Global Private Banking Awards 2014: Winners’ Profiles – National Winners (The Americas and Africa)

Best Private Bank in the US          
Best Private Bank for Socially Responsible Investing
Northern Trust

At Northern Trust, founded in Chicago 125 years ago, wealth management typically accounts for more than half of the firm’s annual profits, with the bank’s leaders saying these figures pour cold water over critics who dismiss this as a predominantly custody-led bank. 

Yet the advantages of already having the technology in-house for custodianship and then leveraging this for private clients should not be dismissed.

“The custody business is a technology centric business, which provides a wonderful infrastructure for our Global Family Office clients,” says Steven L. Fradkin, Northern Trust Wealth Management President.

“The custody business is global, which provides a worldwide footprint from which to take on wealth clients outside our home market. The custody business caters to the largest institutional investors in the world – sovereign wealth funds, hedge funds, pension funds, foundations, endowments, insurance companies and others, which provides us with a front-row seat to changing investment and risk management trends, enabling us to bring the best ideas from the institutional world to our wealth management clients. Far from being a limiting factor, we believe the custody bank business model is extraordinarily additive to our wealth management offering.”

The notion of Northern as a US-centric firm with only occasional, tactical forays into markets beyond the country’s borders is another apparent myth Mr Fradkin is keen to expose.

“Northern Trust is a global firm with offices across North America, Europe, the Middle East, and the Asia Pacific regions,” he states proudly, with the wealth management business serving clients in 40 countries and like the institutional business, there are plans in US head office to further globalise wealth management. Innovation, he says, has been accelerated, encompassing investment thinking, family education, the digital space and engaging with new client segments in dynamic ways.

“Client preferences are broad and influenced by age, technological and investment savvy, among other factors,” says Mr Fradkin.  “In our experience, it is vital that we adapt, innovate, and engage with clients in a manner that is convenient and comfortable for them. Our commitment to doing so has also helped with client retention, satisfaction and acquisition so, for Northern Trust, innovation will continue to be a top priority into the future as well.” YB

Best Private Bank in Canada
Best Private Bank in The Caribbean
RBC Wealth Management

Confirmed as leader in its Canadian home market, RBC Wealth Management claims to hold nearly a quarter of total wealthy client assets in Canada, administering more than $250m (€197m) of client assets and directly managing a further $44bn. The group also generates an estimated 45 per cent of total profits among full service wealth management companies in the country.

Yet the bank should not rest on its laurels, fears George Lewis, group head at RBC Wealth Management, who maintains RBC’s bankers must be “always earning the right to be our clients’ first choice”. This means constantly innovating and improving the service proposition, and taking full advantage of the firm’s sister internal management operation.

But growth ambitions are certainly not limited to domestic markets at RBC. “Over the last few years we have been able to capitalise on a long and successful heritage in Canada to grow to our current position today as the fifth largest wealth manager in the world,” says Mr Lewis, citing figures from wealth management think-tank Scorpio Partnership. “Growing our relationships with HNW individuals in North America will continue to be an important part of our strategy.”

The bank also has a long history in the Caribbean, where its brand stems from a strong retail presence. The wealth management business has grown steadily across the islands since the opening of the first office in Cayman in 1972. Banking, investment, and trust and fiduciary services are provided from RBC’s Caribbean offices, serving clients both locally resident and offshore, including from target countries in Latin America, North America, and Europe and the Middle East.

Growth markets such as Eastern Europe have also recently served the bank well, although the primary focus here has been with respect to clients with local origins, who have created considerable wealth outside their original home market and typically reside in, and require international wealth solutions provided by teams in key international financial centres, such as London.

“With recent developments in Ukraine and Russia, we believe this approach continues to be the most sound and we have no plans to expand our presence with clients residing in these countries,” says Mr Lewis.

Outside of North America, where RBC has been boosting adviser numbers, particularly in the US, Mr Lewis sees opportunities to grow in Asia, where recent “hires” have been added to teams based in Hong Kong and Singapore. YB

Best Private Bank in Brazil
Best Private bank for Innovation
Itaú Private Bank

Part of Itaú Unibanco, the largest financial institution in Latin America in terms of market capitalisation, Itaú Private Bank managed BRL196bn (€64bn) in total client assets at the end of last year, and saw net new money increase by BRL9bn in 2013. 

