VP Bank (Luxembourg) SA Head of Private Banking and Managing Director Christoph Müller says there are opportunities for expansion amid consolidation in the Private Banking sector, and digital technology is a critical complement to the sector’s traditional human engagement.

How is Private Banking evolving in Luxembourg?

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The growth in the sector’s assets to €361bn in 2016 demonstrates that the Private Banking industry has been able to reinvent itself, adapting to the regulatory shift toward tax transparency and successfully targeting a global market. Today we attract international, mobile HNWI and UHNWI clients that recognise the benefits of Luxembourg as an EU banking hub. Client advisers have switched from the wine-and-dine stereotype to a segmented and holistic client approach. The sector needs mandatory certification of client-facing private bankers, and agile, well-educated and well-connected advisers. Unfortunately, Luxembourg still has more farmers than hunters – but that will change. Meanwhile, the number of players continues to decline as a result of ultra-low interest rates, pressure on commission models, risk management and compliance costs. In the future we will see more branches and fewer subsidiaries, but access to the EU financial services passport still makes the Grand Duchy a location of choice for non-EU banks, as the Swiss have demonstrated in recent years. The ecosystem of regulators, banks, fund firms, insurers, auditors and lawyers gives Luxembourg a key foundation for future growth.

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"Today, International Private Banking combines the traditional asset classes with alternative investments."

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How is VP Bank adapting to this changing environment?

 

As we focus on clients in Europe and certain Asian markets, the consolidation of the Private Banking market here and across the EU will help us hire individual relationship managers or entire teams. VP Bank has a target of recruiting 25 client advisors annually across our locations within three years and by the end of 2019. We are looking for international, well connected advisors, but also talented young private bankers that understand Luxembourg and clients increasing desire to look beyond traditional asset classes to alternative investments, and know how to use modern technology to improve the client experience. Our VP Fund Solutions business provides a one-stop shop for establishing private label investment funds for our wealthy family clients – a fantastic opportunity for cross-selling within the group. We also add value through our digital platform, which complements traditional wealth management services and human engagement. VP Bank launched an updated e-banking system for private clients and intermediaries in May, featuring a user-friendly design but meeting the most stringent security requirements.

 

How do you see the outlook for the future?

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In November, we will move to our new offices on the Kirchberg, because the growth of our workforce has been so strong, we are reaching the limits of our existing premises. In addition, we are keen to move into a more modern, open-plan working environment. Our new offices have been rented on a long-term contract and will provide more space than we currently need, which reflects our growth ambitions and our intention to take an active role in the consolidation process in what is the biggest Private Banking hub in the European Union. Growth will remain a key focus this year. VP Bank intends to pursue the continued expansion of its international business and further development of its digital services. For us, growth entails strengthening the quality of client services, expanding our experienced teams, making acquisitions and achieving excellent results that signal our strategic focus is on target.