VP Bank’s business model is based on the intermediaries business and private banking. The Liechtenstein home market also includes the retail and commercial banking activities. In addition to these core competencies, VP Bank Group has its own international fund competency centre. Thanks to the valuable synergies between the respective business segments, VP Bank can offer its clients attractive value added across a broad range of services.
Diversified business model and target markets
VP Bank Group has offices in six financial centres: Vaduz/Triesen, Zurich, Luxembourg, Singapore, Hong Kong and Road Town (BVI). From these locations, VP Bank actively cultivates its defined target markets, differentiating between the intermediaries business and private banking activities.
VP Bank’s primary strategic goal is to pursue profitable and qualitative growth through its activities in the target markets and thereby ensure its independence. To that end, VP Bank Group offers a comprehensive line of services that correspond to its business model.
The target markets for Europe include Liechtenstein, Switzerland, Germany, Luxembourg, Russia, Ukraine and the “Nordic” markets (Denmark, Norway, Sweden). In Asia, the target markets are Singapore, Hong Kong, Indonesia, Malaysia and Thailand. Each site is responsible for market penetration efforts, which are coordinated by the Group. The “Nordics” and Germany are for the most part managed from Luxembourg and Switzerland, and market penetration in Russia is handled primarily from Zurich as the competency centre for Central and Eastern European markets.
In 2015, the Board of Directors and Group Executive Management defined “Strategy 2020”, with the following medium-term goals through end-2020:
VP Bank medium-term targets through end-2020
- CHF 50 billion in client assets under management
- CHF 80 million in consolidated net income
- Cost/income ratio below 70 per cent
The 2020 strategy consists in three pillars with a long-term approach:
In order to achieve the defined growth targets, we are pursuing a dual strategy. Through organic growth, VP Bank seeks to win new clients in its target markets and expand the existing client base and coverage through our line of services, thereby increasing client assets under management and achieving qualitative and profitable growth.
Organic growth is supported through the recruitment of new client advisors. This objective was successfully pursued between 2017 and 2019 through the “Relationship Manager Hiring” project. Along with organic growth, VP Bank seeks to take advantage of its very strong equity position to invest in acquisitions and joint ventures, if and when the right situations and opportunities arise. Such projects are assessed not just from an economic standpoint but also how well they fit with our culture and geographic coverage.
We use the term Focus to refer to measures to enhance efficiency and reduce the complexity and cost of internal processes. The knowledge gained from these efforts goes toward strict recurring cost management and results in a sharper focus for products and services. Productivity gains are reinvested.
The third main theme of Strategy 2020, Culture, includes two areas: sales and performance culture and corporate culture.
As regards measures to strengthen the sales and performance culture, our goal is to further improve our advisory quality. Group-wide seminars, workshops and management training as well as training courses and certifications all help to secure VP Bank’s cultural values, foster a sense of commitment, support management’s continuing development and actively promote the sharing of experiences.
In the area of corporate culture, we support our employees and encourage them to play an active role in shaping the company’s future. VP Bank conducts employee surveys every two years to remain well informed about employee conditions. Thanks to the high response rate and resulting relevance, we can formulate targeted improvement measures.
A comprehensive overview of all measures on behalf of employees is presented in the section “Employees” (➔ page 46 ff.).
The end of the 2020 financial year marks the start of a new strategy cycle. Our successful Strategy 2020 is the starting point and basis for the new Strategy 2025, which the Board of Directors and Group Executive Management developed following a comprehensive process. Numerous workshops were launched back in 2018 on the subject of the “Future of Banking” in order to lay the groundwork for VP Bank Group’s future in advance.
Following comprehensive trend analyses, we classified the trends, selected the most important and relevant development scenarios and identified forward-looking action areas for the years ahead.
VP Bank’s more sharply defined positioning forms the basis for our Strategy 2025. Building on this positioning, we can take advantage of opportunities that arise in the financial services industry. We have therefore summarised our strategic approach under the motto “Seize opportunities”.
Starting with the existing strategic business areas, Strategy 2025 (➔ table on the left) now encompasses four business areas: Retail & Commercial Banking, Wealthy Individuals, Intermediaries and Client Solutions.
The focus is on three main strategic themes: Evolve, Scale and Move, in order to consolidate the planned initiatives. These three terms refer to the profitable and targeted growth of the existing business (Evolve), efficiency, scaling and cost discipline (Scale) and winning new business opportunities to generate additional revenue (Move).
