Tax haven bank buys HSBC arm in secrecy crackdown

Although small with overall assets of £1.7bn, the deal between Liechtenstein’s VP and Germany-based HSBC Trinkaus, majority owned by HSBC Holdings, is the latest move by a smaller player to reduce business risks during an international crackdown on undeclared funds.

Last month regional Swiss bank St. Galler Kantonalbank said it will sell parts of its Hyposwiss Private Bank and integrate the rest due to risks, while VP’s hometown rival LLB, Liechtenstein’s second-biggest bank, is cutting 23 per cent of its staff and closing its Swiss arm.

For HSBC, the move comes amid a strategic review of its sprawling private banking activities.

In May, it said it would hold on to its Monaco-based arm for wealthy clients after weighing a sale when it received an undisclosed and unsolicited bid for it.

The London-headquartered parent bank, which is ensnared in a US tax probe at its Swiss arm, didn’t disclose the sale price for the deal, which it expects to close in the fourth quarter.

Liechtenstein has been quicker than Switzerland to succumb to pressure on banking secrecy laws, yet its smaller banks have struggled with the resulting drop in client assets.

By contrast, Liechtenstein’s biggest bank LGT, owned by the royal family, has recovered faster than the country’s smaller banks, LLB and VP.

This is partly because it was one of the first major banks to be forced to face an international clampdown on tax evasion since the financial crisis.

For VP, the HSBC Trinkaus deal is the first notable public move by Alfred Moeckli, who was in May named the bank’s third chief executive in four years.

“With this acquisition, we are making targeted use of the currently attractive market opportunities,” Mr Moeckli said in a statement.

Roughly 20 employees will transfer to VP Bank in Luxembourg as part of the deal, expected to close by the year end.