Uncertainty remains a
watchword for the private banking industry in 2012 as the eurozone
crisis continues to cast a long shadow. PBI’s Editorial
Advisory Board shares its predictions for 2012, which suggest
competition will remain fierce, banks must improve how they deliver
value and regulators will get personal.
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Francis Koh
MsC in Wealth Management Program
Director
Singapore Management University
What is the biggest
challenge for the private banking industry in 2012?
To sustain the trust of private
clients in the wake of difficulties posed by the political,
economic, fiscal and monetary problems in the eurozone, which will
in turn affect the rest of the world, especially Asia. In the
coming months, markets are volatile and it will be very challenging
to invest well. Clients will react to the capricious environment by
being cautious and investing less. This will reduce bank revenue.
The ongoing relentless pursuit of tax-evaders and the determination
by various governments to create a clean banking ecosystem
(including AML protocols and FATCA) will increase business costs.
In sum, the profitability of banks would be squeezed and service
levels may be affected.
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Do you have a prediction
for 2012?
The industry is largely fragmented and
yet faces a severe profit constraint. Thus, the industry is likely
to see increased consolidations through mergers, acquisitions and
strategic alliances to achieve enhanced operating efficiency to
sustain service levels. However, my prediction is that the European
Community will prevail.
What is your prediction for
the Asian private banking industry?
The rapid growth of wealth management
in Asia will continue but it will not be a year of ferocious
growth. Singapore and Hong Kong will see increased assets under
management in 2012.
Ian Woodhouse
Private banking and wealth management practice director
PwC
What was the biggest
surprise in 2011?
For the industry, it was the
arrival of another macro event, the eurozone crisis, which brought
further major volatility and uncertainty. Most stock markets
returned a negative performance for the year, leading many clients
to again question the value proposition provided by their wealth
managers.
What is the biggest
challenge for the private banking industry in 2012?
Meeting the large number of
regulatory requirements. This, coupled with continuing market
volatility and cautious clients will drive a sea change to private
banks’ traditional propositions. Going forward, propositions will
be more about suitability, risk assessment and clarity of value
delivered. This will require major changes in the way institutions
and advisers deliver value to their clients and also in their
controls and risk management approach and how they evidence
compliance to both clients and the regulators.
Do you have a prediction
for 2012?
The risk and compliance agenda will
also get more personal as regulators seek to punish not just
institutions but also the accountable individuals from the firms
involved.
What is your New Year’s
resolution?
Get myself physically fitter, lose
weight and improve my time management, so I can better balance
assisting our clients while ensuring sufficient, quality personal
and family time.
João Medeiros
Chief executive
Itaú International Private Bank
What was your
organisation’s biggest success in 2011?
Our biggest success was the
re-structuring of our investment strategy and advisory team. We
hired renowned international specialists to increase our capacity
to advise clients on global assets as well as we do with Brazilian
and Latin American assets. We also performed a full review of
investment governance, offering and information. This allowed
greater synergy between the international and local investment
teams.
What is your business’s key
strategic focus in 2012?
We have focused on the Brazilian market throughout the past few
years, expanding our business through a combination of organic and
inorganic growth. In 2012, our plan is to consolidate our presence
in the Brazilian market but also invest significantly to increase
our penetration in the Hispanic markets, following Itaú’s
internationalization movement. Our recent joint venture with MCC in
Chile is an example of our strategy for the region.
What is the biggest
challenge for the private banking industry in 2012?
The challenge is to excel in the traditional offering and
channels while maintaining prudent cost management. Clients will
look for strong, solid and stable institutions and concentrate
their investments in more conservative, low margin products.
Simultaneously, they will demand attentive servicing and an
enriching experience.
What is your New Year’s
resolution?
We will emphasise the improvement of client experience. We will
invest even more in delivering a comprehensive offering, from
wealth planning to credit, while deploying new remote contact
channels supported by scalable and integrated operational
platforms.
Caroline
Garnham
Founder
Family
Bhive
What is the biggest
challenge for the private banking industry in 2012?
To listen, and hear what their
customers want and to be innovative in delivering it. We are living
in an era where social media, like it or not, has changed the
dynamics of the world in which we live. No longer can the informed
few dictate to the uninformed many, the many are not only better
informed but also better connected. What they want is a human face,
costs they understand, methods which are certain even if the
returns may not be. Most private banks have no face, no brand, no
personality and no hearing device. Know your client has become a
box ticking exercise and service has been replaced by product
pushing. One only has to see the success of Wonga.com, Prospect.com
and PayPay, to see what a wealth of opportunity there is for
private banks if only they dared to innovate and change according
to what their customers wanted. Now is not the time to ‘keep
buggering on’, the challenge for the private banking industry is to
listen, innovate and change.
