The CEO of VP Bank Asia has quit after a board-level decision to retreat from private banking in the region, which could result in substantial job cuts.

The chief executive of VP Bank's Asia business has quit after a board-level decision to scale back in the region, which could result in substantial job cuts.

Ian Pollock, the well-regarded chief executive of the Liechtenstein-based bank's Asia hub in Singapore, resigned last week following a board meeting which culminated in the decision to retreat from private banking and focus on intermediaries.

According to an internal memo seen by WealthBriefingAsia, VP Bank has taken the decision to curb its nascent Asian operations, "with a primary focus on profitability and less on growth." The memo, signed by chief operating officer Juerg Sturzenegger and chief financial officer Siegbert Näscher, said:

"The Board decided that the major focus of VP Bank in Asia will be on growing the intermediaries business. The status quo at the Singapore banking location, as our hub in the Asia/Pacific region, will be maintained. The business with private clients will be conducted with a re-dimensioned, standardised offering of VP Bank Group products and services, this with a primary focus on profitability and less on growth."

A Liechtenstien-based spokesperson for VP Bank confirmed that managing director Reto Isenring will succeed Pollock, taking full responsibility for the Singapore subsidiary in the meantime. The asset management company in Hong Kong will be headed by executive director Clare Lam, marking a return to the previous model as a European-focused boutique.

The spokesperson added: "VP Bank Group is staying committed to our wealth management strategy. We also continue to strive to be the prime choice for asset managers in Asia." 

Change of course

The abrupt about-face will be disappointing for Pollock, who joined in January this year from a top role as Julius Baer's Asia chief financial officer and North Asia chief operating officer. He accepted the job with a mandate to lead and grow VP Bank's Asian intermediaries and private banking businesses.

During his tenure he hired a clutch of seasoned relationship managers in Hong Kong and Singapore from top players. These included the likes of Peter Buehler and Jane Foo, who joined from Credit Suisse's old Clariden Leu business, Matthew Tay from HSBC, Patrick Donaldson from Barclays and Chua Eng Leong and Michael Bheem from Julius Baer. A number of top bankers were also on the verge of starting at the Hong Kong office, having just signed contracts.

According to sources close to the situation, the change in strategy could result in a number of redundancies. Currently VP Bank employs 36 people in Singapore and around 10 in Hong Kong. This is likely to be scaled back "substantially" said a source. In total, the group employs 735 individuals in seven worldwide locations.

Commenting on potential redundancies, the spokesperson said: "Within the regular check-up of our management strategy, the bank has decided to part with non-performing RMs which is a normal process for all banks to sustain themselves with healthy performance results. We wish to further reiterate that VP Bank remains to be very committed to and focused on the growth of business in Singapore and Hong Kong."

The change of direction has been on the cards since the resignation of two senior executives in the summer. Global chief executive, Roger Hartmann, stepped down in July, while Georg Wohlwend, head of the main bank unit Liechtenstein and regional, will leave at year-end. Both were behind an international expansion of the group. There have been other top level changes due to opposing views on strategy, including the resignation of Adolf Real as chief executive in August 2009 after 26 years with the bank, 11 of which as CEO.

Global pressure

The group has been grappling in recent years with changes in banking secrecy laws, amid an international drive to stamp out tax evasion. Switzerland and Liechtenstein-based boutiques have been at the centre of a global crackdown on tax fraud and banking secrecy, which has seen costly regulations come into force and has triggered substantial client account outflows.

As a result, many European private banking boutiques have sought to grow their presence in Asia, where the population of millionaires now outnumbers those in the US, at 3.4 million. But industry experts warn of the difficulty of making money quickly in Asia, without adequate knowledge of the market or a realistic grasp of costs.

In its most recent results, VP Bank Group logged client net new money outflows of SFr38 million, while income from trading activities fell by a third as clients steered clear of the volatile markets. Income from commissions and services fell 10.4 per cent to SFr59 million and revenues from client securities transactions declined a quarter. The bank cited the "volatile and uncertainty-plagued market environment", as the reason.

The firm does not break down its results regionally, but it is believed that the decision to cut back the Asian private banking business was partly because it was losing money. VP Bank Group had client assets under management of SFr38.1 billion (US$40.6 billion) at 30 June 2012, around SFr1.4 billion of which was based in Asia. The private banking strategy now will be to keep accounts open which are profitable, but to reduce those which require investment.

Pollock has not yet announced his next move, although sources believe he will seek to remain in the boutique business, of which he has been a long-time advocate. He told WealthBriefingAsia in an interview last month that for a boutique with enough patience and foresight, there are great opportunities to be independent and successful in Asia.