Evolve – Measures focus on the strategic and targeted development of the operating business in the core segments. As part of this process, the segment priorities, target markets, product offerings and price models are defined and developed by and for the respective sites, which are then responsible for their local implementation. These measures are complemented through the development of sustainable investment solutions, streamlined price models and future digital solutions to achieve an even more personalised advisory service.
Scale – Measures include process optimisation through standardisation and automation, as well as efforts to make the operating platform even more flexible. This process also takes into account considerations on the sourcing of services.
Move – Measures serve to build up new competencies as regards asset digitisation, the development of private market solutions and the expansion of our wealth management platform for our clients. Priorities include recognising and exploiting new business opportunities.
Our sustainable investment philosophy plays an outsized role in the new Strategy 2025. This strategy goes under the title of “Investing for Change” and seeks to reposition the product line, with our own sustainability funds and access to new solutions as regards impact investing, among other features.
Financial strategic targets were defined with new medium-term targets through end-2025 (➔ table below). VP Bank seeks consolidated net income of CHF 100 million by 2025, supported by the following four key performance indicators (KPI):
With “Strategy 2025 – Seize opportunities”, we created a sustainable basis for VP Bank Group’s continued growth and international success.
VP Bank was founded in 1956 by Guido Feger, one of the leading trustees in Liechtenstein. From the outset, VP Bank therefore saw its role as a dependable and competent financial partner for intermediaries. VP Bank focuses on large, internationally oriented trustees as well as medium-sized external asset managers.
For its intermediaries business, VP Bank Group uses a hybrid business model. Basic banking services on behalf of the end customers of intermediaries are designed to be as efficient, dependable and cost effective as possible using digital channels. The bank then offers high-quality, personal advisory services for intermediaries and end clients.
Specialised IT solutions such as VP Bank e-bankingPLUS are offered specifically to intermediaries. The VP Bank e-bankingPLUS solution is for financial services providers looking to work with multiple users and diverse authorisations. With the ProLink information platform, intermediaries clients also enjoy a simple and speedy way to access the most important information and services they need for their day to day work.
VP Bank also offers complete fund solutions, from advisory to risk management to fund administration. These offerings are complemented by exclusive Investment and Trading Services, enabling intermediaries to make use of a variety of services such as market research, trade recommendations and investment advisory. We also help clients select appropriate funds or structured products.
VP Bank also offers comprehensive, personalised support on legal, regulatory and tax issues. We are constantly looking to find other solutions that satisfy the needs of our intermediaries clients as comprehensively as possible.
VP Bank also has five booking centres worldwide, making it one of the few banks of its size to have such a broad international presence.
As a proven partner for external asset managers, VP Bank also makes targeted investments in its own resources to comply with the new Swiss financial services act FIDLEG and the corresponding financial infrastructure act FINIG. These investments include measures involving digitisation as well as the optimisation of interfaces and continuing training for advisors. In 2019, we also further developed and optimised the organisation of our intermediaries business segment.
The Asia/Pacific region is one of the most important growth markets for private banking and is one of the identified target markets where VP Bank sees attractive growth opportunities. VP Bank has positioned itself as a “boutique bank” that provides first-class solutions to satisfy demanding standards.
In Asia, VP Bank is represented in the major financial centres. It has an asset management company and representative office in Hong Kong as well as a branch in Singapore with around 75 employees. The bank’s business model in Asia is also based on the two strategic pillars of private banking and intermediaries. The target markets include Southeast Asia, notably Singapore, Hong Kong, Indonesia, Malaysia and Thailand. The client segments range from high net worth individuals (HNWI) to ultra high net worth individuals (UHNWI).
The growing number of intermediaries clients in Asia also creates promising opportunities, thanks to our many years of experience and professional products and services in this business. In this segment, VP Bank offers its clients regionally oriented service models for trustees and external asset managers as well as personalised support. The development of strategic partnerships is also being advanced. Clients benefit from direct market access to VP Bank’s trading desks in Singapore and Liechtenstein/Switzerland, which cover the major time zones.
As part of our growth strategy, we expanded the organisational and management structure at our Singapore site in 2019 and bolstered the client focus with the creation of a new position “Head of Client Business”. We also significantly expanded our product line with special offers such as structured products and mortgages aimed specifically at our Asian clients.
