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VP Bank has closed its representative office in Moscow, according to information obtained by finews.com. What does the closure have to do with the lawsuits the company faces in Russia?

VP Bank has closed its offices on the fifth floor of the Moscow World Trade Center. The Russian bureau, which the bank had opened in 2005, was shut in November, the Liechtenstein-based bank told finews.com.

The Moscow «Rep Office» of the Liechtenstein bank legally speaking was a daughter of its Swiss unit and has had an interesting few years on the Russian financial circuit. The end may not have been entirely the bank's choice alone, finews.com has learned: the activities of the bank in Russia have been the source of legal disputes for the past three years, with claimants demanding the payment of a total of $25 million.

Dealing With Wealthy Russians

The dispute has been on an escalation trajectory – and a settlement seems not imminent. VP Bank, which poached Russia experts from Falcon Private Bank und the former Notenstein La Roche private bank in recent months, was left dealing with its rich Russian clientele without the help of the Moscow bureau.

The bank proclaims not have been bothered too much. «The rep office in Moscow isn't relevant for the Russia business of VP Bank. Russia remains a core target market for VP Bank Group and will continue to be mainly catered to by the Zurich branch,» a spokesperson said. The closure of the offices in Moscow came solely due to efficiency considerations and in a bid to reduce complexity and costs. There was «no connection whatsoever» between the closure and the ongoing legal case, the bank said.

Closure as a Catastrophe

Insiders among Switzerland's «Russian bankers» think differently. They say the closure of the onshore office is a catastrophe. Not only because the withdrawal had already made the round among rivals and clients but also because the Russians will want to carry through their demands against VP Bank in Liechtenstein and Switzerland.

$25 million may be small fry compared with fines issued against banks in the recent past. But for the Swiss unit of VP Bank it would be a significant amount nevertheless. The group had a profit of about 66 million Swiss francs ($66 million) in 2017.

Deposit Guarantee Agency Claims

The Russian demands have been listed cleanly in VP Bank's annual report ever since the end of 2016. They include two payments of $10 and $15 million claimed by the Russian agency for deposit guarantee after the failure of two Russian banks.

VP Bank writes that the deposit guarantee agency claimed the money deposited by third party in connection with the loans to foreign companies shouldn't have been used free-hand shortly before the banking licenses had been revoked and the companies put in administration.

Virgin Island Link

In the case of the failed Intrust Bank, a Russian lawfirm wrote a protocol listing the case against the «Swiss private bank». VP Bank in Switzerland had issue a credit worth $10 million to an unknown firm on Tortola (Virgin Islands), for which the bank was fully liable.

Days before the Russian central bank had revoked the license of Intrust Bank in September 2014, the Swiss unit of VP Bank garnished the Russian company in favor of the Tortola-based firm. That way, creditors and regulator were impaired, the law firm said.

Tricky «Fiduciary Loans»