One in three Western European private banking
players had net asset outflows in 2010 with 10% of them posting
losses, a new study has revealed.
McKinsey & Company’s annual European
Private Banking Survey 2011 found that overall European
private banks increased their assets under management (AuM) last
year by 9% but the outlook for 2011 looks tough.
Go deeper with GlobalData
However, net inflows grew only 2% in 2010,
compared to a 7-8% growth in 2005-2007.
According to the study, in 2010, the 7%
increase in AuM came through market appreciation. This level is
“unlikely to be maintained in 2011,” based on the performance of
financial markets so far this year, the study found.
New flows in Western European offshore markets
were stagnant in 2010, compared to a 3% increase in onshore net
inflows.
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By GlobalDataCost-income ratios rise
In 2010, the average cost-to-income ratio grew
to 71%, compared to 64% in 2005–2007, the survey said.
In a meantime, profit margins rose marginally
to 24 basis points (bps) last year, up from 20bps in 2009 – still
11bps below the high of 2005-2007.
At the same time, revenue margins stood at
83bps in 2010, compared to 84bps in 2009 and 100bps in 2005 – at
the peak of the cycle.
The survey indentified boutiques and universal
banks in their home markets onshore and independent boutiques
offshore as the best performing business models in 2010.
Future focus: Regulation and
technology
McKinsey’s research said with margins still at
low levels and continuing changes in regulation, customer demand,
technology, and the competitive landscape, the rapid re-modelling
of the private banking industry is underway and is set to
continue.
The European Private Banking Survey 2011 is a
part of a larger Private Banking Survey, which studied over 160
firms globally.
In its European sample, 77% of respondents
were private banking units of universal banks, while remaining 23%
were specialists. The number of onshore operating respondents stood
at 68%, while 32% identified themselves as offshore operations.