What is my prediction for
2012?
Given that Mervyn King, the Governor of the Bank of England does
not know what is going to happen tomorrow let alone next month, and
given the uncertainty of Greece and Syria, I think I will keep my
prediction simple, which is that Spring will follow Winter and that
Summer will follow Spring.
What is your New Year’s
Resolution?
Last year saw the death of my mother, who will be remembered for
her wisdom and directness. On the subject of wealth she said, you
have only one back to clothe and one mouth to feed. For her,
austerity was about buying quality not quantity. She was brought up
in war torn Holland, and knew what it was like not to have enough
food to eat and to be fearful for her safety, she understood what a
privilege it was to live another day with food to eat, safety and
comfort. My New Year’s Resolution is to be thankful for every new
day and to buy only quality, not quantity.
Santiago
Ulloa
President
GenSpring Family Offices International
What was your
organisation’s biggest success in 2011?
In the wake of scandals, market
uncertainty and international financial crisis, GenSpring has
maintained a high client retention rate by serving client families
without conflicts. We have the freedom to invest with anyone, in
anything, anywhere, with only the client’s best interests in
mind.
What is your business’s key
strategic focus in 2012?
Our focus for 2012 will be to
continue steady and sustainable growth in client families; assets
under advisement and geographical footprint, while building the
necessary business infrastructure needed to continue providing
intimate, personalised service to our client families sustain their
wealth into the future generations.
What is the biggest
challenge for the private banking industry in 2012?
We believe the biggest challenge
for wealth management firms in the short term will be clearly
illustrating the value that their advice and service provides to
their clients. This is very important to clients in a highly
uncertain market environment and results must be tangible and, to
some degree, quantifiable. It will be an exercise that requires
wealth management firms to profitably tailor their services and
pricing to the specific needs and requirements of each client.
What will be the biggest
regulatory issue for family offices in 2012?
Given the global economic events of
the past several years the need to re-establish trust between
families and their advisors leads us to believe the formation of an
advice industry, completely distinct from product production or
distribution, will continue to be further defined for the benefit
of the investor.
What is your New Year’s
resolution?
To take more vacation.
Michael
Lagopoulos
Deputy chairman
ultra high net worth (UNHW) international
RBC Wealth Management
What was your
organisation’s biggest success in 2011?
Reading the economic environment
correctly and protecting our client’s wealth throughout a very
challenging year. We moved up to become the sixth-largest wealth
manager globally by assets (Scorpio) and consolidated our position
as the largest full-service wealth manager in Canada. And our
market-leading trust business was once again recognised as the
Institutional Trust Team of the Year by STEP.
What is your business’ key
strategic focus in 2012?
Our key focus for 2012 is to
continue to build our brand, particularly outside Canada, focusing
on markets in the US, UK, and emerging markets including Asia and
Latin America. We took the decision to invest in our first global
advertising campaign last year at a time of tremendous opportunity
for our business with clients looking for the strength and
stability that RBC can provide. Another area of focus will be on
further building our asset management business outside our home
country, following the recent acquisition of BlueBay Asset
Management.
What is the biggest
challenge for the private banking industry in 2012?
Navigating through the volatility
and giving clients great value for money will be the greatest
challenge for wealth managers. However, while there will be many
challenges in 2012, there will be many opportunities too. An
example of this is the changing regulatory landscape in the US,
including FATCA and its impact on international providers. While
some are already deciding to exit the market, we see this as an
opportunity to grow our business serving compliant US persons.
Do you have a prediction
for 2012?
The eurozone will make it through
2012 but I don’t expect it to make it through this decade without
some very significant structural changes.
What is your New Year’s
resolution?
To follow my own advice much more
closely in the future than in the past.
Fidelis
Goetz
Head of private banking (international)
Bank Sarasin
What was your bank’s
biggest success in 2011?
Overall 2011 was a year of
improvements and consolidation. With the introduction of Avaloq in
Asia, we made a significant step in completing the foundations of
our growth strategy and maximising the potential synergies between
Asia and Switzerland. In January 2011 the Sarasin Group set up a
new subsidiary in Singapore, the Sarasin Trust Company (Singapore).
In January 2012 our private banking business in Singapore is being
transferred to Bank Sarasin Singapore Branch with the further
upgrading of the banking licence to an offshore bank branch. Other
highlights include our business in Poland.
