A Chinese finance firm has wrapped up a deal to buy a private bank in Liechtenstein. It is the most recent of a spate of Chinese deals in Europe's finance hubs. What is the attraction?
Hong Kong's Mason Group has cemented its purchase of Raiffeisen Private Bank in Liechtenstein, the two banks said in a statement. The Vaduz-based private bank's assets stood at more than one billion Swiss francs ($1.04 billion) in October, when the deal was first disclosed.
Raiffeisen has clients from Germany, Austria, Spain, Liechtenstein, Russia and Switzerland, including external asset managers. It is the latest European finance firm to go to a Chinese buyer. Germany has been the largest recipient of Chinese foreign direct investment thus far, but several finance deals have made waves. The move follows a glut of Chinese money flowing into Europe, including conglomerate HNA's big bet on Deutsche Bank as well as Fosun's minority stake in Portuguese bank Millennium BCP.
Chinese Crackdown
The most recent deal is China’s Legend Holdings purchase of Banque Internationale du Luxembourg (BIL), last autumn – the largest Chinese finance deal in Europe to date. Last April, Shanghai-based Hywin bought U.K. boutique Azure Wealth, while Chinese luxury firm Citychamp bought Liechtenstein's Bendura Bank two years ago.
The European banking sector's profitability is notoriously low – so what is attracting Chinese firms? Priority number one is getting money outside the purview of increasing capital controls in China. Finance has until now enjoyed looser rules governing capital flight.
The acquisitions come as China, fretting over a huge backlog of debt, intensifies scrutiny of exactly these types of deals. Two months ago, the Chinese government annexed Anbang, an insurance conglomerate. Its founder and erstwhile Chairman Wu Xiaohui is standing trial on fraud charges.
Bridge-Building
The fate of Anbang is a warning signal to Chinese firms and their voracious overseas appetites. While large deals such as those carried out by Anbang and HNA have grabbed headlines, the smaller deals in Liechtenstein and Luxembourg tell a slightly more nuanced story.
Raiffeisen's buyer, Mason, said it wants to build a bridge between Liechtenstein and Asia. «With our international partner network, access to Asian and European markets, and planned investments, we will significantly strengthen the market standing of the bank,» incoming Chairman Alex Ko said. Unlike Switzerland, the principality of Liechtenstein is part of the European market.
Strategic as Well as Financial in Nature
The deal between Legend, which owns Lenovo, and BIL is likewise strategic as well as financial in nature: the new Chinese owner wants to diversify outside of computing, as well as build the bank into an international banking brand out of Luxembourg.
