All articles by PBI Editorial
PBI Editorial
Reality starts to bite in the UHNW space
Ultra high net worth has been an industry buzzword in the last year, but there are signs the segment may not be able to support the growing number of firms setting up businesses in the area.While there has been a steady shift up the asset pyramid, research shows that the most profitable area for wealth management firms remains in the $500,000 to $20 million segment, generally considered simply high net worth (see page 11).This was one of many issues discussed at PBIs roundtable on business models, held recently in London (see pages 6-9).The main conclusion was that wealth management is an industry large enough for many businesses to co-exist There remain concerns about the ability for private banks to provide truly independent advice because they are often linked to asset management units and other product houses.That conflict means maintaining the integrity of the relationship between client and private banker is vital at these institutions This tension is what lies behind the emphasis in the industry to promote or to be seen to promote open architecture.And for this to be credible, private banks need to prove their clients are getting access to best in class products across all institutions, rather than paying lip service to the idea
Eng: compliance key to Asia push
Clariden Leu has identified Greater China, Indonesia, Singapore and India, including non-resident Indians, as the key private banking markets for its Asian business.The bank has appointed Jimmy Lee Kong Eng head of Asia business to spearhead its push in the countries Eng, previously head of Deutsche Banks Southeast Asia Private Wealth Management business, previously headed a team of around 150 employees.Eng said the main priorities for Clariden, a subsidiary of Credit Suisse, were ensuring regulatory compliance with revised legislation in Singapore
A window into the future
A PBI roundtable on business models held in London brought together some established and up-and-coming members of the wealth management community to talk about the future of their industry This edited passage highlights the main exchanges on open architecture, advice and structured products William Cain, editor, PBI: The one-bank model has been endlessly criticised in the industry
Client reporting crucial in a crisis
As a result, client retention has leapt up the agenda at wealth management firms, with a particular emphasis on client reporting and fee structures.The number of dollar millionaires globally declined 14.9 percent in 2008, with 1.5 million wealthy individuals falling below the threshold, typically used to define high net worth individuals.The total decline in the wealth of high net worth individuals, a key barometer of industry health, was $7.9 trillion, leaving a total wealth pool, excluding primary residence, collectibles, consumables and other consumer durables, of $32.8 trillion.The research, the Merrill LynchCapgemini World Wealth Report, also confirms provisional findings in Januarys Private Banker International (PBI 244), that ultra high net worth clients defined as those with wealth of greater than $30 million in the survey were the worst hit by the financial crisis.Analysis conducted by PBI of wealth managers which published assets under management (AuM) performance by wealth threshold showed those with assets of more than $10 million fared significantly worse than those lower down the wealth spectrum.The World Wealth Report showed ultra high net worth individuals (UHNWIs) wealth declined 24.6 percent, compared to the 14.9 percent overall decline
StanChart leans into the wind
Standard Chartered has underlined its financial strength by raiding the job market for new private banking staff Its wealth and wholesale businesses have proved natural complements in a tough climate and may provide lessons for other players swamped with cash by risk-averse clients Standard Chartered Private Bank is to recruit another 100 relationship managers globally, or a 30 percent increase, within the next 12 months to accelerate operations in its fast-growing markets
Subscribe to our Newsletter
Get industry leading news, data and analysis delivered to your inbox
Itaú-Uni looking to acquire $30bn AuM
Ita-Unibanco Private Bank is looking to acquire a $30 billion book of client assets outside Brazil by the end of 2009 in a bid to double it assets under management, Private Banker International has learned.The private bank, formed by the merger of Banco Ita and Unibanco last year, is the largest in Brazil and has been gaining further market share recently Its share of private client assets has increased from 36 percent following the merger to over 40 percent at the most recent measure.A senior source in Brazil said the private bank has been given a mandate from its board to acquire $30 billion in international client assets to build its business outside Brazil
Credit Suisse seeks market share gains
This is the time they need help to finance in different ways.Marsh said the key things entrepreneurs were looking for in the current climate were not necessarily wealth management products, but included: help financing growth; M&A advisory around how to grow their business; private placements, for businesses that were not as near to IPOs as the owner had anticipated; and, for clients that have cash and are looking for other assets, Marsh said the bank can often work to identify, access and package relevant assets for them.Marsh said access to the capital sections of the investment bank formed a central part of its offering to entrepreneurs.Other private banks which have high profile campaigns to pursue entrepreneurs in wealth management include Barclays Wealth and Standard Chartered.Barclays Wealth is sponsoring Ernst & Youngs Young Entrepreneur of the Year Awards in Singapore until 2011 as part of a marketing initiative to the segment.Didier von Daeniken, CEO of Barclays Wealth Asia-Pacific, said the bank had an unparalleled understanding of entrepreneurs, adding business owners were in need of suitable services in these challenging times.But some private bankers regard entrepreneurs as risky clients to chase, describing it as a toxic segment, particularly as the economy worsens and loan defaults increase
Booking centres in the spotlight
Booking centres are being put under the microscope by private banks seeking to reduce costs and risks to their tax status and reputation.Top tier wealth management firms like UBS and Credit Suisse are starting to question what they gain from operating in a wide range of booking centres, according to industry sources HSBC Private Bank has started consolidating some of its offshore business in Luxembourg, while Lloyds TSB Private Bank is also looking at rationalising its locations in offshore centres, PBI understands Some smaller private banks are considering whether to maintain offshore operations at all or move entirely onshore.This shift in the industry has been prompted in part by the startling speed with which US President Barack Obama has sought to tackle transparency, tax and banking secrecy in tax havens
Benefiting from a changing landscape
Intesa SanPaolo Private Bank deputy CEO Saverio Perissinotto is confident that client money will start flowing into Italy during the final quarter of this year, once there is clarity on plans by the G20 nations to provide tax amnesties for clients with undeclared wealth overseas.Client money will start to flow out of Switzerland more quickly in the final quarter of the year as European tax amnesties start to kick in, according to the deputy CEO of Intesa SanPaolo Private Bank.In an interview with Private Banker International, Saverio Perissinotto said the focus on onshore asset gathering could intensify as European governments move towards declaring tax amnesties for individuals that have undeclared wealth overseas
Standing their ground
And wealth managers have only 25 percent of the estimated total of £1.4 trillion of high net worth client money, leaving them plenty of growth prospects even in these tough times.