LGT’s Prince Max looks east for future growth
By Yuri Bender
Success in Asia is hard to come by for private banks but LGT’s sustained assault on these markets is paying dividends.
The major realisation for Prince Max von und ze Liechtenstein when devising long-term strategy for LGT, the family-owned portfolio management business of which he is chairman, was that ultimately, impressive long-term growth will come from clients in Asia, not Europe.
“I’m investing in Asia because we like the broader macro dynamics, with more growth,” says the suave European royal, visibly at ease with both clients and staff in one of his offices close to London’s Piccadilly Circus.
“Europe still has an incredibly rich set of competences and traditions that it can leverage and beautiful settings, cultural sensitivity and finesse that remains unparalleled.”
But while fuelling tourism, these qualities do not translate into his key goal for target markets: “incredible” economic growth.
“We have been living on our historical strengths for too long,” he says of Europe’s once irrepressible finance industry. “We have not been future-oriented enough to develop capabilities we can monetise well into the future.”
Asked which financial hubs will prove most successful in future, Prince Max barely gives London, Zurich and Luxembourg – natural habitats of Europe’s blue-blooded wealthy families – a mention.
Instead, his discussions with London-based families show many leaving for Singapore and Dubai, due to tax concerns and perceptions that UK authorities lack ambition and purpose.
“Reasonably liberal melting pots have always done well in history,” says the LGT chairman, considering the Asian trajectory of his business. “They attract folks that might be laying low in other jurisdictions. They go there, come together, have a good time, and the food is good.”
He is also conscious of financial centres’ fragility. “Singapore is heavily influenced by what’s happening in China and globally,” he says, commenting on the the Lion City, where LGT has invested heavily. “Like Liechtenstein, Singapore is a tiny country, highly dependent on open markets and a well-functioning economic and political system.”
Success in Asia, he believes, depends on engaging with the next generation of investors, participating in ongoing transfer of assets shaping the region’s family-owned business backdrop.
“From a family governance and long-term asset allocation perspective, Asian families look at examples where they can potentially learn something, and we’re an obvious one for them,” he says, referring to his own family’s 26 successful cross-generational handovers.
Dates and deals
2019 Acquisition of Validus Wealth in India (now LGT Wealth India)
2020 Acquisition of the wealth management business of UBS Europe SE in Austria
2021 Acquisition of Crestone Wealth Management in Australia (now LGT Crestone)
2023 Acquisition of discretionary fund management business of abrdn in the UK
Generation game
At LGT, these generational transitions have been challenging. “My mother was most concerned about whom I would marry, because getting the next generation right starts with who you team up with,” he recalls.
His mother, from the House of Kinsky, a prominent clan of Bohemian nobles dating back to the 1200s, understood well the concept of family. Her practical approach has since inspired the LGT Next Generation Academies, where younger investors prepare for family transition.
As the first European royal to marry a partner of predominantly African descent – Panamanian-American fashion designer Angela Brown – back in 2000, Prince Max’s choice of partner generated more than a little controversy within his extended family. Although his immediate relatives were won over “with her many qualities”, in some more conservative reaches of the family – which is a large one – “not everybody applauded”, he recalls.
“Values play a key role in picking the right person to form your family with,” he says. “The main concern of my mother was a highly rational one.”
A rational approach was also crucial to define LGT’s change in direction. “We clearly had the conviction that we were a bit subscale,” he says, discussing the dramatic shift in strategy which triggered tripling of managed assets to more than SFr356bn ($410bn) over the last 10 years.
“Private banking had become fragmented. It was clear it would consolidate further and even clearer that to be too small could threaten your existence,” says Prince Max, sharing his family’s business philosophy.
“We saw the urgency to grow, and felt that if you do that the right way, it’s going to translate into a more robust, better-quality business, that will generate good rewards for all stakeholders. We were quite keen on getting this right,” he says with a hint of understatement.
This meant looking well beyond the bank’s home market. “We needed to grow internationally and what we got right is the geographic dimension, pushing hard into Asia, our fastest growing territory.”
China, Asia’s main growth engine, has many problems to tackle. “Centralisation of power has not resulted in better decision making over the challenging last seven or eight years, and changes in the overall system of governance have not been good for supporting entrepreneurial activities,” reflects Prince Max. “We see some great successes in China. But overall, the dynamics have been very, very difficult.”
Yet unlike many family owned businesses, which have divested from China, he sees positive reasons for backing Beijing long-term. “China is being rewarded for foresight to see a broad clean energy transformation, recognising electrification is going to be a critical element” of a “long-term” and “intelligent” industrial policy. Family offices are expected to return once they see concerns around governance, mounting over the last decade, being addressed and reversed.
Strategic calls
LGT’s story around geographical re-orientation goes back two decades, with a major strategic decision to pull back from a German market, once central to the growth plan, increasingly mired in awkward, complex and expensive regulatory pressures.
He vividly describes how the German business ended up, after the global financial crisis of 2008, caught between two forces: accelerating costs of infrastructure, combined with regulatory pushback against foreign private banks, which hit LGT “particularly hard”.
These headwinds left the Prince with two options. “Either we buy the right business and get to a much bigger size quickly, or we divest and focus our efforts on markets where we see opportunities in a better light.”
After a planned acquisition of BHF Bank fell through, he and his advisers chose the second. They exited Germany and started a renewed assault on Asia, over a much longer timeframe than rival players. “Out of probably 2000 European banks, there are only a handful which succeeded in Asia, and we are one of them,” he says proudly, demonstrating his keenly competitive nature, seen on both Alpine ski slopes and tennis courts. LGT re-entered Germany in 2022.
The bank is now “number six” for market share in Asia, says Prince Max, with this key “geographical dimension” combined with an investment call on investment in private markets.
“Private equity has generated the highest returns over the last 30 years, which has been very rewarding for all investment managers who built a skilful presence,” he says, drawing attention to LGT’s diversified private equity strategies, which have garnered assets of €60bn ($65bn).
This include the €5.5bn Lightrock fund concentrating on sectors and companies with strong impact on environment and society, which he terms “a bit of a speedboat on the investment management side”.
As well as investment prowess, he highlights “culture”, bringing over the “right people” when identifying and acquiring new businesses and convincing them they are joining a happy ship.
Most clients, who invest with several different banks in the market, start asking advisers, with whom they intend to have a relationship, about culture at their banks – including employee turnover, satisfaction and consistency of business strategy.
“They eat and drink with them and ask: ‘How do you like it at LGT? Is it better there than where you worked before?’ We have built that culture, which is distinct and served us well in terms of overall happiness of people who work for the organisation. That has been a critical factor for acquisitions and transfers well to our clients.”
Clever aquisitions have “beefed up scale without having to cosy up to share market vagaries”, says Ray Soudah, founder of Zurich-based strategic consultancy MilleniumAssociates. “We have to hope LGT will not become too large and forget its unique and privileged circumstances and stay focused.”
