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* Deal for 2.5 bln Sfr in assets from private bank, fund arm
* HSBC Trinkaus majority-owned by London-headquartered HSBC
* Move comes amid strategic review of HSBC's private bank
By Katharina Bart
ZURICH, July 15 (Reuters) - VP Bank is buying HSBCTrinkaus & Burkhardt SA's private bank and the fund businessrelated to it for an undisclosed price, a further sign ofindustry consolidation as banking secrecy comes under fire.
Though small with overall assets of 2.5 billion Swiss francs($2.6 billion), the deal between Liechtenstein's VP andGermany-based HSBC Trinkaus, majority owned by HSBC Holdings Plc, is just the latest move by a smaller player to reducebusiness risks during an international crackdown on undeclaredfunds.
Last month regional Swiss bank St. Galler Kantonalbank said it will sell parts of its Hyposwiss Private Bankand integrate the rest due to risks, while VP's hometown rivalLLB, Liechtenstein's second-biggest bank, is cutting 23percent of its staff and closing its Swiss arm.
For HSBC, the move announced in Monday comes amid astrategic review of its sprawling private banking activities. InMay, it said it would hold on to its Monaco-based arm forwealthy clients after weighing a sale when it received anundisclosed and unsolicited bid for it.
The London-headquartered parent bank, which is ensnared in aU.S. tax probe at its Swiss arm, didn't disclose the sale pricefor the deal, which it expects to close in the fourth quarter.
HSBC is seeking up to $3 billion in additional annualsavings by 2016, on top of $4 billion already achieved, butsluggish growth outside Asia, particularly in Europe, means itstarget to get costs below 52 percent of revenue has been eased.
Liechtenstein has been quicker than Switzerland to succumbto pressure on banking secrecy laws, yet its smaller banks havestruggled with the resulting drop in client assets.
By contrast, Liechtenstein's biggest bank LGT, owned by theroyal family, said in March it had attracted 10.5 billion francsin net new assets last year.
LGT has recovered faster than the country's smaller banks,LLB and VP, in part because it was one of the first major banksto be forced to face an international clampdown on tax evasionsince the financial crisis.
For VP, the HSBC Trinkaus deal is the first notable publicmove by Alfred Moeckli, who was in May named the bank's thirdchief executive in four years.
"With this acquisition, we are making targeted use of thecurrently attractive market opportunities," Moeckli said in astatement.
Roughly 20 employees will transfer to VP Bank in Luxembourgas part of the deal, expected to close by year-end.
