U.S. deal vital for banks, Liechtenstein prince says

By Lisa Jucca

VADUZ, Liechtenstein (Reuters) - A landmark deal signed with Washington this week will allow Liechtenstein banks to prosper by accessing U.S. financial markets even if it ends bank secrecy for tax evasion, Prince Max of Liechtenstein said.

"For Liechtenstein banks and for Liechtenstein as a financial center it is vital that we have access to U.S. securities and to the U.S. financial system," Prince Max, who runs Liechtenstein's biggest bank, LGT, told Reuters.

"The U.S. wealth management market has never been a market that we have actively pursued with a dedicated effort. For us it is much more important that we have access to the U.S. financial system."

Liechtenstein, which has used its strict bank secrecy rules to lure about $165 billion of assets, agreed on Monday to share client data in clear cases of tax evasion.

Experts have said the deal with Washington may spur Switzerland, which is under pressure from a U.S. tax fraud investigation into services offered by UBS to its many wealthy American clients, to make more concessions.

Liechtenstein -- still on a black list of uncooperative financial centers drafted by the Organization for Economic Co-Operation and Development -- has also been under pressure in Europe to relinquish its strict bank secrecy rules.

INVEST LIKE THE PRINCE

LGT, which manages the prince's family's money alongside bank clients' money, was last year at the center of a data theft scandal, which saw Germany paying a former employee to access bank client information.

Now the bank is keen to move on and expand abroad.

"In wealth management, we will continue to build up on-shore platforms in our core European markets: Germany, Austria and Switzerland," the prince said.

Prince Max said LGT, which has been pursuing a conservative investment strategy, will end the year in good shape despite having faced the double challenge of tackling the data theft and the market turmoil.

"We will finish this year with a Tier 1 ratio of 20 percent and solid earnings, which, in the current environment, is pretty good," the banker said.

He said bank secrecy was not doomed, despite increasing pressure from Europe and the United States, and would remain a useful tool for bank clients in turbulent regions of the world.

"The world has had the benefit, during more stormy times than today, to have some safe havens," Prince Max said.

"It obviously depends a lot on how worried, how unhappy you are about the jurisdiction you live in. If you live in a highly volatile and unstable country it is very rational for people to address this risk."

(Editing by Andrew Macdonald)