private client market is headed by the leading Scandinavian
players. SEB and Danske Capital have a presence in the region while
last month Handelsbanken opened a branch in the Latvian capital,
Riga, with a view to further complementing its existing private
client services in the region.
Hansabank, the largest financial institution in the Baltic region,
is no exception to the drive to find wealthier clients. Swedbank,
the Swedish institution, purchased 50 percent of Hansabank’s shares
in 1998 and bought out minority shareholders in 2005, but the
branding implications for Hansabank’s private banking division in
the Baltic states are only now being realised.
Go deeper with GlobalData
As of autumn 2008, the Swedbank brand will replace
that of Hansabank Group in the Baltics, as part of an
implementation process that is expected to conclude in autumn
2009.
Hansabank head of private banking Hannes Oja told PBI, “I really do
not see a big influence arising from the new brand name”, noting
foreign capital has long had control of vast swathes of the Baltic
banking sector.
“Swedbank’s brand name has been increasingly visible in the Baltic
states and in Russia it has been used for two years already”.
Oja does, however, foresee that the closer cooperation between the
two banks will bring benefits.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalData“Most value-added to our customers and knowledge sharing for us can
be expected from Swedbank’s experience in Luxembourg,” he
comments.
Indeed, Both Hansabank in the Baltics and Swedbank “have a lot to
learn from each other,” Swedbank CEO Jan Liden said in May.
The Baltics, like Luxembourg, have long benefited from high net
worth individuals (HNWs) from neighbouring Russia looking to secure
funds in more attractive jurisdictions. The rise of the onshore
market does not unduly worry Oja, who says that “the Russian
business environment will remain somewhat unpredictable” moving
forward.
While many of the leading lights of wealth management are making
encouraging noises about Russia (see
JPMorgan wins $700m compensation case), the Baltics, with their
smaller client market and relatively subdued growth rates, have
attracted less attention from afar. But viewed up close, the market
is still characterised by a jostling for position among private
banks, with regional players such as Estonian investment bank Gild
Bankers lining up alongside the Scandinavians.
“We are ready to face the pressure,” says Oja. “Gaining a
significant market share is a highly ambitious task.”
Oja estimates that Hansabank has a total of 10,700 clients in the
Baltics, with combined assets of around €2.7 billion ($4.26
billion). Of this, Estonia is home to some 6,700 clients with €2
billion in assets between them; in Latvia, the bank has 2,300
clients with €500 million in assets; and €200 million from 1,700
clients in Lithuania. Unsurprisingly, then, Oja states “the biggest
growth potential definitely lies in Lithuania”.
Its market share is estimated to be around 60-65 percent in Estonia
and 30 percent in both Latvia and Lithuania. Current growth plans
centre on process improvements, fitting for an institution
originating in Estonia, a country known for having one of the
world’s most advanced IT infrastructures.
“Efficiencies in processes will definitely help to increase share
of wallet. Well structured offering and procedures will guarantee
clients being well served even during economic downturn,” asserts
Oja.
The bank is installing the activebank Wealth Manager system from IT
firm Financial Objects, due to go live in September, and believes
that the improvement in reporting processes will further boost
Hansabank’s standing in its domestic markets.
“As one of PWC’s [PriceWaterhouseCoopers] recent studies expressed,
only slightly more than half of wealth managers can offer
consolidated reporting to customers. So we are seriously addressing
that issue. In addition we are actively working on internal data
gathering and analysis [by both CRM and business intelligence],”
the private banker declares.
A study from Financial Objects has suggested this kind of process
improvement will enable wealth managers to increase assets under
management without the need to increase head count. Pete Dingomal,
wealth management sales director at Financial Objects, acknowledged
such developments must not be accompanied by relationship managers
finding themselves spread to thinly. Dingomal told PBI that “as the
market grows and more players enter the game, it is essential that
a cost effective way is found to offer top client service”.
Service is a key pillar in the Swedbank strategy, with Liden having
outlined his vision to make the bank “the best service bank in
Europe. We are building an even more efficient and powerful
cross-border bank because it will become increasingly important for
our clients”.
In wealth management terms, the focus on IT extends from
client-facing services to clients themselves, says Oja.
“Several of the past years’ successful IT company sales have
created attractive opportunities for wealth managers to capture new
clients,” he notes, adding that substantial levels of wealth have
also been created in the booming real estate sector.
Oja, like Dingomal, believes the arrival of increased competition,
coupled with the potential for economic slowdown across Western
markets, makes technological improvements key to future
success.
“Experience is a precious value treasured by HNWs,” he says.
“Newcomers have to prove themselves. We are currently the leaders
with regards to this service for the Baltic states – by
continuously developing our offerings, we plan to keep it that
way.”
