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We can adapt quickly

Membership in the European Economic Area (EEA) grants Liechtenstein investments funds direct entry into the EU Single Market. Liechtenstein began its tax compliance strategy before Switzerland. In an interview with Steffen Klatt the President of the Bankers Association, Adolf Real, explains why this reorientation has been painful but necessary.

Liechtenstein began its tax compliance strategy before Switzerland. This reorientation has been painful but necessary, says Adolf Real, President of the Bankers Association. And yet client confidence in the financial centre is great. Membership in the European Economic Area (EEA) grants Liechtenstein investments funds direct entry into the EU Single Market.

Interview: Steffen Klatt

All three large banks experienced a sharp drop in profits in the past year. Is this a temporary setback or the beginning of the decline of Liechtenstein's financial centre?

Adolf Real: The present decline in profits is mainly the result of the difficult markets. The overall situation of the financial centre is very challenging because of the transformation. Everyone is aware of this. Nevertheless, the inflows of new money demonstrate that Liechtenstein banks are still well positioned and attractive. Despite the turbulent markets, confidence in Liechtenstein banks remains high.


We have had a solid tradition in the area of asset management for many years now. We have know-how and we have a corresponding network. The banks are known for their good service. By implementing the strategic approach to international cooperation, legal certainty has also increased. Treaties with different countries create clarity and trust.

Do clients still come from the same target markets?

The regions that Liechtenstein banks serve have hardly changed. Several banks have also gone onshore to offer services where clients either live or work. This shows that growth can even be generated overseas.

The traditional target markets in Western Europe will likely not generate the same growth as before. Banking secrecy in tax matters is receding. Can the banks to continue to prosper?

There are several reasons why someone may transfer a portion of their assets overseas, even if they are declared. It's a matter of protecting one's assets. This can be an issue because of family, competition or confidence in their own government.

How interesting are the other markets for Liechtenstein, especially emerging market economies?

Liechtenstein banks have become very strongly diversified by now. In addition to the German-speaking world, we have dealt with eastern European countries in the last years. Some of the banks are in the Middle and Far East, too, either physically or with representatives in the field. The growth potential in these emerging markets is greater than in Europe – and the growth rate several times higher, too.

Does the asset management sector in Liechtenstein need new products and services?

Asset management changes insofar as the needs of the clients change. What is important is that we have the necessary specialists in Liechtenstein for this, and we can continue to grow stronger. This is a reason why we promote relaxing the immigration policy. I assume that our country will have to rely on bringing in added-value activities in the future. And naturally, we must be innovative.

Liechtenstein increasingly positions itself as an investment fund centre. Has this been successful?

The investment fund centre first emerged in 1996; until then there was no modern law governing investment undertakings. Investment funds now have managed assets in the amount of 36 billion Swiss francs. By implementing the EU Directives – UCITS (EU Directive on Undertakings for Collective Investment in Transferable Securities, stk) and now AIFM (EU Directive on Alternative Investment Fund Managers, stk) – we have become an attractive market player in the middle of Europe. All of our investment funds are automatically granted a European passport. And as a result of market research, we are convinced that there is an enormous potential in this, too.

That means that thanks to the EEA, Liechtenstein has an advantage over Switzerland's investment fund centre.

As a result of EEA membership, we have a good starting position generally with respect to market entry into the European Economic Area. In terms of global competition, this is an advantage.

Which direction should the investment fund centre go into in order to better realise its full potential?

We are in the process of reviewing the new AIFM law, which we believe offers growth potential in alternative investments administration. We also see opportunities in connection with international pension funds. We already implemented the relevant EU Directive back in 2007, which is why Liechtenstein is able to offer pension funds to multinational companies, where the pooling of assets and risks can be offered as a summary of original activities from pension funds in different countries.

What roles do the LIFE Climate Foundation and the Microfinance Initiative play in the financial centre?

We see the potential for us to fill a niche with the regard to sustainability in Liechtenstein. For instance, this may relate to impact investing, that is investments in social projects. With the LIFE Climate Foundation and the Microfinance Initiative Liechtenstein, we have brought together other associations and the government to deal with a subject matter that has increasingly gained importance among the public.

Is sustainability a niche for you or does it have the potential to become a more substantial business?

It is a mosaic stone in the repositioning of the banking industry. Sustainability is likely to gain in importance as a business in the future. But in the short term we shouldn't have too high expectations because this is also a mental process for clients, too.

What role does the university with its Liechtenstein Congress play in this?

You are referring to LISDAR (Liechtenstein Congress on Sustainable Development and Responsible Investing, stk). We regard it as a marketing instrument to position Liechtenstein in the context of sustainability. If highly regarded experts attend such congresses and events in Liechtenstein, this once more reflects our credibility and attractiveness. This is why every activity that shows the various facets of the financial centre is a step forward.

When Liechtenstein began to reorient its financial centre the outcome was still uncertain. Has the strategy for the new financial centre proven itself?

The decision was correct and irreversible. We have to better explain to potential clients, who are tax compliant, that we are a location which has many advantages in Europe. It is important that this new direction be supported by all. With the Roadmap Financial Centre 2015, we have identified numerous areas where we can take action to make the future more secure in the long term.

Adolf Real, 1954, is President of the Liechtenstein Bankers Association. From 1998 to 2008, he was also Chairperson of VP Bank. Real studied agricultural economics in Zurich and business administration in St. Gallen.