VP Bank to upgrade Singapore subsidiary to full branch

(From left) VP Bank's head of client business Christoph Mauchle, Singapore's head of investment advisory and treasury Asia Thomas Rupf, chief strategist and head of investment research Bernd Hartmann, and Singapore chief executive Bruno Morel.
(From left) VP Bank's head of client business Christoph Mauchle, Singapore's head of investment advisory and treasury Asia Thomas Rupf, chief strategist and head of investment research Bernd Hartmann, and Singapore chief executive Bruno Morel.PHOTO: VP BANK

The boutique VP Bank is upgrading its local subsidiary to a full branch in a bid to capture Asia's voracious appetite for credit, said Singapore chief executive Bruno Morel.

The Liechtenstein-based bank, which celebrates its 10th anniversary in Singapore this year, will also upgrade its merchant bank licence to a wholesale banking one for more freedom and capacity to handle its burgeoning regional business.

The new structure is targeted to be implemented by July.

A wholesale banking licence will allow VP Bank to offer the same range of services as full banks, except it faces certain restrictions pertaining to collecting Singdollar deposits, and it can have only one main branch.

Mr Morel, who joined VP Bank Singapore in March last year from Credit Industriel et Commercial here, says unlike private banking clients in Europe, those in Asia are hungry for credit to develop their businesses and manage their wealth. "Asia is in a different stage of development compared with Europe, which is developed," he said.

"In Asia, the focus is on growth and you cannot grow a business without funding and financing.

"We see a huge demand for credit from our clients."

To serve that demand, VP Bank needs to have the capacity to support this lending.

"It is about credit. When we are a subsidiary, we are limited in our business by the size of the capital we put into the subsidiary," said Mr Morel in an interview last Thursday.

"If we want to lend to a client, we cannot lend a big amount. But we have a very strong balance sheet in Liechtenstein, with Tier 1 ratio of 25.7 per cent. In Europe, we don't have this demand for credit. The demand for credit is here in Asia.

"So, the solution is to transform the subsidiary to a branch to leverage on our strength in Europe and use it for the clients in Asia."

A stronger credit capacity will allow VP Bank to eye property financing and refinancing, life insurance and portfolio financing, which allows private banking clients to take loans from the bank at competitive interest rates using securities as collateral. Apart from Singapore, its other key markets in Asia are Indonesia, Malaysia, Hong Kong and Thailand.

VP Bank Singapore, which has about 50 employees, plans to double its headcount within three years. The new hires - a mix of relationship managers and support staff - will be housed in the bank's expanded premises in Asia Square, after it acquired adjacent space formerly occupied by BlackRock.

Globally, VP Bank will be hiring 75 client advisers, namely in Singapore and Hong Kong, by the end of next year. It has 860 employees worldwide.

The bank generated a net income of 65.8 million Swiss francs (S$91 million) and had 40.4 billion Swiss francs in assets under management in the 2017 financial year.

It plans to achieve 50 billion Swiss francs in assets under management by 2020.

VP Bank merged with Centrum Bank, the fourth-largest financial institution in Liechtenstein, in 2015.

It is open to potential acquisitions to drive growth.

"If there is an opportunity in the market and because we are well capitalised, we will look at acquiring," said Mr Christoph Mauchle, its head of client business.

"Hopefully, we will be able to close a deal very soon."

Its Asia push also involves electing Julius Baer's former Asia boss Thomas Meier to its board.

A version of this article appeared in the print edition of The Straits Times on March 19, 2018, with the headline 'VP Bank to upgrade S'pore subsidiary to full branch'. Print Edition | Subscribe