The Case Of Liechtenstein Based Lgt Bank Finance Essay

This study seeks to progress an apprehension of both theoretical and empirical premises associating to the international enlargement schemes of European based bank LGT into the Australian banking sector. The treatment centres on entry-mode picks and internationalization of new ventures in Australia. This paper besides analyses recent literature stressing different manners of entry into foreign markets, it discusses and describes each manner separately such as ( JV ) partnership, amalgamations and particularly acquisitions ( M & A ; As ) or even direct investing such as ownership.

This paper examines the pick of the FDI manner of entry into the Australian market, and discusses feasible entry options sketching the pro and cons of each entry pick. It suggests that a direct investing with full ownership and control of the freshly formed endeavor may be the best option for LGT and provinces that a good planned M & A ; A option is besides peculiarly appropriate depending on LGT ‘s purposes and outlooks in this dealing.

There are treatments in respects to LGT bank ‘s competitory advantages when compared the bing participants on the Australian market, and it besides covers possible challenges when LGT will run into a foreign market with recommended schemes capable of relieving any such barriers.

The study concludes, that based on the bing grounds, international enlargement is possible for a niche participant such as LGT with strong demand for LGT ‘s merchandises and services due to savvy investors. Finally, the study will endeavor to suggest an expansionary manner of entry in consideration to LGT ‘s expansionary motivations into Australia for consideration given the significance of the competitory, cultural and regulative Australian market conditions.

Introduction defines FDI or Foreign Direct Investment as any signifier of investing that earns involvement in endeavors which function outside of the domestic district of the investor. FDIs require a concern relationship between a parent company and its foreign subordinate. Foreign direct concern relationships give rise to transnational corporations. For an investing to be regarded as an FDI, the parent house needs to hold at least 10 % of the ordinary portions of its foreign affiliates. The investing house may besides measure up for an FDI if it owns voting power in a concern endeavor operating in a foreign state.


In today ‘s fast turning universe economic system globalisation is synonymous with FDI, states have learned the possible values of FDI and presents are viing with each other ask foring FDI while offering new inducements to foreign multinationals and reasoning new trade understandings with other states to promote foreign investings, this seems like a large alteration from a few decennaries ago when FDI was seen as an invasion of foreign multinationals meant to take over local assets, another ground for this international sweep of foreign multinationals is besides that they have learned how to act in foreign civilizations and be more sensitive and compared to earlier times.

Many authoritiess have made immense attempts to domestically liberalise trade and invite FDI, by implementing new trade ordinances which promote free trade at assorted degrees through good developed models meant to back up such accords.For a state to be short listed by planetary investors at that place needs to be given consideration to two sets of variable which at the same clip are requirements for international enlargements, the first is the institutional background of a state such as the domestic investing clime which is besides linked to the 2nd one which is the state ‘s supply of economic and human resources, these will be discussed subsequently in the study.

FDI attraction background

aˆ? A foreign market demands to show itself attractive to foreign investors and for that a elusive set of institutional wants demand to be addressed:

aˆ? Economic and political stableness: it is an of import necessity for transnational investors which measure their capital investings returns over a mid to long term period.

aˆ? A stable legal concern environment which needs to be supported by strong regulative trade Torahs guaranting that foreign investings are safe and treated as domestic 1s. The state ‘s bureaucratic system needs to be corruption free and information must freely go through in order to avoid ruddy tape.

aˆ? Trade barriers such as duties must be low or sensible to promote trade and free trade must be on the authorities ‘s docket.

aˆ? The state ‘s market needs to either be affluent plenty or large plenty to be able to absorb its merchandises or services.

aˆ? The state needs to possess a well-organized communications system and be good linked to the outside universe by readily available transit agencies such as airdromes, etc, as it is really of import for a MNC to be able to pass on with its subordinate on a regular footing or send over executives to guarantee that concern tallies swimmingly.

aˆ? A state ‘s labour force must be qualified and readily available, peculiarly its white neckband, proficient and in-between direction, this is considered a existent competitory advantage by foreign MNC ‘s when constructing their international entry.

aˆ? Well organized, developed and efficient related industries normally hold particular involvement with foreign MNC ‘s guaranting that the freshly formed entity has entree to associate services and distribution channels as required in order to run into capacity and grow.

