Banque Heritage has been in the
spotlight following the sale of its family office business to
members of the bank’s management team, including Nick de Scossa.
Will Cain spoke to Carlos Esteve, CEO and founder of Banque
Heritage, about the reasons behind the move.
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Despite the recent sale of its family
office business, senior bankers at Banque Heritage remain confident
its mix of private banking, asset management and merchant banking
will continue to deliver, both among HNW individuals and wealthy
families.
Nick de Scossa, William Lovering and Andrea
Savoretti, previously based at Banque Heritage’s premises in
Geneva, have now left to run the business, called The Private
Office, as a stand-alone entity.
It followed a meeting between them and senior
management at Heritage during which Heritage decided to sell its
stake because of a divergence in opinion between the management
team of The Private Office and Banque Heritage.
Carlos Esteve, who founded the Banque Heritage
business in 1986 to manage the finances of the Esteve family, said
the main issue centred around the strategy for growing The Private
Office. It appears that neither party was willing to inject capital
to grow the business while the other held a stake.
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By GlobalData“No-one wanted to have their stake diluted, and
neither party was prepared to inject more into the co-investment
vehicle,” Esteve told PBI. “We will continue to
collaborate with them in certain other areas, but their plans to
grow The Private Office business could not be accomplished from
within the bank.”
The Private Office, when part of Banque
Heritage, was responsible for developing relationships with
single-family offices, though Esteve said the business will
continue to offer family office services to new and existing
clients.
Differences in style
“I appreciate the way they have built
the business, but there were two different strategies to take it
forward,” Esteve said. “In the end, we agreed amicably to sell our
stake.”
In addition, the sale does not impact Banque
Heritage’s Heritage & Camuzzi business in Milan. It was one of
the first family offices to be started in Italy, set-up in 2000
following the sale of the Camuzzi family’s agro-industry interests.
It has since taken on additional family advisory roles and also
works with institutional clients.
Banque Heritage will continue to focus on
growing its private banking and asset management divisions, as well
as its merchant banking joint venture, Heritage Capital, which is
based in London but has offices in Sao Paolo and Singapore. Esteve
believes the bank’s relationships with small and medium-sized
enterprises (SMEs) can help contribute towards its private client
business.
Heritage Capital’s investment banking
activities operate in a niche different to that of most
investment banks – originating and distributing securities to
mid-sized investment managers, corporates and family offices – and
provides corporate finance and advisory services.
Banks which combine this capability with
private banking – Standard Chartered is probably the best example –
often develop a deep and strong referrals culture between
divisions, with wealthy business clients handing mandates to the
private bank and driving assets under management growth. Esteve
said he found referrals at times work the other way, with
Heritage’s private banking clients approaching advisers to gain
access to investment opportunities generated by the merchant
banking division.
“The dynamic generally involves high net worth
clients providing capital for SMEs for restructuring or advice on
business models and mixes,” he said.
“Typically we discuss this offering with
clients. If they have interests we try to nail down what they are
interested in and present the cast to the investment bankers to see
if they can help.”
He also feels an asset management business is
an important part of the set-up, an issue which typically divides
opinion in the industry, especially among the family office
community. Banque Heritage evolved from the single family office of
the Esteve family, which made its fortune from the agriculture
industry.
Niche operations
Heritage’s investment banking
activities operate below the level typical investment banking firms
operate in, advising businesses on transactions anywhere between
CHF30m ($28.4m) to CHF500m.
“In a wealth recreation environment, the
private wealth and merchant banking model has a role to play. The
emerging markets are showing particular interest in this,” said Seb
Dovey, managing partner at Scorpio, a wealth consultancy.
“Notably, the more nimbly-sized banks like
Banque Heritage can reach the parts of the emerging markets world
the big investment banking and private banking giants dare not to
tread.”
Most family offices, and an increasing number
of private banks, however, believe that the asset management and
advisory function should be kept separate so as to avoid conflicts
of interests.
It is difficult for organisations to promote
themselves as independent advisers to clients if the business
profits from placing their assets into in-house products, though
Esteve maintains Banque Heritage is open architecture.
“These operations were set up to enhance what
we have in terms of an offering to our clients,” he said.
“Our mission as a private bank is to offer an
expert asset management function. If you do not have that you
should not be in private banking, that is our reading of the
industry. We have always put an emphasis on that.”
In terms of geographical expansion, Banque
Heritage has positioned itself to benefit from the exceptional
growth opportunities currently seen in private banking in
Asia-Pacific, through the establishment of its office in
Singapore.
Esteve said he is “very happy” with inflows in
the bank’s Singapore asset management business and that the bank
was seeing “strong growth”.
It has CHF7.5bn in assets under management
across the group, CHF5.5bn of which are private banking client
assets, with a target to reach CHF15bn by the end of 2012.
Esteve said the bank’s investment threshold
was CHF1m, though it typically worked with client mandates of
between CHF3m and CHF10m.
