It has been a tumultuous year for Liechtenstein-based VP Bank with profit pressures, loss of multiple senior personnel and the latest closure of its Hong Kong office. Is a turnaround in sight?

Last week, VP Bank saw the resignations of Pamela Phua and Heline Lam, its CEO and chief operating officer (COO) for Asia, respectively, followed by the planned closure of its Hong Kong office. A difference in expectations was cited as the reason for the exit of the two private banking veterans.

This marks yet another hit to the Liechtenstein-based bank which has faced unending turmoil in the last year or so.

Chairman’s Exit

In September 2023, Thomas Meier stepped down as chairman of VP Bank and decided not to stand for reelection after holding the role for three years. No reason was given though the bank said it regretted the decision.  

The move followed VP Bank’s mid-year results announced in August 2023 which may have been a sign of things to come. While profit rose 19 percent year-on-year to 25.5 million Swiss francs ($29.5 million), the bank only managed to attract 83.1 million francs of net new money, down 92.1 percent, citing Russia-linked outflows as the main headwind.

Profit Warning

Momentum would continue to slow. At the end of 2023, VP Bank’s profit increased 10.1 percent to 44.2 million francs. Client assets shrunk 2.3 percent to 51 billion francs as net new money plummeted 97.4 percent to just 27.3 million francs. 

And in May 2024, the bank issued an interim management statement flagging a 50 percent profit drop in the first four months of the year, citing lower interest income, while net new money inflow stood at 1 percent on an annualized basis.

Personnel Loss

The bank has also suffered a series of losses in senior talent. In addition to Meier, Phua (who had just taken on an expanded role in May due to the exit of Singapore branch head Johnny Heng) and Lam, VP Bank saw the surprise departure of global CEO Paul Arni in May. 

Global COO Urs Monstein has taken over as interim CEO with a successor search underway. 

Chinese Troubles

Business troubles extend to external parties. In late 2023, there were problems linked to Chinese strategic partner, Hywin Holdings, in which VP Bank acquired a 3.4 percent stake in 2021. Hywin's Shanghai-based unit, Hywin Wealth, faced pressure from missed payments from real estate-related investment products it distributed, which led to an internal probe.

From a high of $9.9 at its debut, Hywin's Nasdaq-listed stock was trading above $7 for most of late 2023 before plunging below $1.5 by early 2024. In mid-2024, Hywin said it would exit the wealth and asset management business as well as rename the company to Santech Holdings, in line with a shift in focus towards the technology sector. The firm is now trading at $0.23 per share. 

Incoming Measures 

According to its May interim management statement, VP Bank has been focused on lowering costs in the longer term and reducing complexity with «a corresponding set of measures» to be presented in its upcoming mid-year results. Information about intensified efforts to accelerate growth in strategically relevant areas will also be unveiled. 

«As a strong partner for intermediaries, a focused private bank and a universal bank in Liechtenstein, VP Bank is optimally positioned for profitable growth,» said current chairman Stephan Zimmermann. «Together with the Board of Directors and the Executive Board, I am continuing to make every effort to exploit this potential by applying the necessary measures with respect to efficiency and growth.»

VP Bank will announce its first-half financial results for 2024 tomorrow (August 20).