aˆ? Tax subsidies or revenue enhancement inducements such as revenue enhancement vacations form portion of a market ‘s attraction and shall be granted and form portion of a regulative attack of a state economic policies, but overall revenue enhancement subsidies shall non ever play a major portion when taking a new market and/or form portion of a state ‘s attraction for foreign investors, as MNC ‘s ever place economic profitableness in front of fiscal profitableness, financial inducements ( revenue enhancement vacations or subsidies ) have been mentioned by merely a minority of houses polled as a factor that can heighten a state ‘s attraction. The incentive issue is really wide and can non be dealt with in the model of this note. Nevertheless it might be of involvement to emphasize two major points which are formulated in a more inexplicit than expressed manner in the replies made by most of the houses surveyed. First, inducements can non be a replacement for a state ‘s deficiency of

attraction, except for investors who are seting fiscal profitableness above economic profitableness.

LGT Background information and history

Harmonizing to LGT Group, 2010, The Group is the private banking, wealth direction and plus direction supplier of the deluxe House of Liechtenstein, a state located following to Switzerland. LGT, originally known as “ The Liechtenstein Global Trust ” , is the largest household owned private wealth and plus director in Europe, wholly-owned by the Prince of Liechtenstein Foundation. LGT is headquartered in Liechtenstein with over 1,700 employees in more than 29 offices in Europe, Asia ( excepting Australia ) , the Middle East and the United States.

LGT, operates through 3 divisions:

Wealth Management – LGT Wealth Management International and LGT Private Bank provide wealth direction services to private clients

Traditional Asset Management – LGT Capital Management provides investing chances for institutional investors and private clients

Alternate Asset Management – LGT Capital Partners is an alternate investing director, with over $ 18 billion of capital invested in hedge fund and private equity investings ( LGT Group, 2010 ) .

Liechtenstein is a constitutional monarchy, Independent since 1719, whose foreign personal businesss have been handled by formidable Switzerland since merely after World War I, Liechtenstein is a bantam princedom situated between Switzerland and Austria, and the state joined the United Nations in 1990 and boasts a population of 31,000 occupants, with its capital at Vaduz.

The royals hold supreme power Inside Liechtenstein and the Prince Hans Adam II is it ‘s the swayer since 1989, “ the lone European sovereign with any existent political power. ” The royal household ‘s luck is estimated to around $ 3Billion and is administered via the Prince of Liechtenstein Foundation and the Liechtenstein Global Trust.

LGT began diversifying its merchandise scope in 1981 when Prince Franz Josef II ( who had taken the throne in 1938 engaged the services of Swedish man of affairs Christian Norgren to rede the household on its concern involvements, Norgren urged the household to spread out the concern and from so on LGT Bank focussed its attending largely on wealth and money direction.

Harmonizing to:, In 1987 LGT bought the little Menlo Park, California based James T. Rea & A ; Associates, so New York ‘s Trainer Wortham & A ; Co, a large-cap growing equity and bond director. The $ 20 million acquisition of the $ 1 billion in assets Trainer was completed in 1988, the same twelvemonth LGT picked up Menlo Park based King & A ; Stocklin, which had about $ 100 million under direction, chiefly for household trusts.

By 1989 LGT ‘s involvements besides reportedly included the London based Bank in Liechtenstein ( U.K. ) and three Frankfurt affiliates: a banking subordinate, a direction consulting house and a interest in plus director Euroinvest ( ) .

But the biggest trade came in 1989, when Norgren discovered CT Management, a esteemed, if hard currency starved, London based investing director. Founded in 1969 by Foreign & A ; Colonial Management veterans Richard Thornton and Thomas Griffin ( with endorsing from British life insurance company U.K. Provident ) , CT was an early partisan of planetary puting gaining stunningly during the Nipponese bull market of the ’70s and early ’80s. The house, which besides had a promising U.S. based common fund concern in San Francisco, went public in 1986, raising [ lbs ] 101 million ( $ 149 million ) . Then came the 1987 clang. Directors and employees took steep wage cuts, but Griffin concluded Thornton had left in 1983 that the best hope for the $ 6.4 billion in assets CT was to procure new capital ( ) .

And so, for a mere $ 168 million, the royals welcomed CT to their spread outing kingdom in March 1989. Griffin, happy to hold cashed out, quit, and the royals installed Norgren in London as CT ‘s main executive and shortly thenceforth named Peter Stevens as its deputy head executive ( ) .

Harmonizing to its web site, LGT Group reported a 35-percent bead in one-year net net income to 106 million Swiss francs ( 73 million euros, 100 million dollars ) in 2009 as the client backdowns due to the GFC ( planetary fiscal crisis ) that began a twelvemonth before dented its net incomes.