Serving 8000 wealthy families from its eight offices in Brazil, as well as offices in Chile, Uruguay, Paraguay, the US, the Caribbean, and Switzerland, the bank has expanded mainly organically in its home country. In other Latam markets, growth was achieved largely through joint ventures, such as the one with asset management firm MCC in 2011, and corporate acquisitions such as that of CorpBanca in 2014, both in Chile.

“Many international banks have moved in and out of the region, bringing uncertainty to many families, but clients distinguish our Latin American DNA and appreciate that our commitment to the region is permanent,” says Flavio Souza, CEO, Itaú Private Bank, emphasising the bank’s 90-year history.

Supported by the innovation department, created in 2009, last year Itaú Private Bank implemented a client segmentation model that resulted in improved offering, as well as greater scalability and efficiency for the bank. Recognising the importance of the HNW segment, it created a new advisory model specifically dedicated to individuals having assets between BRL5m and BRL30m.

Understanding the need to provide exclusive products to UHNW individuals, with more than $20m in assets, who represent an important segment of the bank’s client base, Itaú Private Bank is also planning to step up its offering of alternative investments.

A process introduced last year called “financial check-up” gives all clients the possibility to consult with several specialists in the same meeting, enabling advisers to identify opportunities and propose financial solutions.

While innovation will continue to have critical importance in the technology and digital space, increased regulatory requirements call for banks “to review and reinvent” their business model, in order to better serve clients, but also deliver a sustainable performance to shareholders, says Mr Souza.

The recent economic slowdown combined with higher regulation has made the Brazilian wealth management market one of the most competitive, he says. However, Itaú estimates the sector will still grow 12 to 15 per cent this year. While aiming at maintaining its leadership position in Brazil, the bank plans to grow market share in Latin America too.

“We are looking for growth opportunities in major markets such as Chile, Peru, Colombia and Mexico,” states Mr Souza.  ET

Best Private Bank in Mexico
Banamex

With $68.5bn (€54bn) in assets under management at the end of last year, Citigroup’s Mexican unit Banamex claims to account for 33 per cent market share in the HNW and UHNW client segments in the country. Net new money increased by 42 per cent in 2013, reaching $9.8bn, and number of clients increased by 8 per cent.

With more than 130 years of banking experience, Banamex boasts 4,500 client relationships, more than 500 with UHNW families. These represent more than 50 per cent of the wealthiest families in Mexico, according to the bank.

Segmentation is key for targeting client needs. Onshore and offshore banking are treated separately, according to regulation, and recognising different needs of HNWs and UHNWs, the bank serves them from separate business lines, which also rely on the group’s dedicated offices abroad, in the US and Geneva. 

This strategy is also based on client professions too, with the focus being on young professionals and entrepreneurs. The bank actively targets the next generation and has launched a new digital platform allowing better interaction between clients and bankers.

“Banamex clients have access to the best global product offering in the market through Citi,” states Alexander G. van Tienhoven, CEO, Citi Wealth and Investment Management, Mexico and Latin America.

Scale, talent and expertise, with 550 bankers with 14 years of professional experience on average, are some of the bank’s key strengths, says Mr Tienhoven.

But having a sound onshore and offshore franchise, and global expertise is not enough, he says, when it comes to managing and growing clients’ portfolios in a sustainable way. “We need to continuously be ahead of the curve by innovating and understanding the changing environment. This is the core of our vision and strategy.”

“Competition is tough, especially if the name of the game is offering the best services and products to clients in a low spread environment,” says José Ernesto Fuentes, CEO, Citi Private Bank, Latin America.

“With external frauds and attacks continuously increasing, we need to continue to have a strong franchise focused on managing risk and controls.” Regulatory requirements are also a challenge, says Mr Fuentes. “Regulation is here to stay and we need to focus and comply, and that requires resources and effort.” ET

Best Private Bank in Chile
Larrainvial

LarrainVial and its private banking division, Gestión Global, have been enjoying impressive rates of growth in recent years. Assets under management were up by 18.5 per cent in 2013, following on from a 20 per cent rise the previous year, while the numbers of private clients have also been on the up.

