This news service speaks to the Liechtenstein-based bank, which was founded by a man with an intermediaries background. This business segment is core to what the bank does, one of its senior figures says.

While some banks might serve intermediaries such as external asset managers as a side-business, albeit an important one, this market is so embedded in VP Bank’s DNA that it is central to what it does, the Liechtenstein-based lender argues. 

VP Bank was founded in 1956 by Guido Feger, whose own business background was that of a fiduciary, and his experience in the intermediaries space has shaped how the bank operates. Today, about half of its revenues come from serving EAMs and similar organisations, including advisors and family offices. 

“We’re the only bank in Switzerland that can say that this is one our core businesses,” Peter Vangehr, head of intermediaries at VP Bank Switzerland, told this news service.

“A big part of our profit comes from this business. And we’re ready to grow further and it is one of the strategic pillars in Liechtenstein and in our locations around the globe,” he said. The two other pillars of the bank are its private banking business, and the recently-launched client solutions arm. VP Bank operates in Liechtenstein, Luxembourg, Switzerland, Singapore, Hong Kong and the British Virgin Islands. VP Bank’s workforce of more than 900 employees administer clients assets totalling SFr47.4 billion.

Such is the importance of the segment that VP Bank takes care over the kind of people it recruits to its teams, Vangehr said. Typically, it looks for people with at least around 10-15 years’ experience serving the space. “If we hire people on the intermediaries side we look for very experienced bankers who have known the market for a long time,” he said. 

As reported recently, new Swiss regulations from the Financial Markets Regulatory Authority, or FINMA, which take force in coming months, are shaking up how EAMs operate. In some cases this means that they must increase their spending on technology and people to keep up with reporting requirements. (The new regime has been likened to a Swiss version of the European Union’s MiFID II legislation enacted a few years ago.) (See more articles about EAMs here and here.) 

“At the moment we have 2,800 intermediary companies in Switzerland and about half of them have signed up to the new licences. In one or two years, they will not all be under a FiNMA licence and the system will be too strict and too money-consuming for some of them,” Vangehr said. 

One option will be for smaller firms to gather under the roof of a larger, licensed business so that EAM managers can retain autonomy over their day-to-day business, while benefiting from the support of a wider group, he said. (To some extent, this has been the pattern in the UK after regulations on independent financial advice tightened the regime.)

There is definitely a pattern of EAMs concentrating on specific niche areas, ranging from specific investment areas such as private equity, as well serving certain types of client, he said. Firms will need to focus particularly if their existing business structure means they serve a lot of cross-border clients, raising regulatory/compliance burdens, he said. 
 

Technology
An important area for VP Bank is helping EAMs manage technology challenges such as digitalising processes and handling some of the outsourced requirements these businesses have, Vangehr said. 

“We try to give the best support for their digital asset management needs and try to support them wherever we can,” he said. 

This need for more digital support for operations will be a reason why smaller firms will gather under the umbrella of a larger organisation and plug into its services. This in turn will be an opportunity for VP Bank, he said. 

Ultimately, VP Bank’s success in serving EAMs will be measured not just in “share of wallet” and through revenue/profit growth, but by client satisfaction – sometimes demonstrated through client referrals and feedback, he said. 

“For me, client satisfaction is the biggest marker of success,” he said. 

Vangehr is optimistic about the future of the EAM market in Switzerland, and also bullish for sectors in Germany, the UK, other parts of Europe, and in Asia. Thanks to a cooperation with a Chinese asset manager (Hywin Wealth Management Co), we are already part of an important and growing EAM sector in Hong Kong and Singapore, he added.

This news service recently honoured the EAM sector with its inaugural awards programme.