However, client assets under disposal grew 14 per centum to 89 billion Swiss francs by the terminal of 2009, mostly due to the acquisition of Dresdner Bank ‘s Swiss private banking arm in December 2009. LGT besides reported net influxs at its international subdivisions in Asia, and in neighboring Austria, Germany and Switzerland.

LGT ‘s recognition evaluations reflect its strong market capitalisation, and although the house experienced a steep bead in its capital, the bank ‘ evaluation is besides supported by changeless profitableness physique over the old ages in its operating niche market besides backed by its strong repute and loyal patronages, over the old ages LGT has experienced minimum recognition losingss and holds a high repute among other fiscal establishments.

LGT Bank has retained its first-class capitalisation by systematically increasing profitableness and returns on its investings, recent returns on assets place its profitableness at 1.41 % . LGT is bank with alone features such as seaward fiscal Centres, dedicated to its clients, established direction squad and an first-class repute among high net worth persons, harmonizing to Standard & A ; Poor.

The direction of LGT have late thought to spread out its international operations and make a presence in Australia, the determination is supported by an increasing demand for private banking/asset direction services internationally and domestically in Australia needed by progressively sophisticated investors, the enlargement is fuelled chiefly by a new section of high net worth persons ( HNWI ) and institutional investors such as big MNE ‘s and old-age pension financess. Give the houses determination to come in the Australian market, careful consideration demands to be given to which schemes to be used, hence, LGT needs to exercise cautiousness and undertake careful planning in relation to the enlargement as this could potentially hold a important negative impact on the success on its new international enlargement into Australia.

Mode of Entry Analysis

Traditionally, international enlargements by fiscal services suppliers into foreign markets consider a limited scope of entry manners, and depending on the chosen manner of entry the house may make up one’s mind on the size of its investing and committedness, this can besides hold a important impact on the result of the investing and can change projected net incomes or losingss in the long tally. Narrowing down the pick of entry manners, LGT Bank are presently sing an either a pick of JV ( joint venture ) partnership followed by a possible M & A ; A ( amalgamation and acquisition ) with a local house and /or other signifiers of Foreign Direct Investment ( FDI ) with the most prevailing penchant in puting up a new office in Australia.

Below I will briefly describe and discourse some of these possible entry manners which may be good to LGT as a manner of entry into the Australian market.

International Agents

This pick is the least expensive option and can be used as a first proving measure before come ining into either an M & A ; A, JV or puting up an independent office in Australia, in simple footings agents could be persons such as fiscal contrivers or organisations straight contracted to LGT and marketing its wealth and other fiscal services and merchandises, agents normally receive a committee on any gross revenues, they normally represent more than one organisation and hence this can make struggles of involvement in the long tally as they may favor to sell merchandises which pay more income, but at the same clip they are low cost to put up and/or support in the long term as they are reasonably much ego sufficient, running as independent concerns, they are besides low control as they work for themselves and this may besides turn out to be of a negative impact therefore for one can ne’er be certain of their overall committedness.

Strategic Alliances ( SA )

Strategic confederations are relationships between national or international companies defined by normally a simple relationship between 2 or more houses organizing portion of the same sector, these can sometimes take topographic point between rivals, i.e. The Commonwealth Bank may hold or look at selling and merchandising insurance merchandises from AMP which is besides a rival and has its ain scope of fiscal merchandises and services, such as loaning, histories old-age pension, etc, but in this instance AMP would be able to offer a merchandise otherwise non available to Commonwealth bank and therefore is good for both sides to join forces.

Basically, strategic confederations are formed between companies on an understanding footing and normally do non integrate capital spendings and are considered non-equity agreements, the companies involved remain independent, so in such a instance LGT may originate contact with an Australian local participant of reputable standing and expression at originating a product/s that the Australian company is non presently offering, this will be rather hard to accomplish at this phase as the Australian wealth industry is already leveraging on US type investments/schemes which seem good advanced.

Joint Ventures ( JV )

Quick MBA, 2007, provinces that when a fiscal establishment, and in our instance, LGT is come ining into a JV /M & A ; A understanding with a local spouse in a foreign market such as Australia, there are five common points that need to be looked upon in this type of agreement.

These scope from market entry, risk/reward sharing, engineering and joint merchandise development, and conforming from authorities ordinances to other benefits including political connexions and distribution channel entree that may depend on relationships ( Quick MBA, 2007 ) .