This is despite increasing competition from overseas. “Adapting to the arrival of foreign private banks that have brought strong competition to Chile has been a challenge,” says Gonzalo Córdova, head of wealth management at LarrainVial.

He reports that it has been a tough year for the bank’s onshore investments as the equity and fixed income markets underperformed, though the bank is responding by trying to offer its UHNW clients greater access to its international platforms and more sophisticated products.

“We have pushed alternative investments, mainly private equity, as a new asset class into our strategic team so they can incorporate these products as options for our private banking clients,” says Mr Córdova. LarrainVial’s part-ownership stake in Altamar, a Spanish private equity fund, offers clients a gateway to Europe, while the company’s asset management arm recently launched a Mexican equity fund and a Latin American high yield fund that have brought an element of diversification to portfolios.

Clients are divided into high net worth (more than $1m), which includes ultra high net worth (more than $5m) and family offices (more than $15m), all of whom are offered the bank’s full array of products. Mass affluent clients (less than $1m) are offered a more limited range. ES

Best Private Bank in Colombia
Best Private Bank for Growth Strategy
BTG Pactual

Mush has been happening at BTG Pactual, underlining why it is a worthy winner of PWM’s awards for best private bank for growth strategy and best private bank in Colombia. The group, Brazil’s largest independent investment bank, announced in July its acquisition of BSI, a Swiss wealth management bank, from Italian insurer Generali. “For us this is the cherry on the cake for our growth strategy,” says Rogerio Pessoa, co-head wealth management.

The deal is groundbreaking in the asset management sector and will double the company’s assets under management to $200bn, increase BTG’s employees from 3,000 to 5,000 and expand its presence into Europe and Asia.

Mr Pessoa says the firm’s great strides since its flotation in 2012 have been partly driven by its meritocratic style, sheer hard work and aligning the interests of its partners with wealthy clients. The partners are heavy investors in the company’s products, sometimes taking up to 40 per cent into their own accounts.

This year, the firm also identified how regulatory change had opened up market opportunities in Colombia, such as in standardised local derivatives and margin accounts, which have brought new sources of revenues and engendered long term relationships with important clients. “These new initiatives were responsible for 5 per cent additional revenues to our books and are currently bearing more fruit,” says Mr Pessoa.

Having made such a remarkable imprint so quickly on Colombia, he adds that Peru and Mexico are the next two countries targeted for expansion plans in 2015-16. CJ

Best Private Bank in South Africa
Investec

While Investec remains a nose ahead of fierce South African rivals including Standard Bank and FNB, it is continuing to innovate in order to stay ahead of the game, having recently launched a concept known as “One Place”, which the bank’s management believes provides true differentiation.

 “This puts us in a position today where we are the only financial services company in South Africa that, under one umbrella brand, can offer private clients seamless and integrated access to private banking as well as wealth and investment, both locally and internationally,” claims Ciaran Whelan, the group’s head of private banking.

Private clients, he says, can choose their preferred transaction channels from Investec’s mobile or tablet apps, the Investec Online Platform, a 24-hour global call centre or direct contact with private bankers and investment managers.

Whereas many Investec clients are based in South Africa, the bank feels it is important they are not restricted by national boundaries in their lifestyles or in their income generation and preservation. “We endeavour to simplify the financial lives of our ‘global’ clients and ultimately give them access to their greatest commodity – time,” says Mr Whelan.

Some competitors are using South Africa as a regional platform for cross-border expansion, but Investec believes clients based in neighbouring countries will look predominantly at investment options out of the UK and Swiss platforms, both of which are available at the bank.

“The fact that we are an entrepreneurial African business that has grown globally helps us understand African private clients,” adds Mr Whelan. “We understand their businesses, their growth objectives and their investment requirements.”

Yet the challenges facing wealth managers, particularly securing continued support and respect from government to enable them to continue to deliver favourable risk adjusted returns for their clients, should not be trivialised, believes Mr Whelan.