What is your business’s key
strategic focus in 2012?
For 2012 we aim to achieve
profitable growth in our target markets within the existing
organisational structures. With the implementation of Avaloq in
Asia, we have created a very good starting point. The new
infrastructure allows us to serve more clients with the same number
of staff. It is our objective to manage only tax-compliant assets
by the end of 2012. To reach this goal is therefore a key strategic
focus for us in 2012.
What is the biggest
challenge for the industry in 2012?
We will continue to operate in a
very challenging environment: volatile financial markets, the as
yet unresolved euro debt crisis, and political unrest in North
African and Arabian countries. Besides the macro-economic
situation, the industry also faces increasing regulatory pressure.
However, I don’t want to paint too gloomy a picture. The market
offers many interesting opportunities. Asia and the Middle East
will remain strong drivers for the Sarasin Group in 2012.
Do you have a prediction
for 2012?
The deleveraging process by
sovereign states and private households will act as a significant
curb on growth in the industrialised countries. In Europe, we
anticipate a recession around the turn of the year, and only a
modest upturn in the USA. In the emerging markets, the rate of
economic growth is expected to slow, but remain fairly high.
Rory Tapner
Chief executive
Coutts
What was your bank’s
biggest success in 2011?
Firstly, the launch of our new
strategic plan in March 2011, that emphasised a greater geographic
mix to change the balance to a more international business.
Secondly, a much greater focus on client service , ie, ultra high
net worth (UHNW), HNW and affluent clients with a differentiated
service level between those. Launching a consolidated single brand
worldwide that communicates our history, balanced with modernity
and relevance. Lastly, a significant increase in the use of
technology. You cannot be in this business unless your technology
is world-class, that’s not just back and middle office, it is also
client connectivity.
What is your business’s key
strategic focus in 2012?
It is less to do with the strategic
thinking, more about ensuring that we execute on our strategic
plan. Key markets will be Middle East, CIS (Russia, Ukraine and
Kazakhstan), Switzerland and Asia; in the UK we are in good shape.
There are a handful of senior hires we still need to make. We will
also be increasing investment on IT and implementing Avaloq as our
operating system across the whole business.
What is the biggest
challenge for the private banking industry in 2012?
Uncertainty: economic, political
and regulatory. Economic uncertainty is driven by the recession,
eurozone issues, inflation and flat yield curve issues. On the
political side, we have a year of elections and changes of senior
leadership, at a time when the world needs long-term decisions. The
regulatory piece is ongoing with RDR in the UK at the end of the
year; there is still a lot of regulatory reaction as a result of
the crisis. That is putting a bigger burden on banks, which makes
managing for growth challenging.
Do you have a prediction
for 2012?
Europe falling back into recession
is something that is likely to happen. There will be continued
speculation about a eurozone breakup.
Daniel
Truchi
Global chief executive
Société Générale Private Banking
What was your bank’s
biggest success in 2011?
Société Générale Private Banking
(SGPB) has pursued its development throughout 2011 capitalising on
its strong franchise in Europe and its collaboration with the
group’s other businesses. The partnership with Komercni Bank in
Czech Republic in 2010, has allowed the local retail banking
network to become one of the leading suppliers of structured
products for private clients in the country. We have been assisting
the Credit du Nord Group in France in developing its wealth
management offering targeted at regionally-based French wealthy
clients.
What is your business’s key
strategic focus in 2012?
In a high-pressured regulatory
environment, we remain very focused on our clients. In order to
further develop a proactive dialogue with them, we will increase
the use of our innovative dialogue and asset allocation method. The
development of our services towards UHNW clients is also a key
priority. In this area, we will announce an important new
initiative shortly.
What is the biggest
challenge for the private banking industry in 2012?
The industry is facing four main
challenges. Firstly, the economic and financial landscape will
remain uncertain and volatile. Growth deceleration, the eurozone
turmoil and volatility will push banking experts to more innovative
structures to face this context. Second, the numerous changes in
the financial industry (Dodd Frank act, FATCA, Vickers, Basel III
etc) will require from all banks a strong capability to adapt
themselves. Competition will continue to be fierce. The industry is
facing deep regulatory changes that hamper their cost base and
require more efficiency. Consequently, the fourth challenge will be
to provide the client with the right answer at the right time.
Do you have a prediction
for 2012?
The eurozone will not break up and
the euro is unlikely to collapse. As financials have dragged down
developed equity markets and have reached rock bottom valuations,
notably in Europe, we expect they could positively surprise the
markets in 2012.