Joint Ventures are when two or more companies set up a new house for the exclusive intent of selling and taging the parent company ‘s merchandises and services, the best illustration to exemplify this is Open Universities Australia which is a conglobation of eight Australian universities advancing distance instruction to the Australian and international markets, this type of agreement does non halt each single university to offer its ain package of classs separately or straight.

JV ‘s involve capital spending and are a safer option as compared to puting the concern separately from the investing size facet, these types of ventures spread the hazard but one besides loses control and they own merely a proportion of the freshly formed entity, spouses besides tend to pull from each others competences to offer best merchandises and services. LGT Bank may wish to near such a company already runing within the Australian market and advance the new venture from so on, by carefully be aftering a feasible proposal of good involvement

Joint ventures are a really common manner of infiltrating a market and may look a good option for LGT ‘s current state of affairs as a mid-size company, below are other pro and cons are discussed above:

JV Advantages:

Hazard sharing and the ability to pull on spouse ‘s cognition and expertness every bit good as resources.

The transactional hazard is spread between the two spouses and the resources are more readily available.

A JV may be the lone manner of come ining a extremely regulated market.

JV Disadvantages:

Control of the new entity is shared.

If the new venture fails may be harder to reimburse capital losingss.

Possible dissensions as the proprietors will be two separate entities with possibly non indistinguishable visions.

Spouses could hold different outlooks in respects to public presentation.

Further, JV and/or M & A ; A understandings can be complimentary when:

Spouses ‘ long term ends congregate and their economical aim diverge

Spouses ‘ resources, size, and array of services offered are limited when matched against industry leaders

Spouses ‘ complement and learn from each other but limit entree to one ‘s proprietary expertness.

Other elements/issues that need careful consideration when sing entry into a JV partnership/M & A ; A as a manner of entry into a foreign market, are the distribution spread of entire ownership, distribution of control of the new entity, merchandise development to accommodate local market, CRM platforms and overall client communicating engineerings to be implemented which need to be compatible with both spouse ‘s bing communicating platforms, and local authorities ‘s future regulative guidelines.

While JV partnerships may be the more alluring to prosecute as a first option when interrupting into a foreign market they are besides considered a less expensive manner of entry, but there are a few possible issues that may originate and could finally hold a negative impact on the freshly formed entity.

Disagreements/disparities associating to investings or size thereof

Distrust in respects to each others proprietary cognition

Distribution of net incomes and wrangles over long term investing schemes

Possible lacks associated with split ownership and limited/insufficient start up resources

Possible cultural mismatches in footings of merchandises and services to be developed

Obscure footings in relation to a possible expiration of the relationship

JV Agreements frequently have conflicting force per unit areas to collaborate and finish due to the undermentioned grounds:

Strategic jussive mood: spouses desiring to maximize the overall advantages gained for the JV, but sometimes they want to maximize their ain single concerted place and separately profit from the relationship.

The freshly formed entity may endeavor to develop the parent companies shared resources to its future advantage but its laminitiss may be fearful that the freshly developed entity may interfere with parent companies in their ain markets cy direct competition in the foreseeable hereafter.

M & A ; A ( Merger and Acquisitions )

Mergers & A ; Acquisitions ( M & A ; As ) is another method that LGT Bank could see in order to spread out into Australia, this manner of entry has been proven really popular within the banking industry for a foreign bank to get a local bank in the mark state in order to firmly come in the market.

M & A ; As can be divided into four types, harmonizing to the chief motivations and rationalizations which once more need to be considered by LGT


Domestic Bank M & A ; As ;

International Bank M & A ; As ;

Domestic Conglomeration ;

International Conglomeration ( European Central Bank, 2002 )

Given the fact that the study aims to render relevant information in respects to an international enlargement I choose non to discourse the Domestic Bank and Domestic Conglomeration motivations and rationalisations as they would look unneeded in our present context.

International Bank ‘s M & A ; A ‘s involves non merely banking establishments, but besides houses which are normally located in different states. The demand to be large plenty in respects to regional or planetary markets can be one of the chief motives when sing such an enlargement, but there are other grounds such as the demand to follow their clients abroad or tap into dumbly populated parts trusting to increase sale volumes, and farther construct their trade name internationally, so, variegation and the chase of new profitable markets, through cost and gross efficiency is as of import ( Focarelli, D. & A ; Pozzolo, A.F, 2000 ) .

