Boutique VP Bank upgrading local subsidiary to full branch

The boutique VP Bank is upgrading its local subsidiary to a full branch in a bid to capture Asia's appetite for credit, said its Singapore chief executive Bruno Morel.

The Liechtenstein-based bank will also upgrade its merchant bank licence to a wholesale banking one for more freedom and capacity to handle its regional business. The new structure is targeted to be implemented by July.

A wholesale banking licence will allow VP Bank to offer the same range of services as full banks, except it faces certain restrictions pertaining to collecting Singdollar deposits, and it can have only one main branch.

Mr Morel said unlike private banking clients in Europe, those in Asia are hungry for credit to develop businesses and manage wealth.

To serve that demand, VP Bank needs to have the capacity to support this lending.

"When we are a subsidiary, we are limited in our business by the size of the capital we put into the subsidiary," said Mr Morel last Thursday.

"If we want to lend to a client, we cannot lend a big amount. But we have a strong balance sheet in Liechtenstein, with Tier 1 ratio of 25.7 per cent. In Europe, we don't have this demand for credit. The demand is here in Asia.

"So, the solution is to transform the subsidiary to a branch to leverage on our strength in Europe and use it for the clients in Asia."

A stronger credit capacity will allow VP Bank to eye property financing and refinancing, life insurance and portfolio financing, which allows private banking clients to take loans from the bank at competitive interest rates using securities as collateral. - THE STRAITS TIMES