After virtually
uninterrupted growth for much of the past decade, the UK private
banking market is feeling the chill winds of retrenchment.
PBI reports that a number of players, publicly and
privately, are culling staff and pruning back regional
networks.
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Subdued client trading
volumes and pressured margins are prompting staff cutbacks and
slimming of client distribution networks by a growing number of
firms in the UK private clients business.
This is reversing the
sustained growth for the UK wealth industry sector for much of the
past decade, a period that has seen active recruitment of
relationship managers and other client advisory
specialists.
In latest retrenchments,
Credit Suisse has closed its Birmingham office and simultaneously
culled a number of staff in its financial planning division. The
Swiss parent has already announced it plans to cut overall
headcount by 4% to help achieve CHF1bn ($1bn) of cost
efficiencies.
In London, a Credit Suisse
spokesperson stressed that clients in the Birmingham region, where
it had been maintaining four relationship managers, would not see
any interruption in service. The bank’s London and Manchester
operations would take over the business, she said.
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By GlobalDataAnother private bank,
Kleinwort Benson, has also been slimming down its regional network.
The bank has closed its Scottish office and will now service
clients north of the border from London.
The closure of its
Edinburgh-based business followed a review by Kleinwort’s chief
executive Sally Tennant. Under RHJ International, which bought
Kleinwort from Commerzbank in 2010, much of the focus has been an
overall improvement in profitability. The review has already seen
Kleinwort Benson close its Manchester and Leeds offices.
But Kleinwort is expanding
its chosen franchises out of London and the Channel Islands. The
recent acquisition of Close Brothers Offshore Group underlines its
commitment to banking, and especially lending at a time when a
number of other banks have been cutting their lending books, say
Kleinwort sources.
Butterfield
blues?
In other cutbacks, Butterfield
Bank UK’s head of private banking Danny Dixon and chief investment
officer David Stewart have both left the firm. A bank spokeswoman
refused to comment on industry speculation that the departures are
linked with a possible cut back or even exiting of wealth
management in London.
“As a matter of policy,
Butterfield will not comment on speculation about possible future
events or corporate activities unless there is a regulatory reason
to do so,” the spokeswoman said.
Butterfield, which has
received major assistance including a $550m capital infusion in
2010, has about £400m ($632m) of assets under management in the
UK.
Meanwhile, the UK’s largest
wealth managers, Barclays Wealth and Coutts, have both been
rationalising staff levels. Nearly 100 people are being laid off at
Barclays Wealth at home and abroad after a review of strategic
objectives and areas of focus for 2012.
The majority of staff are
being cut from “non-revenue generating infrastructure roles” in
several jurisdictions, a Barclays Wealth spokesman said
But he stressed that the bank
would continue to recruit during the course of this year, saying:
“We remain committed to hiring the best talent in the areas of the
business that we are prioritising.”
It is being emphasised that
in banking generally, regular reviews of staffing and performance
are standard practice. Barclays Wealth has the reputation of active
hiring, by dispensing with those personnel that don’t meet tough
performance and revenue targets.
Client service
changes drive Coutts cuts
At rival Coutts, between 80 and
100 roles could be lost, primarily as the bank embarks on the next
stage of its remodelling to become a broad-based wealth management
force, able to accommodate a complete range of client requirements
from banking products through to complex tax and estate
planning.
In addition, it has long been
rumoured that CEO Rory Tapner has been keen to dismantle
over-manning in Coutts’ middle and upper management ranks. A number
of senior staff are understood to have been asked to re-apply for
their roles.
Michael Morley, Coutts head
in the UK, stressed the key initiative by the bank is to position
to provide both an “exceptional private banking and exceptional
wealth management service for clients”.
He told PBI: “The
nub of it is to have a Coutts wealth manager sitting alongside a
Coutts private banker.”
This is an approach that
would allow the bank to service all the components of a client’s
balance sheet, from banking services through to advanced wealth,
tax and estate planning.
Coutts first signalled last
March last year that, under Tapner, it would be significantly
reshaping the business.
The latest initiative will
generate opportunities for staff to decide where they want to be in
the client service chain.
Clients, depending on their net worth as well as
investment profile, will in future have their own private banker,
supplemented by a wealth manager for the more advanced wealth
planning requirements. In other cases, clients may prefer to start
with a wealth manager, with a private banker assisting with
lending, credit and deposit products.
