Tatler Focus

Family business. From left: Prince Philipp von und zu Liechtenstein, chairman of LGT; and Prince Max von und zu Liechtenstein, CEO of LGT.

Stability is an enduring feature of Liechtenstein, both culturally and geologically. The principality’s royal family lays claim to a heritage stretching back almost 1,000 years, while the mountains that make up half its land mass have been an unchanging presence for millennia.

These solid foundations are also at the heart of LGT Bank, a private bank that has been owned and controlled by the Princely Family since its establishment in 1930, though preserving wealth and protecting legacy has been the family business for centuries. Today, that is literally the case, as Princes Philipp and Max are the current chairman and CEO of LGT, respectively. Prince Philipp is the younger brother of Prince Hans-Adam II, the ruling sovereign of Liechtenstein, and Prince Max is Hans-Adam’s son.

LGT’s unique form of private ownership provides a natural alignment of interests between the bank, its clients and its owner. Having a sole shareholder who takes a long-term view on the business allows relationship managers to similarly take a long-term view with their clients.

This is reinforced by the bank’s flat structure, which encourages a high level of ownership and ensures that clients are always receiving the advice of an experienced relationship manager.

Thus, LGT avoids the short-term, brokerage-style focus of many competitors and instead concentrates on providing relevant investment and other advice to clients—free of any conflicts of interest.

However, this long-term focus does not mean the bank is so conservative that it cannot respond to opportunities or offer flexibility to its clients. On the contrary, the bank’s flat structure makes for quicker decision-making than is often possible at larger and more bureaucratic financial institutions, while also allowing continuity in terms of its strategic focus and stability in management.

Perhaps more important, the Princely Family’s ownership ensures that traditional values and virtues such as reliability, respect and integrity are not just marketing slogans but are firmly embedded in LGT’s corporate culture. In keeping with these values, compliance is an integral process in everything the bank does.

The family’s popularity in Liechtenstein is testament to this integrity. Thanks in large part to the success of LGT in managing its wealth, the Princely Family’s formal powers have been upheld through referendum and
it remains independent of the taxpayers.

Clients of LGT can also avail themselves of this time-tested wealth management strategy through the Princely Portfolio. Also known as the Global Investable Markets (GIM) fund, this portfolio is home to US$3.5b of the royal family’s assets and is the bank’s core offering, with more than US$11b in total assets under management.

Unsurprisingly for a fund that manages a centuries-old financial legacy, the portfolio has wealth preservation and stability as a prime goal—volatility is maintained below 10 per cent. But it also seeks equity-like returns thanks to an investment horizon of more than six years and a flexible allocation strategy that leans on the bank’s decades of experience.

LGT in Asia
Since opening a representative office in Hong Kong in 1986, LGT has quietly grown into a competitive local private banking player with two fully fledged booking platforms in Singapore and Hong Kong, some US$25b in assets under administration and 400 employees in the region.

“Starting a presence in Singapore in 2001 was an important milestone for LGT’s Asia expansion strategy,’ says Dominique Joye, LGT Singapore’s CEO. “Since then we were able to grow our business in a sustainable manner by focusing on hiring experienced relationship managers and ensuring the highest levels of client service and client offerings.”

Growing organically, client by client and relationship manager by relationship manager, has allowed LGT to maintain its unique culture, in addition to its unique level of stability in terms of staff and management. Henri Leimer, the bank’s CEO for Asia, has been with LGT in Hong Kong since 1994, while Silvan Colani, CEO for Hong Kong, and Dominique Joye, CEO for Singapore, have been with LGT since 1996 and 2007 respectively. This contrasts dramatically with the waves of consolidation that periodically sweep through the rest of the private banking industry in Asia, creating considerable uncertainty for clients and relationship managers alike. LGT is a beacon of stability in this changing environment.

“We believe that we are in a unique ‘sweet spot’ in Asia, having a platform that can easily compete with your typical large private bank, yet staying focused and client-centric and trying to avoid all the typical pitfalls of large banks,” says Leimer. “As such, our objective is relatively simple: to continue growing in a steady, healthy and profitable manner, with happy clients and highly professional and motivated staff.”

There is a myth in Asian private banking circles that local clients are more aggressive and trading-oriented than traditional European clients, who tend to be more conservative and long-term oriented.

“This stereotype is not necessarily true in our view, as many of our Asian clients are also conservative, asset allocation-driven and think long term in their investment decisions,” says Colani. “What can be said, however, is that Asian clients tend to be very well banked, which is to say that they maintain relationships with many different private banks. They tend to be very well informed and are used to—and rightly expect—very efficient and timely service from their bankers. As such, it is crucially important to provide all the relevant services out of Asia with a full understanding of the local culture, expectations, language and so on.”

This approach has also allowed LGT to buck another entrenched idea: that discretionary management doesn’t work in Asia. The bank says that its experience has been very different. Its portfolio management offering has been popular with clients and the proportion of assets under discretionary management is relatively high and growing.

There are specific reasons for this success, aside from good performance, including a portfolio management offering that is fully available locally. LGT has portfolio managers in the region who personally meet with clients to review portfolios, and not just sales people who try to sell a product that is managed far away. This provides a much higher level of transparency and engagement. Whether in Europe or Asia, managing the wealth of a royal family or a first-generation entrepreneur, the capabilities of a good private bank are the same—and the fundamental quality is stability.