Through a memorandum of understanding in July 2019, VP Bank AG and Hywin Wealth Management Co. announced their intent to develop a joint collaboration platform in Hong Kong in order to offer high-quality asset management solutions to wealthy Chinese clients. The two companies are thereby pooling their respective strengths and creating a comprehensive, global asset management product line for the rapidly growing segment of Chinese (ultra) high net worth individuals both within and outside of China.
Hywin Wealth was founded in Shanghai in 2006 and is currently among the leading Chinese asset management companies, with 148 branches in 72 cities and more than 2,000 employees, serving more than 50,000 clients nationwide. The company offers high-quality asset management and estate planning solutions, as well as philanthropy services. In addition to mainland China, Hywin is also active in Great Britain and Hong Kong. The planned cooperation offers us the opportunity to build up our business activities in the Chinese market and successfully advance our Asia strategy together with a highly professional and reputable partner in China.
Private banking strategy
In private banking, VP Bank focuses mainly on the high net worth individuals (HNWI) and ultra high net worth individuals (UHNWI) client segments. VP Bank also offers broader coverage in private banking, but only in the Liechtenstein home market, where it also supports the so-called affluent client and retail client segments.
VP Bank offers its clients a broad range of personalised solutions from investment advisory to asset management and, depending on the target market, estate planning and financing. We ensure independent advisory through our open architecture platform. Working with our global partners, we recommend the best investment instruments or develop innovative solutions.
Client advisory is supported by digital banking services, the innovative VP Bank e-Banking platform and client advisors equipped with iPads. The advisory process is enhanced with the “Finfox” interactive advisory application.
The changing environment in the banking industry requires a flexible line of products and services. We are laying the foundation for the investment advisory of the future through our systematic advisory process and continuous improvements to our services.
Last year, we analysed our processes and will continue to develop them methodically. In the near term, the focus will be on a fundamental overhaul of the client on-boarding process. Thanks to its professional and efficient initial advisory conversation, VP Bank improved its ranking to 11th in the “Permanent Best List” published by the “Fuchsbriefe” private banking assessment firm, making it one of the top 20 asset managers in the European tables.
The fund business is an eminently attractive growth segment for VP Bank. In addition to the intermediaries business and private banking, it represents a central pillar of VP Bank Group’s business model.
With VP Fund Solutions, VP Bank Group has an innovative and dynamic funds competency centre at its Liechtenstein and Luxembourg sites, which acts as a one-stop shop for all services related to the fund business. The “VP Fund Solutions” brand includes not only the business with third-party funds but also proprietary VP Bank funds. The Group-wide management of this strategically important business is directed from Luxembourg, the second-largest funds centre in the world behind the United States.
With more than 20 years experience, VP Fund Solutions offers local as well as international asset managers comprehensive and high-value services. Through its cooperation with VP Bank as a custody bank, VP Fund Solutions uses the network and international know-how of VP Bank Group to process the investment decisions of fund managers.
VP Fund Solutions’ geographic focus is Germany, Liechtenstein, Switzerland, the Benelux countries and Scandinavia. The client segments comprise independent asset managers, family offices, wealthy private clients and institutional clients such as banks and pension funds.
In the near term, our immediate priorities will be to maintain growth, optimise processes and ensure quality at the two sites. The reconfigured website vpfundsolutions.vpbank.com provides an overview of the services line.
Building on our successful and established activities and knowledge of fund solutions, we will focus our attention even more in the future on our positioning in the private market investment solutions business. We also intend to recruit additional staff to expand our capabilities in this area.
In a competitive environment of falling earnings and rising costs, clear differentiation is a decisive factor for success. VP Bank Group’s lending business is a key feature that sets it apart from other traditional private banks. It is further enhanced by the bank’s flexibility, agility, short decision-making channels and trusted client advisors familiar with mind-set of the clients in the respective markets.
For many years, the lending business has served as a steady, dependable source of income for VP Bank Group; it provides a significant and stable earnings contribution.
Lending is an integral part of VP Bank Group’s service offerings. It is conceived in accordance with the strategies of the two business segments, private banking and intermediaries, and their respective market strategies and is aligned with them. We offer standard financing for retail and corporate clients in Liechtenstein. The lending business provides substantial support to the organic growth of the private banking and intermediaries businesses.
The growth of client assets in the international business continues to trend favourably. We take advantage of this trend and adjust our credit offerings to the respective market and client needs while securing our position in with local businesses as a skilled and reliable financing partner.
The continued expansion and development of the lending business is essential for VP Bank Group to achieve its medium-term goals. This objective involves both organic growth as well as productivity gains achieved through the digitalisation of the lending process.