“Without consistently good economic growth the political and economic challenges facing South Africa will be exacerbated and will continue to pose difficulties for South African wealth managers charged with realising good returns for their clients,” he says. The UK also remains a key strategic priority for Investec, now the third largest wealth manager by assets, running  £24bn (€30bn). The
franchise is also being developed in Guernsey, Ireland and Switzerland, although the group is continuing to explore opportunities in other jurisdictions, including Hong Kong. YB

Best Private Bank in Nigeria
Fidelity Private Banking

Against a challenging socio-economic background, characterised by corporate and government corruption, political instability and insecurity - fuelled by increasing sectarian violence in the north-eastern part of the country, carried out by members of the Islamist armed group Boko Haram, - the growth of the Nigerian private banking is driven by economic expansion, rising per capita income and foreign direct investments.

The largest oil producer in Africa, as well as its largest economy and the 26th in the world, Nigeria is the N of the “Mint” countries (Mexico, Indonesia, Nigeria and Turkey). This is the new acronym that identifies the next emerging economic giants, coined by British economist Jim O’Neill – serving most recently as Goldman Sachs Asset Management chairman, best known for coining the Bric (Brazil, Russia, India, and China) countries in 2001.

“The policy-backed diversification of the Nigerian economy has created opportunities for entrepreneurial success, witnessed in various sectors of the economy, including entertainment, oil and gas, and information  and communication technology,” explains Nnamdi Okonkwo, CEO, Fidelity Bank. “These entrepreneurs are on the path of being the next generation of HNWIs in the country and will form the engine for private banking growth in Nigeria,” says Mr Okonkwo.

The regulatory body for private banking in Nigeria, the CBN, has maintained economic stability via well-implemented fiscal policies. Regulatory oversight processes and requirements are also continually improved to ensure clients’ funds are secure, he assures.

The private banking division of Fidelity Bank, which targets clients with minimum investable wealth of $250,000 (€197,000), saw its assets under management grow by more than 30 per cent, to NGN27bn (€130m) last year, which may be seen as the average level for a private banking institution in the country.

In 2013 the bank invested in electronic banking products, strengthened customer service and the procedure to handle client complaints, and enhanced performance management tools. These measures positively affected revenue and profit, explains Mr Okonkwo.

Investments in mobile banking technology and internet-based solutions improved the utilisation of client data, thus facilitating product cross-selling. The institution plans to further improve digital channels of communication, and dedicate more resources to minimise or eliminate bank frauds.

The key challenge for private banks in Nigeria in the medium term remains how to face client’s approach towards important issues such as succession planning. This is still a taboo theme, although average life expectancy in the country is only 52, explains Mr Okonkwo. “Clients often shy away from such topics thereby creating more problems for both the bank and their families upon an unexpected death. Often times, their estate is in disarray, with family members at war and in court.”

The secrecy clients keep on their overall assets adds to the issue. The bank hopes to change client attitude through educational seminars and by increasing trust. ET

Best Private Bank in Mauritius
MCB Private Banking

Albeit from a low base, MCB Private Banking’s assets under management grew at a compound rate of 250 per cent over the past three years, reaching MUR29.2bn (€724m) at the end of 2013. This phenomenal growth was driven by the introduction of portfolio management and financial planning services, coupled with a successful client acquisition strategy and improved customer service standards. Establishing partnerships with external asset managers was also key, explains Didier Merle, head of MCB Private Banking.

The institution partners with international brands such as Société Générale, Morgan Stanley, Carlyle Group or fund specialists such as Kotak Mahindra in India.

Leveraging on synergies within the MCB Group, ie the capital markets division and the corporate banking, contributes to enable the bank to offer bespoke solutions to clients.

But the limited size of the home market means the bank has to actively look for new pools of wealth. “The next logical phase of our growth strategy will be in the continent,” says Mr Merle. “We will need to deepen our understanding of the needs of the affluent and high net worth segments in Africa, build our brand in selected markets and leverage on the numerous advantages of the Mauritius jurisdiction so as to attract this regional pool of wealth.”

The island has signed numerous double taxation agreements with several countries; the legislation on trusts and foundations is “very attractive and the island itself offers a unique lifestyle,” he says.  

To support AUM growth, the bank is investing in a new IT infrastructure for custody services. As the business grows and becomes more sophisticated, client segmentation, currently around wealth buckets, will need to be refined too.

As the talent pool of private bankers is scarce, building the capacity and capabilities of the team to retain talent and meet expectations of an international clientele are also top priorities, explains Mr Merle.  ET