UPDATE 2-Liechtenstein’s LGT sanguine about risk from HSBC private bank deal
ZURICH, March 23 (Reuters) – Liechtenstein’s biggest bank LGT does not expect to suffer any fallout from assets it bought from HSBC’s private bank months before that business was embroiled in a scandal over allegedly helping clients to dodge taxes.
Vaduz-based LGT, owned by the principality’s royal family, snapped up 7.1 billion Swiss francs ($7.3 billion) of private banking assets last year that HSBC wanted to offload to reduce the size of its wealth management arm.
HSBC has since admitted past failings in compliance and controls in its Swiss bank. It also faces investigation by U.S. and French authorities and an inquiry by British lawmakers after reports it helped customers to conceal millions of dollars of assets in a period up to 2007.
“In our view, the HSBC portfolio was in comparison to others we saw in the market one of the cleanest portfolios in terms of the compliance risk,” LGT’s Chief Executive, Prince Max von und zu Liechtenstein, said at a media briefing.
“Overall our impression is a very positive one. We don’t believe that we have just acquired a heap of compliance problems.”
LGT was one of the first major banks to be caught up in an international clampdown on tax evasion, suffering a client exodus in 2008 and 2009 after it featured in a U.S. Senate report on tax evasion.
Since then the principality, wedged between Switzerland and Austria, has made efforts to dispel its image as a tax haven and reposition itself as a financial centre for clean money, moving ahead of fellow microstates such as Andorra, which has been swept up in a money laundering scandal at one of its banks.
“Some, and I count Liechtenstein among them, will have gone from A to B in a relatively smooth sensible way, understanding pretty early on in the process what the trends are and positioning themselves accordingly, and others will struggle much harder,” said Prince Max von und zu Liechtenstein.
LGT has seen net inflows of assets for the past five years. An expansion into Asia has been profitable, LGT executives said on Monday, without providing details.
LGT said its net profit rose more than 18 percent last year to 165 million francs, with assets under management rising by 20 percent, helped by a combination of valuation gains, net asset inflows and the HSBC inflows.