LGT could see doing an acquisition of a local company within the fiscal services sector in Australia such as an insurance company and solidify its entry via Financial conglobation which is besides known as a of fiscal assemblage of services runing in different sectors of the fiscal industry. By uniting banking with insurance the procedure of conglobation is formed, conglobation is made up of either domestic or international conglobation, and for the intent of this study I will merely discourse the later.

International conglobation as explained above is made up of a steadfast offering multiple merchandises or services within the same industry such as fiscal services and is normally born when an M & A ; A takes topographic point between two or more companies within the same industry which complement each others array of merchandises such as banking combined with insurance, the major inducement here is accomplishing an economic system of scope merchandise and services variegation, and cross merchandising of merchandises to each others client ‘s base, but besides to increase size and gross and market portion.

Banking M & A ; As are serve other intents excessively, such as desires to heighten soundness of their books and client bases, when unifying with larger rivals, this can besides function as a encouragement in productiveness by hoggish endorsing on their larger spouses resources and client base, an interesting illustration at a domestic degree in Australia is the recent Commonwealth Bank take over Bankwest antecedently owned byaˆ¦.which found itself hard currency strapped and forced to execute the sale due to the GFC, in this instance the Commonwealth Bank saw an chance to command a rival running its concern on really slender net income borders, Commonwealth is trusting to add this theoretical account to its ain and spread out its operations to fit Bankwest ‘s every bit good as merchandise scope to Bankwest ‘s clients.

However there is no grounds to propose that international amalgamations allow fiscal services suppliers to significantly profit from economic systems of graduated table merely because they performed the amalgamation.

Harmonizing to Dymski ( 1999 ) , suggests that M & A ; A ‘s are more desirable if bank ‘s hope to utilize their spouses capableness to increase their ain net incomes instead than trusting to accomplish an operational efficiency which may be easy achieved without the demand to unify.

Berger ( 1995 ) which suggests that “ Bankss may utilize amalgamations as a manner of seeking out market power, so as to heighten their ability to bring forth net net incomes ”


On the other manus, Foreign Direct Investment ( FDI ) is a more dearly-won manner of entry into a foreign market and at the same clip riskier, but overall it seems to be the more secure and efficient pick to undertake entry into a new market such as Australia, FDI warrants direct ownership of the new venture and hence entails 100 % power in determination devising.

Such an entry it would necessitate LGT to put considerable upfront and on-going resources to advance its services and set up itself within the Australian market, this may imply capital, expertness, forces and engineering. An FDI may besides be made by geting and bing entity that closely matches its bing services and vision, where minor transmutations may be undertaken in the short to medium term as opposed to making a new endeavor and holding to construct its trade name over many old ages.

LGT Bank may see puting up a new office in Australia, in this instance LGT will utilize the most extended signifier of engagement therefore having 100 % of the new company to be structured as a subordinate or a new entity with LGT as the stockholder, LGT may distribute the hazard of such a venture by drifting portion of the concern and offering ownership through portion allotment to single or institutional investors with themselves retaining a important figure of portions such as in the instance of Walt Disney puting up their Euro Disney operation in Europe ( discussed below ) or at least 51 % so they can retain control of the concern.

By taking this option LGT needs to put a considerable sum of capital to put up the new venture which would be spread among substructure, selling, engineering and labor purchases. This type of FDI is hazardous largely due to cultural grounds until the concern is established, but with the right selling and behavior behind the new entity every bit good as monetary value decreases in its services to appeal to the local market and present a existent good trade this can be avoided, and the best illustrations to exemplify this is the entry of Optus, and Virgin group of companies, where monetary value decreases and intelligent selling saw them set up in the Australian market.

A full ownership type of entry is really good from the position that LGT will retain control, net incomes and market portion if the entry is successful, so such an entry requires really careful planning and organizing.

Regardless of which entry option LGT Bank may take pursue as an entry manner into the Australian market they would necessitate to see a figure of schemes to market their merchandises and services, Cunningham ( 1986 ) identified five schemes that best fit international houses when come ining an new international market, they are as follows:

aˆ? Technical invention scheme – perceived and incontrovertible superior merchandises

aˆ? Product version scheme – alterations to bing merchandises to suit local civilization

aˆ? Availability and security scheme – overcome conveyance hazards by countering sensed hazards

aˆ? Low monetary value scheme – incursion monetary value and,

aˆ? Total version and conformance scheme – foreign manufacturer gives a consecutive transcript.

