LB (Swiss) Private bank believes being owned by the German state presents no hindrance to it being a Swiss-based private bank, despite questions being raised about intervention by the German tax authorities.
Holger Mai, chief executive of the Zurich-based private bank, said: Being owned by the savings banks in Germany, which are the undisputed market leaders with roughly a 60% share of the market for retail, commercial and corporate clients, gives us a strong foundation. Our owners have no core competence in wealth management.
LB (Swiss) is owned by the two German state-controlled Hessische and Bayerische Landesbanken, which each own 50%, making the wealth manager 100% Government owned.
Given the turmoil in the financial market in the past 18 months, the firm believes having this type of guarantee has bolstered its position.
Assets under management last year increased by Sfr300m (202m) when most private banks were doing their hardest to hold on to their money as the wealthy moved money around at unprecedented levels.
With more than 6,000 clients, LB (Swiss) appears to have prospered because of its owners strong links to German entrepreneurs. Mai said: Typical clients for wealth management services have accumulated assets through the sale of their company or a larger parcel of real estate.
He believes LB (Swiss) wealth structuring expertise is popular with entrepreneurs who are looking for bespoke wealth management. He said: Our various investment processes are on one hand benchmark-oriented and, on the other, also aimed at achieving target returns. It is mandatory that the portfolio structures be adapted on an ongoing basis. Most clients are looking for long-term growth strategies.
LB (Swiss) offers clients several in-house funds provided through its investment subsidiary LB (Swiss) Investments and access to out-of-house funds. The bank also caters for ultra-high net worth clients with a multi-family office offering.
LB (Swiss) might have prospered from its effective state guarantee, but the flipside of this is that it has attracted the attention of the German media over the tax affairs of some of its clients. Last week an article in Der Spiegel newspaper questioned the legitimacy of the Landesbanken using offshore centres like Switzerland.
However, LB (Swiss) managers played down the controversy. According to the Der Spiegel article, Mai said: All our German clients money is examined before to ensure taxes have been paid. Nevertheless, analysts believe the tax issue for German offshore account holders will not go away in a hurry.
Murat Ünal, a senior analyst at the Frankfurt-based strategy consultant Funds@Work, said: This has become a bigger issue. Banks might be benefiting from German private client money moving from Liechtenstein, after the tax crackdown there last year, to Switzerland.
