Global Private Banking Awards 2013: Winners’ Profiles – Regional Winners

Best Global Private Bank
Best Private Bank in Asia
Best Global Brand in Private Banking
Best Performing Private Bank      
UBS Wealth Management

UBS Wealth Management has turned its operation around, shaken off much of its post-crisis bad publicity and returned to the upper echelons of the private banking industry in 2012.

After outflows in 2010, it has enjoyed healthy net new money in 2012 and managed to cut expenses, while boosting its share of Asian clients to 25 per cent in asset terms. UBS posted inflows of $22bn (€16.3bn) in 2012, up $8bn from the previous year, and showing a renewed faith among private clients, most of whom typically shuffle their portfolios between four or five trusted partners, according to which one is in the ascendancy.

Rather than Europe, the bank’s strongest inflows come from the Asia Pacific region and developing markets in general. There is a strong focus on Hong Kong and Singapore, with increasing resources being allocated to developing a presence in Japan, Taiwan and mainland China. Other developing markets such as Brazil, Mexico, Israel, Turkey, Russia and Saudi Arabia are also being prioritised.

Structural changes mean that wherever a client resides, the house view can now be implemented in every portfolio. Senior management has been striving to impose more central control over rogue relationship managers since clients were caught in Madoff losses, which also co-incided with bad news from the bank coming from the global crisis soon after 2008.

Around 15,000 investment funds are now screened by a central verification team, which has also introduced new asset classes including US corporate high yield and emerging market bonds to help boost returns.

The one market UBS has yet to fully recover in is Switzerland, where critics at rival banks still blame the global giant for catapulting the industry into disarray for not only recruiting excessive numbers of US taxpayers, but then negotiating ineptly with US tax authorities, thus affecting the Swiss industry.

In order to boost engagement in its traditional homeland, the bank introduced a new advisory model, UBS Advice, during 2012, aiming at clients who want to make their own investment decisions, with plans to now roll out this concept internationally. Bank strategists claim that within one week of a relevant market event happening, they guarantee that relationship managers (RMs) will contact clients with a solution. This service attracts a new flat-rate advisory fee, a charging model which the bank eventually expects to become the industry norm.

After many Swiss banks pressed the panic button several years back, shocked at the increasing market imprint of multi-family offices staffed by dissatisfied refugees from larger banks, UBS has invested significantly in its ultra high net worth segment, offering new initiatives such as Impact Investing, combining philanthropic objectives of making positive social and environmental contributions, while also achieving good financial returns. 

The bank’s global family offices group functions as a joint venture between the wealth management unit and investment banking, to target the needs of the world’s largest 250 family offices.

Many of these changes have been brought in by wealth management boss Jürg Zeltner, something of a “Teflon Don” character according to Swiss consultants. While he took the flak and had to apologise to clients for problems and mis-sold products soon after the crisis, he is now reaping the rewards of a rise in form and fortune. Currently, at least, his star is rising. YB

Best Private Bank in Europe
Best Private Bank in Switzerland
Pictet

Pictet has been one of the fastest growing banks in the private client world, increasing managed assets by 23 per cent to $322bn (€235bn) in 2012, according to figures from Scorpio Partnership.

Partners at the Geneva bank, founded in 1805, feel they have caught the popular mood by recently restructuring to shed the old-fashioned unlimited liability partnership structure and concentrating increasingly on portfolio management expertise and international expansion capabilities. Although the bank has been promoting some innovative thematic investments, its portfolio strategists insist on a conservative philosophy, protecting client assets and beating inflation, rather than chasing returns.

But there is a belief within the bank that Switzerland is no longer a big enough market to sustain banks such as Pictet, rivals Lombard Odier and UBP, and the larger universal banks such as UBS and Credit Suisse. Pictet already has a presence in 15 countries. The bank claims to have added $13bn in net new money during 2012. Inflows from new entrepreneurs, many of them enriched by social media, are increasingly drawn in by the bank’s strong brand, says Heinrich Adami, head of the London office for the Swiss wealth manager.

These clients lodge some of their assets with investment US banking-led institutions, but are also keeping faith with traditional Swiss private banks, he says. As well as portfolio management, the bank is increasingly active in family governance and succession planning, helping families build solid governance structure to help manage change.

While some bank watchers in Geneva claim that unlimited liability partnerships were only rethought because partners were becoming increasingly concerned about potential liabilities to US tax authorities, the Pictet partners see the move as part of a longer-term trend, rather than reacting to specific current circumstances. It will also mean a much more transparent set of reporting requirements, with the bank now able to bat away accusations of being a secrecy-shrouded operator.

Six years ago, the bank moved from its picturesque headquarters on the banks of Lake Geneva to more functional premises on the busy Route des Acacias. This was one of the first stages of demonstrating to the market a new mentality, where asset management could co-operate much more closely with and assert greater influence on private banking, with secrecy-led services now belonging to the past.

“We do have the image of a 200-year-old private bank rooted in Switzerland,” comments Mr Adami. “But people who know us well also know we stand for something innovative, creative, bespoke and flexible,” with recent innovations including the introduction of ebanking tool Pictet Connect.

Chief investment officer Yves Bonzon, who does the rounds of larger private clients across Europe to share investment themes, says clients have been very positive so far about the new direction their bank has chosen and even those with sentimental leanings to the old-style bank have not yet complained.

