BIL hasn't been able to generate the scale in Singapore that a European private banking group might have sought, so it is shutting this business as part of a strategic re-focus, it says.

Banque Internationale à Luxembourg is shutting its operations in Singapore for strategic reasons, it said, arguing that the closure is part of its plans as laid out under its “BIL2020” programme of changes. The bank's move has echoes of Societe Generale's decision to sell its Asian private bank last year.

“After many years of activities in the country, closing our office in Singapore was a difficult but necessary business decision, as significant scale is required to sustainably operate in this region, which we do not have,” Hugues Delcourt, BIL’s chief executive, said in a statement late yesterday.

BIL’s Singapore operation started in 1982 and now employs 23 people, out of a global headcount of more than 2,000, thereby representing a tiny fraction of the total.

“Despite the potential that Asia represents in terms of private banking markets, this decision was adopted after reviewing BIL group’s international presence in light of the new strategic framework and after completion of necessary procedures and internal communication to impacted staff,” the bank said.

The statement from the firm did not say what will happen to the Singapore operation or whether any of the assets managed from the city will be sold or managed in other locations. This publication is in contact with the bank seeking further details.

The closure is an example of how the failure to reach critical mass of business has led banks to abandon the Asia market - or reduce the level of business involvement in it - despite it being sometimes breathlessly touted as the fastest-growing wealth market. A year ago, France’s Societe Generale sold its Singapore-headquartered private bank to DBS Group, although SocGen retains a link to Asia by a reciprocal arrangement of collaboration with DBS going forward. Royal Bank of Scotland has recently sold part of its wealth operation, which has offices in Singapore, to Geneva-headquartered Union Bancaire Privée.

“As we carefully reviewed our priorities and target markets, we decided to increase our wealth management activities in other regions where, we believe, we can be of greater relevance to our clients and to the market in general, ensuring long-term sustainable growth for the bank. We thank our team in Singapore, as well as the regulator and other participants in Singapore’s thriving financial sector, for their excellent collaboration over the past years,” Delcourt said.

In late April, BIL reported pre-tax income of €164 million ($178 million) for 2014, a year-on-year gain of 17.4 per cent.

The BIL2020 review, as revealed in late April, has “confirmed the importance of wealth management for BIL and has laid the path for the bank’s private banking activities to concentrate on a number of key markets, notably in Europe and the Middle East,” the bank says.
 
“This enhanced focus will allow BIL to achieve greater relevance in key markets and to further improve its service to its clients through perfectly-suited products and services. In this context, BIL is continuously reviewing the international footprint that it needs to serve its clients across these key markets. This has led to the recent opening of a branch in Dubai and the announcement of the reinforcement of its presence in Switzerland through the acquisition of KBL Switzerland,” it said.

BIL is, it says, Luxembourg’s oldest bank, having been founded in 1856. It is present in Luxembourg, Switzerland (since 1984), Denmark (since 2000) and in the Middle East (since 2005).