BERLIN, Nov 8 (Reuters) - Liechstenstein's banks are coping with a clampdown on tax evasion thanks to cost cutting and a drive to attract new funds, reducing the likelihood of merger deals, the head of tiny Alpine principality's banking association said.
Liechtenstein was removed from a global black list of uncooperative tax havens in 2009 when it agreed to help hunt foreign tax dodgers after data leaked the year before revealed hundreds of wealthy Germans had hidden assets in its banks.
Liechtenstein Bank Association President Adolf E. Real said on Thursday the country's 16 banks have been working closely with the government to reverse its image as a haven for tax dodgers.
That, along with rocky markets and a rise in the Swiss franc - Liechtenstein's official currency since 1924 -, slashed assets managed in the country from a 2007 peak of 153 billion Swiss francs ($214 billion) to 109 billion at the end of 2011.
However, Real said the banks were adjusting well, and saw little need for the industry consolidation that was widely expected to follow the clampdown on tax evasion.
"The banks had a very good first half and were able to attract new funds. That's of course very important. They're also able to reduce costs," he told journalists.
"I'm optimistic that if there is a consolidation wave it won't be very strong. The banks are all in good shape with a strong capital base. I don't see a big consolidation coming."
About a third of Liechtenstein's gross domestic product (GDP) comes from the banking sector and it also accounts for 16 percent of the country's jobs.
The country's biggest bank, LGT, was ensnared in the German tax evasion affair, while U.S. authorities are investigating the second biggest, LLB, for helping rich Americans avoid paying tax.
Banking has helped to make the 36,000 inhabitants of the 160 square km (62 square miles) principality wedged in the Alps between Switzerland and Austria among the world's wealthiest, with national output per head seen at $141,000 in 2012.
Real said banking would remain a cornerstone of the country's economy, based on its standing as a haven of stability. He agreed the country's reputation as a haven for tax dodgers lingered but said it was working hard to change that.
"That is indeed the case and not something you can just ignore," he said. "But we've taken a new route since 2009 and we are going down that path with determination. There's no doubts about that direction whatsoever inside Liechtenstein."
When asked how Liechtenstein could change its image, Real said: "First of all, we 'walk the talk', as we like to say. We have proven in the last three years that we're serious about it. And then it's important that we communicate we're doing that." (Editing by Mark Potter)