VP Bank Group’s digitalisation strategy involves the modernisation of communication channels with clients and employees as well as broadening the Bank’s online offerings.
In that regard, VP Bank applies a hybrid advisory model that combines tried and true personal financial consulting with modern technologies and digital services, in which tools that support the client advisors and various client segments play a central role.
In recent years, as part of the trend toward digitising processes, data and communications channels, we introduced and steadily implemented a variety of measures. Our main focus is on solutions that can be implemented Group-wide and standardised.
In 2019, we made substantial investments in three major areas:
Finalisation and rollout of the client portal for simple and professional access to banking information as well as the execution of transactions. Meanwhile, the client portal serves as the basis for further digitisation steps in the client interface.
Introduction of an open banking interface for simplified payments with third-party providers; this interface makes it possible to integrate innovative online payments through the PSD2 interface.
Internal digitisation of processes
With the development of a professional, digital client advisor workplace, we provide our advisors with better access to the information they need for full-service advisory.
Meanwhile, this portal lays the foundation for a new IT architecture that will render the development and implementation of new client-oriented services more flexible as regards a speedy, lean and agile “two-speed IT” architecture and also enable open interfaces for the integration of innovative third-party systems.
Digitisation of internal processes in order to improve processing quality and efficiency (loan application process, client on-boarding).
Substantial investments to ensure compliance with regulatory provisions and continue ensuring smooth operations (IT maintenance).
From a strategic standpoint, 2020 is a transition year. Starting in March 2020, we will roll out the new “Strategy 2025” (see above) communications initiative through in-house and external roadshows. The rigorous implementation of this strategy will also require organisational adjustments. The new strategy will focus on the development of new business segments while focusing on the continued targeted development of our existing business and the scaling and optimisation of our operating business model.
The continued development of our digitisation strategy is another key focal point. In 2020 we will undertake the following projects:
Finalisation of the client advisor workplace
Digitisation of in-house research and the client relationship
Digitisation of compliance
Further optimisation of internal processes with an emphasis on drastically simplifying the client on-boarding process
Enhancement and rollout of our advisory tool to our international sites
The EU Commission wants to strengthen sustainable finance and support long-term company management practices through its “EU Action Plan on Sustainable Finance”. The implementation of sustainable products and services is therefore one of the growth drivers for 2020. For new investment themes, we are increasingly looking to focus on long-term themes and adjust our products and services to satisfy sustainability and ESG criteria.
At 1 January 2020, the so-called blockchain act took effect in Liechtenstein, establishing a legal foundation for the use of token technology. In connection with this law, we are working on the digitisation of assets in order to make corresponding products available in a timely manner. In that regard we have already initiated projects and developed know-how that will be a source of exciting opportunities in the years ahead.
As part of our implementation of Strategy 2025, we will further delegate market development responsibilities to the respective sites and incorporate the resulting challenges and key areas of development into Group-level deliberations. The focus on the client business should also be strengthened significantly.
The importance of our Asian business will continue to grow. In Asia, we see this growth coming increasingly from the intermediaries business and the funds segment. We are looking to participate in the dynamic growth of the Chinese market through cooperations.
Following the completed acquisition of the investment fund of the Swedish financial services company Carnegie and the transaction with Catella Bank S.A. in Luxembourg, we are focusing increasingly in 2020 on building up our activities in the Scandinavian market (“Nordics”). This step already proved to be successful in 2019 and offers solid growth opportunities in the years ahead.
VP Bank’s fund business is very successful, posts steady gains and creates a stable foundation for growth over the next five years.
The results of our client survey are being input into a catalogue of measures to further optimise our product line as well as enhance the efficiency of our advisory services. In the intermediaries business, we will continue to improve our dialogue with trustees.
Following the successful completion of our relationship manager hiring programme, we will expand the existing teams at our sites in the future by adding new client advisors. We would like to reinforce the Group viewpoint through internal measures.
In the light of still narrowing margins, we need to find new areas with growth potential where we can add value while maintaining strict cost discipline. VP Bank must constantly keep up with technological change and forge new partnerships to that end. We review innovative models and cooperation with partners in order to secure new value-creating potential.
VP Bank will systematically wind down its Strategy 2020 program and start up the 2021-2025 strategic cycle to continue its broad-based growth. The bank remains well capitalised and is very well equipped to respond to market developments accordingly.