FDI creates chances for a foreign house reflected through an odd grade of control in the houses operations coupled with the ability to command clients and offer services straight related to their demands.

Quick MBA, 2007, discusses a comparatively recent instance survey that could function to exemplify the above construct, as in the instance of ‘Euro Disney ‘ where Walt Disney Co. faced the challenge of constructing a subject park in Europe, and antecedently Disney ‘s manner of entry into foreign markets has been by licencing understandings such as in Japan. However, Disney chose FDI as an entry manner in relation to its European subject park, having 49 % with the staying 51 % held publically, this manner seems really unafraid where Walt Disney Co ‘ holds control of the new venture with a really capital injection but at the same clip they spread the hazard involved by leting stockholders to have a piece of the new endeavor in returns for a hard currency injection.

Besides the manner of entry, another of import component in Disney ‘s determination was precisely where in Europe to turn up its park. There are many factors involved in the site choice determination, and a company carefully must specify and measure the standards for taking such a location. These issues associating to Euro Disney ‘s enlargement illustrate that even if a company has been successful in the yesteryear, hereafter success is non guaranteed, particularly when traveling into a different state and civilization which does non needfully embraces that of its parent company. Therefore appropriate accommodations for national, customary, gustatory sensation and cultural differences should ever be made ( Quick MBA, 2007 ) .

Below is a speedy catch and comparing of different foreign market entry manners sketching both the pros and cons associated with such an entry.

Comparison of Foreign Market Entry Modes


Conditionss Favoring this Manner



Joint Ventures

Import Barriers

Large cultural spread

High Gross saless Potential

Political Hazard

Government limitations on foreign ownership

Local company can supply accomplishments, resources, distribution web, trade name name etc

Overcomes ownership and cultural spreads

Combines resources of 2 companies

Potential for larning

Viewed as insider

Less investing required

Difficult to pull off

Dilution of control

Greater hazard involved as compared to licensing/exporting

Knowledge spillages

Partner may go a rival

Foreign Direct Investment

Import Barriers

Relatively little cultural spreads

Assetss can non be reasonably priced

Low political hazard

Greater cognition of local market

Can break use specialized accomplishments

Minimises knowledge spill over

Can be viewed as an insider

Higher hazard than other manners

Requires more resources and committedness

May be hard to pull off the local resources.

( Quick MBA, 2007 )

Harmonizing to Zhao, X and Decker, R, 2004, which quote Wind and Perlmutter ( 1977 ) argued that the pick of market entry manner has a great impact on the overall international operations of a concern and can be regarded as a “ frontier issue ” in international selling. Root ( 1994 ) claimed that the pick of market entry manner is one of the most critical strategic determinations for companies wishing to spread out internationally, such as LGT Bank. Choosing the right entry manner has the possible to impact future determinations and public presentation in foreign markets, and it entails a attendant degree of resource.


Above theories and illustrations backed by empirical grounds have prompted me to organize the sentiment that LGT Bank ‘s best entry manner into a new international market such as Australia will be best achieved either through the M & A ; A or Ownership options, as these seem to suit best with the current state of affairs of LGT Bank, their fiscal public presentation seems solid and their competitory advantages seem to suit good with the local civilization and client demand, in retrospect each of the two options have their advantages every bit good as disadvantages and deductions of which I stated above.

To sum up, I would urge that LGT Bank assess their current demand ad motive to come in the Australian market every bit good as what they truly wish to accomplish or pull out by doing such a move, and so based on these consequences they need to make up one’s mind which option fits best with their hereafter programs and schemes.

In short out of the two proposed options the M & A ; A alternate airss first-class benefits to a company such as LGT Bank due to a warm entry where they will take over an established participant in the domestic Australian market with a purportedly established trade name and culturally accepted as an Australian company, this option will though come at a well high monetary value due to this being an straight-out purchase, where as on the other manus constructing their concern from land up they will foremost put the financess as needed and construct their trade name and credibleness over clip with lesser of a capital spending as there is no good will to buy, this option offers LGT Bank the chance to choose location, technological platforms, labor, and the type of patronage they wish to market to as opposed to the M & A ; A option, I am besides of the sentiment that with the right merchandises to suit the Australian civilization and the right selling mix ( such as in the instance of Optus and Virgin entries mentioned above ) LGT Bank could thrive and take advantage of the ownership option which seems less hazardous when compared to buying an established company.