8 October 2020

A family-owned Bank: an asset that inspires confidence5 min read

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For strategic reasons, the Frick family retains a majority stake in Bank Frick. Statements by clients and employees have demonstrated to us that it is advantageous if the Bank remains in the ownership of the Frick family, as it creates a sense of security as well as clear responsibilities, and bolsters trust among employees, clients and various partners in the Bank.

Specific positioning

When people talk about banks, the first thing that usually comes up is the strategy of the bank itself. In what area does it want to operate? Is it tech-savvy? Is it better positioned for asset management? Is it a classic private bank or a transaction bank? Does it want to serve the mass market or is it geared towards financial intermediaries? Bank Frick has clear answers here. We want to offer technically sophisticated, modular solutions to financial intermediaries. We have thus positioned ourselves in a very specific manner in the banking market.

Family means sustainability

But what do the Bank owners want? There would be a wide range of possible approaches in this case as well. As far as the Bank’s strategy is concerned, it goes without saying that it also needs the support of the owners, as the Bank’s strategy has an impact on profits, the timing of profits and the extent to which the Bank can be sold. Since Bank Frick is a Bank in family ownership and the family is also involved in its management, this aspect certainly plays a role.

The Kuno Frick Family Foundation, and thus the Frick family behind it, has always emphasised that Bank Frick should plan and operate in a sustainable manner. In return, it has always been accepted that considerable investments and expenses were made in adapting and implementing the current strategy, which then led to reduced profits for three years. We definitely show a preference for sustainable and stable development over turning a quick profit.

With family-managed and family-owned businesses, the question also arises time and again: Is it to stay this way permanently, or does the family want to cash in at some point? The family’s stance was and is quite clear: We believe that Bank Frick as such is a very good investment that generates profits on a sustainable basis. It is much better if profits can be paid out again and again over the years through dividends than if large sums are suddenly generated at a single point in time through a sale.

In addition, it is clear that the family is also prepared to take on management responsibilities for the foreseeable future – whether the next generation will also want to do this remains to be seen.

NET1 UEPS almost acquires 70%

As is well known, in 2015 we were of the opinion that we needed international partners if the Bank was to continue its path of steady growth. With NET1 UEPS, it was surprisingly quickly the case that we found a partner that was an excellent match for us due to its activities in the area of fintech and payment transactions. For this reason, Net1 initially acquired 30% of the shares in 2017, along with an additional 5% in 2018 – with an option to acquire a further 35%, which Net1 then chose in October 2019.

Still in control

The Kuno Frick Family Foundation was therefore prepared to give up its majority stake – but not control – in the medium term. Through appropriate shareholder agreements, the Kuno Frick Family Foundation would also have been significantly involved for several years beyond the sale of its majority stake.

The foundation would have continued to provide the Chairman of the Board of Directors and a Board of Directors; any strategy adjustment and major decisions could only have been made with the agreement of the foundation’s representatives on the Board of Directors. However, shortly before completion of the planned sale in March 2020, Net1 decided to fundamentally rethink its strategy and the majority stake in Bank Frick remained in the hands of the Kuno Frick Family Foundation.

Bank Frick stays family-owned

So what happens next? We have analysed the situation and came to the conclusion that we can continue to develop and grow in a stable manner even without a strong majority partner from the outside. In addition, the response from clients and employees has shown us that it is advantageous for the Frick family to retain ownership of the Bank.

Frankly speaking, we were surprised at how much importance clients attach to the fact that the Kuno Frick Family Foundation, and the family behind it, remains responsible for Bank ownership. It represents both an honour and a duty. The signal to clients that our trusted family from Balzers stands behind the company is obviously something that adds value in itself. It creates a sense of security and clear responsibilities and strengthens our stakeholders’ trust in the Bank.

Taking the next step

There are therefore no plans to sell the majority stake in Bank Frick. We want to continue to work with operational partners, and even more so with strategic partners. However, we do not believe that this should be accompanied by a change in the shareholder majority.

The progress the Bank itself has made also speaks for this. We have succeeded in taking our technology to a new level and in hiring many highly qualified people. At the same time, it was also possible to maintain profit at an average level of roughly CHF 3 million despite a massive increase in expenditure.

We need to set substantially increasing profits as our goal for the coming years. However, the fact that we were able to maintain profits at this level despite huge investments and the establishment of structures gives us the confidence that we can continue to grow and develop under our own power.

Open for minority shareholders

The ownership strategy of the Kuno Frick Family Foundation is therefore quite simple: the Kuno Frick Family Foundation retains its majority stake, fully supports the current Bank strategy and remains open to partners who are willing to participate in minority shareholdings.

Author(s)

Dr. Mario Frick

Dr Mario Frick has, since 2008, been Chairman of the Board of Directors of the independent Liechtenstein bank run by the Frick family. Mario Frick is a lawyer, with his own law firm, and co-owner of a trust company. He was Prime Minister of the Principality of Liechtenstein from 1993 to 2001, and President of the Liechtenstein Chamber of Lawyers from 2005 to 2014.

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