Statement by the Chairman of the Board

At the annual general meeting on 25 April 2014, the Board of Directors will propose a dividend of CHF 3.50 per bearer share (previous year: CHF 2.50) and CHF 0.35 per registered share (previous year: CHF 0.25). This dividend increase reflects the revised dividend policy adopted by the Board of Directors: 40 to 60 per cent of VP Bank Group’s total net income is to be distributed to shareholders as long as the Bank’s medium-term tier 1 ratio exceeds the target of 16 per cent. The aim is to cultivate a consistent dividend trend. 

2013 was a year of vast changes for VP Bank Group. These changes were accompanied by significant personnel alterations and organisational realignments that enhance VP Bank Group’s sharpened focus on current market and client needs. The importance of having an efficient management structure which is centred on clients and marketing has been underscored by the appropriate measures that have been taken. 

One of the major steps in this regard was the establishment of the new “Client Business” division, which comprises all of the Group’s client-oriented units. As of 1 July 2013, the “Banking Liechtenstein & Regional Market” and “Private Banking International” were integrated into this division.

VP Bank continued to pursue its growth strategy in 2013 by taking over the private banking activities of HSBC Trinkaus & Burkhardt (International) SA as well as the private banking related fund business of HSBC Trinkaus Investment Managers SA in Luxembourg. This asset deal reflects our strategic aim to grow both in terms of the mid-range private banking segment and the intermediaries business. Simultaneously, the import­ance of the fund business at our Luxembourg location is being accentuated, as is the fund competence of the entire VP Bank Group.

In conjunction with the aforementioned sharper focus on two business fields, the Board of Directors resolved to divest the Group’s fiduciary companies in 2013. The IGT Inter­gestions Trust reg. subsidiary in Vaduz was separated from VP Bank Group via a management buyout.

In the same vein, the structures of the VP Bank and Trust Company (BVI) Limited holding company in Tortola (British Virgin Islands), which has been a long-standing joint venture with Liechtenstein-based Allgemeines Treuunter­nehmen (ATU), have been tranched off. In 2013, VP Bank Group acquired full ownership of VP Bank (BVI) Limited and ceded the other financial interests to ATU. 

The Board of Directors stands by its medium-term goals – an annual 5 per cent increase in net new money based on client assets under management, a cost/income ratio reduction to an average of 65 per cent and a core capital (tier 1) ratio of at least 16 per cent. Compared to its peers, VP Bank Group has a very solid equity capital base which will afford a high degree of stability and security even after the intro­duction of Basel III. 

As one of the largest banks in Liechtenstein, VP Bank is deemed by the Financial Market Authority to be “system relevant”. Accordingly, VP Bank will also need to fulfil higher minimum capital requirements in the years ahead.

For us, the subject of sustainability is of central importance, and is crystallised in the business policy of VP Bank. Further information in this regard can be found in the newly structured “Corporate strategy” section of this annual report.

In the autumn of 2013, the Government of Liechtenstein issued a Governmental Declaration on international tax cooperation. With this declaration, it formally acknowledged the applicable OECD standard regarding international tax coop­eration and subsequently signed the OECD and European Council convention on mutual administrative assistance in tax matters. By doing so, Liechtenstein has reinforced its commitment to implementing the standards on transparency and the exchange of information, and thereby the integrity and reputation of the Liechtenstein financial centre. The strategy of VP Bank takes these developments into account.

At the outset of 2013, the Board of Directors elected Alfred W. Moeckli to become Chief Executive Officer (CEO) of VP Bank Group. He took up his new role on 1 May 2013, replacing Siegbert Näscher, Chief Financial Officer (CFO), and Juerg W. Sturzenegger, Chief Operating Officer (COO), who had headed the Bank on an ad interim basis since mid-July 2012.

As of 1 July 2013, the two client-oriented business units “Banking Liechtenstein & Regional Market” and “Private Banking International” were combined to create the new “Client Business” division. Since 1 October 2013, Christoph Mauchle bears responsibility for the division as “Head of Client Business”.

In connection with the adaptation of the organisation to the changed overall and market-specific circumstances, Juerg W. Sturzenegger, Chief Operating Officer, decided to leave VP Bank Group at the end of 2013. Over the past five years, he successfully conducted important strategic projects and in particular played a major role in the further development of the Investment Management product range and other product-related areas. The Board of Directors would like to take this occasion to express its thanks for his valuable commitment.

Martin Engler, Head of Private Banking Liechtenstein, Günther Kaufmann, Head of Intermediaries & Transaction Banking, as well as Rolf Jermann, Head of Commercial Banking, each a member of Executive Management at the main office in Vaduz, stepped down from that body as of 1 January 2014 in order to concentrate fully on the cultivation of their areas of responsibility. The Board of Directors also thanks them for their great efforts.

As of 1 January 2014, Executive Management at the main office in Vaduz – which in the form of a personnel union now performs the function of Group Executive Management – comprises Chief Executive Officer Alfred W. Moeckli, Head of Client Business Christoph Mauchle, and Chief Financial Officer & Head of Banking Services Siegbert Näscher. 

With this streamlined management structure, the processes and competencies are simplified and the reaction times shortened. While this is aimed at the further reduction of redundancies, it is mainly intended as a means of redoubling our client focus through intensified Group-wide collaboration and the bundling of skills.

In April 2013, Roland Feger – after a 12-year term of office on the Board of Directors of VP Bank – opted not to stand for reelection. Roland Feger was also a member of the Audit & Risk Management Committee; he played an important role in both bodies and contributed a wealth of experience. The Board of Directors is very grateful to Roland Feger for his valuable and dedicated contribution.

For personal reasons, Max E. Katz stepped down from the Board of Directors of VP Bank Group on 23 September 2013. We thank him for his devoted efforts in the transformation process of VP Bank Group and his work as a member of the Audit & Risk Management Committee.

After twelve years of service to VP Bank, Walo Frischknecht will step down from the Board of Directors on 25 April 2014. VP Bank thanks Walo Frischknecht for his dedicated contribution, in particular as chair of the Audit & Risk Management Committee.

The Board of Directors will propose to the general assembly on 25 April 2014 that Dr Beat Graf and Michael Riesen be elected as new Board members. It is envisioned that Michael Riesen will be the successor to Walo Frischknecht as Chairman of the Audit & Risk Management Committee.

Going forward, our focus on clients and marketing will enable us to cultivate our target markets even more efficiently than in the past and contribute to the commercial success of VP Bank Group.

The primary strategic goal of VP Bank is to grow profitably as a Group and thereby preserve our independence. The special strengths of VP Bank, such as its solid equity capital and shareholder base, also contribute to that aspiration. That substantial amount of capital enables us to invest in growth – also via acquisitions. Thus, VP Bank will take advantage of attractive market opportunities as they arise, provided they are a suitable fit from a strategic and cultural standpoint. 

In previous financial reports, we have underscored the challenges with which VP Bank Group has been faced due to the rapidly changing regulatory environment. Today, we can look back on our successful mastery of those challenges. We actively nurture collaboration with all relevant partners in the Liechtenstein financial centre and in our target markets. 

We are well equipped for the future thanks to a healthy mix of the tried and true and the readiness to accommodate change. We look forward to having our employees, shareholders, clients and partners continue to accompany of us along this successful path.

Our thanks firstly go to our employees, who each and every day demonstrate their tremendous commitment to our clients and thus to the success of VP Bank Group. And of course it would be remiss of us not to express our sincerest gratitude to our clients for their abiding loyalty – and to you, our valued shareholders, for your support of and confidence in our Bank. 

Fredy Vogt

Chairman of the Board of Directors