“We have been very impressed so far by the favourable client reception,” he says. “The real test will be in five to 10 years time, when they will see if we can deliver our vision.”  YB

Best Private Bank in Central and Eastern Europe
Best Private Bank in Hungary      
OTP Private Banking

OTP Private Banking is a dynamic, growing player in the Central and Eastern Europe, having a dominant market position in its home country, Hungary, and good coverage in several CEE countries. Last year the institution saw its AUM swell by 24 per cent to around HUF 739bn (€2.5bn) and its client base rise by 22 per cent, compared to an average growth rate of 13 per cent of its Eastern European competitors, according to OTP.

The main driver of the firm’s success is its “very unique and innovative approach to regional growth strategy, through which it can effectively exploit the extraordinary growth potential of the region,” according to András Takács, head of private banking.

OTP not only applies different client segmentation thresholds across the region but adapts the value propositions offered to client segments to the local market conditions, using group-wide standards and local features and also taking into account the strategic position of the firm’s subsidiary in each country.

“This unique approach proves to be very effective in a region which is defined as one but where in reality there are huge differences between countries,” says Mr Takács.

The bank also developed an efficient methodology to migrate clients from its retail network, supported by an effective incentive system. Last year in Hungary, almost 80 per cent of new clients were sourced from the retail bank’s client base, while the implementation of a joint SME-private banking value proposition attracted new SME owners.

The introduction of a new resource allocation model led to a considerable increase of the average size of assets brought by new and existing clients. Last year, around 60 per cent of the AUM growth was generated by net new money inflows, and in 2013 it is expected to be even higher.

Although revenue margins shrank significantly in the region due to a dramatic decrease of interest rates, which caused a sharp drop in interest margins on deposits, OTP Private Banking was able to sustain its profitability by implementing a strategy to boost revenue generation in different areas. Selling more complex investment instruments to meet client needs drove the bank to enhance its risk management process and upgrade its RM training
programme.

 “Despite decreasing revenue margins, the private banking business in CEE countries will remain more profitable than in mature European countries, in terms of average profit margin,” predicts Mr Takács. ET

Best Private Bank in the Middle East
Best Private Bank in India
Standard Chartered Private Bank

The Middle East has been a strategic region for Standard Chartered Private Bank for almost a century, enabling the bank to forge deep ties with its clients in the Middle East, who are often second generation business owners facing the challenges of balancing the need for capital and the family desire for liquidity, as well as issues of leadership transition and asset transfer between generations. The bank’s Key Clients Solutions team based in the UAE are specialists in family advisory and support the regional managers, as well as directly handling a small number of institutional-sized clients.

The bank has also made inroads into the fast-growing Muslim market in the Middle East through its Islamic banking offering which was rolled out in the Dubai Advisory centre in 2012.

In India’s fragmented private banking landscape, Standard Chartered Private Bank ranks highly in delivering its One Bank value proposition. Clients include 77 of the top 100 Richest Indians on the Forbes Rich List. The bank is also heavily involved in the community, recently raising funds for a Seeing is Believing project in Kolkata which sponsored 8,592 cataract surgeries, and screening for 122,790 people.

The acquisition of Morgan Stanley’s Indian Wealth Management Unit also adds material scale.

“India and the Middle East are key contributors to our Private Banking business,” says Stephen Richards Evans, head of Private Banking West for Standard Chartered Bank. “Specifically in the Middle East, AUM and revenues have experienced double-digit growth rates in the past year. Our Indian business continues to see strong growth too and we have acquired the wealth management business of Morgan Stanley in India which further fuels growth prospects and adds some great new talent for the business,” he explains.

“Our longstanding on-the-ground presence in these and other core markets have enabled us to build deep client relationships based on strong regional affinity and thorough understanding of client needs. With an established footprint across Asia, Africa and the Middle East, we are also positioned superbly to connect clients to people, ideas and opportunities in the world’s fastest growing markets.” CJ

Best Private Bank in Latin America
Santander Private Banking

Despite slower economic growth across Latin America and in particular in the region’s largest market, Brazil, wealth management continues to be a booming sector. Santander Private Bank knows this well. It has been steadily increasing its total assets under management over the past few years to just under $77bn (€56bn) in 2012 and expects this trend to continue in the future. Santander, in fact, says it will match its wealth management market share with the one it has in its considerable retail operations in the region.

“Over the last 12 months, Latin America’s economic growth has remained solid enough to encourage continued wealth generation,” says Alvaro Morales, chief executive of Santander Private Banking International. “Santander is working to attain the same market share in the wealth management sector that it has in retail banking – [the bank] has launched an ambitious growth plan that seeks to increase the business by double-digit levels in the medium term.”

Looking at last year’s data, the bank claims to have achieved good investment results for its clients as well as for its bottom line. It focused on expanding its client base and net new money grew by 18 per cent in Latin America and by an exceptional 116 per cent in Chile. Furthermore, continuous investments in technology made sure asset quality was effectively monitored, and communication with clients was timely and available from a variety of platforms.

Aside from generating healthy returns from Latin America, Santander is also addressing the many challenges facing international wealth managers, such as heavier regulation and compliance costs. Adapting to this new environment may mean a new structure which prefers a local, more independent model to a global one, believes Mr Morales.

“Economic conditions will continue to favour expansion of the business for entities specializing in wealth management,” he says. “However, other issues of growing importance must be taken into account, such as more rigorous regulations and greater demands in terms of compliance. In this environment of increased pressure, we can expect the weight of the local private banking model to grow.” SP