center (IGT Intergestions Trust reg.).

The pre-tax segment results in 2013 increased year-on-year by CHF 10.9 million or 22.4 per cent. 

In 2013, total operating income could be increased by CHF 5.9 million or 5.1 per cent year-on-year. In particular, thanks to increasing client activities, transaction-based income from clients grew year-on-year. Operating expenses declined year-on-year by CHF 0.5 million, or minus 0.9 per cent to CHF 59.8 million. In the business segment “Client Business Liechtenstein”, the recharging of services is based on intern­ally set transfer prices. Indirect costs for internal services in this business segment are recorded in the item “services to/from other segment(s)”. 

During 2013, the charge for valuation allowances, provisions and losses declined by CHF 4.5 million to CHF 1.7 million. 

The gross margin was 68.2 basis points (prior year: 64.5 basis points). The cost/income ratio was 49.3 per cent which is lower than the 52.3 per cent in the prior year. 

During 2013, the segment encountered a net outflow of client money totalling CHF 0.8 billion. The inflows of new money arising from market-development activities could not compensate for the net outflows resulting from the regulatory environment as well as from a large outflow from a third-party investment fund. 

Client assets under management at 31 December 2013 amounted to CHF 17.7 billion (31 December 2012: CHF 17.8 billion). 

The employee headcount declined slightly from 110.9 (31 December 2012) to 109.1 positions.

Segment results

1. Annualised, average values.
2. Operating expenses / gross income minus other income and income from financial investments.

During 2013, the segment recorded a pre-tax result of CHF –3.5 million. Total operating income declined by 3.6 per cent from CHF 62.2 million to CHF 59.9 million as a result of retreat­ing income both from interest as well as financial investments. 

Income from commissions and services developed positively and could be increased by CHF 3.5 million, or 12.0 per cent in comparison to 2012. This increase results from both increased client trade-related activities as well as portfolio-based income. 

Operating expenses increased by CHF 1.5 million, or 2.8 per cent to CHF 55.2 million (prior year: CHF 53.7 million). This increase results primarily from general and administrative expenses in connection with the asset deal with HSBC as well as due to higher professional fees relating to the participation of VP Bank (Switzerland) Ltd. in the US tax programme. The recharges of services in this business segment are made on the basis of actual invoices and are included in general and administrative expenses. The charge for valuation allowances, provisions and losses increased by CHF 4.5 million to CHF 5.6 million. This includes a provision of CHF 3.0 million for possible fines in connection with the participation of VP Bank (Switzerland) Ltd. in the US tax programme. 

The gross margin was 57.6 basis points (prior year: 71.9 basis points). The cost/income ratio deteriorated and in 2013 stood at 94.6 per cent (prior year: 93.5 per cent). 

Market-development activities in international target markets of VP Bank were further successfully intensified during 2013. During the reporting period, the segment recorded a net inflow of new money of CHF 1.8 billion, of which CHF 2.0 billion derived from the HSBC asset deal. Client assets under management at the end of 2013 totalled CHF 11.5 billion (31 December 2012: CHF 9.3 billion). The employee headcount increased from 199.1 (31 December 2012) to 223.1 in 2013, principally as a result of the successful transfer-in of employees from the HSBC asset deal.

Segment results

1. Annualised, average values.
2. Operating expenses / gross income minus other income and income from financial investments.