Debt Crisis Could Hurt Private Banking Industry: Top Exec

Source : The Straits Times, Sep 21, 2007

FALLOUT: If the credit crunch fallout worsens, wealthy clients might decide to play it safe with their investments, says Mr Gerber of LGT Bank.

A TOP private banker based in Singapore has warned that the global debt market mess could spill over and hurt private banking, perhaps as early as in the middle of next year.

The chief executive of LGT Bank in Liechtenstein (Singapore), Mr Rolf Gerber, said that if the credit crunch fallout worsens, wealthy clients of private banks might decide to play it safe with their investments.

The bank is a relatively small player and caters to a niche market.

'Relationship managers, you always need, regardless of how the market is. But then you have investment professionals who specialise in certain areas for the private banks, whom you might have slightly less demand for, as clients become slightly more cautious in their approach,' Mr Gerber told The Straits Times yesterday.

Still, he remains optimistic about the long-term health of the wealth industry and is sticking to an 'aggressive' hiring strategy of doubling the bank's number of relationship managers based in Asia to about 200 by 2010.

LGT Bank's approach to tackling the markets of Asia is not new, as it started with an Asian presence in 1986 with a representative office in Hong Kong, and has since expanded to make Singapore its Asian booking centre - because of the attractive tax regime in the Republic.

Tiny Liechtenstein, bordered by Switzerland to its west and by Austria to its east, has a population of slightly more than 34,000.

The boutique bank owned by the royal family of Liechtenstein plans to expand further in the region, and will make countries such as Thailand, Malaysia, Indonesia, Singapore and India a focal point of its strategy.

Clients of LGT Bank typically need to have about US$1 million (S$1.51 million) in investible assets. But clients in Singapore on the average have about US$7 million in investible assets.

Mr Gerber said the objective was for the bank to raise the percentage of Asian assets it manages as a proportion of its total holdings to 20 per cent by 2010 from 12 per cent now.

LGT Bank's global assets under management amount to 96 billion Swiss francs (S$122.4 billion) currently.

'You can't really compare us to UBS or HSBC. I don't claim to be able to do everything, so I specialise,' said Mr Gerber, the former head of UBS' Singapore branch.

LGT differentiates itself from the big names in the private banking industry by playing on its strengths in tax advice, succession planning and estate planning, that is, services that stem from its expertise as a 'family office', he said.

'We started off as a family office to the princely family, and we've then ventured out into other things,' he added.