Global Private Banking Awards 2018: Winners’ Profiles – Regional Winners

Best Global Private Bank;
Best Global Private Bank for Customer Service;
Citi Private Bank

Citi has won the coveted crown, so often snatched by Swiss rival UBS, for best global private bank, mainly due to its resilience and growth after the global financial crisis, when so many rivals floundered.

As well as the healthy balance sheet, key to Citi’s growth, including a phenomenal haul of $42bn in net new money in 2017, has been its incorporation of private banking into its division serving institutional clients. This means that at Citi it looks less like private bankers have brought in the investment banking arm to sell more capital markets products to the clients, but more like they have brought knowledgeable partners with them to help solve problems, tackle business growth challenges and offer advice. 

Consultants say Citi is one of the few banks to actually get this formula right, with the link between investment and private banking often looking more natural and less forced than the ‘one bank’ structure espoused by the Swiss giants.

In the ultra high net worth space, on which Citi concentrates, it is always at the table when potential customers are looking for banks to pitch for their business, with long-standing expertise not only in alternative investments and trading, but also a desire to help clients purchase property in hotspots such as New York, London, and European and Asian capitals, where it can be hard to move quickly and find value. 

Citi has got it right in recruitment, communicated effectively with wealthy clients through mechanisms such as its ‘theme machine’, which uses big data to identify long-term investment themes, but most of all managed to effectively combine the human and digital elements of the client offer. It was one of the first private banks to effectively digitalise, devoting both staff and financial resources to establishing “customer journeys” and “customer experiences”, noble pioneering sentiments, since reduced to derogative clichés in private banking circles, as they have been devalued by mass adoption.

The one chink in Citi’s armour, say observers, is its reluctance to mobilise the Citi brand across all client segments outside the US, thus hiving off the private bank from retail and high net worth outlets, and refusing to countenance any career mobility between the units, insisting that private bankers are a special breed, linked only to their investment banking cousins. While this elitism irks some, the policy seems to have succeeded so far. YB

Best Private Bank in Europe;
Best Private Bank in Switzerland
Pictet

One might think that a bank founded in the year Napoleon defeated the Austrians and Russians at Austerlitz, and 19 years before Beethoven finished his final symphony, would be inherently conservative and resistant to change.

But this is false logic: the truth is precisely the opposite. Any institution not capable of embracing changes in which it could see the value would have died out at some point over the next couple of centuries. As Heinrich Adami, head of private banking at Pictet Wealth Management in London, notes: “We like to say that innovation is our oldest tradition. Our history would not span over 213 years, if we had not been able to innovate and continuously adapt to evolving environments.”

An example is its early adoption of thematic strategies before they became popular. Its Water fund was launched in 2000; SmartCity, its latest one, was introduced this year. Being a pioneer in thematic strategies is an extremely hard thing to do, because at the early stage it is hard to separate long lasting themes from mere fads. However, the longevity of some of the bank’s themed funds shows it has judged well.

A more recent example of technological innovation is the Wealth app, which allows clients to access their portfolios, positions, transactions and documents in real time. 

On the other hand, it is possible to be both innovative and cautious at the same time. Clients still remember, and are grateful for, the private bank’s cautious positioning ahead of the 2008 crash, which led to stellar outperformance at the worst point of the crisis compared with its peers. Observers often used to credit Pictet’s cautious approach to investment to the unlimited liability of its partners; Pictet has certainly done nothing rash since unlimited liability ended in 2014, and clients will hope that this break with tradition will not alter its approach to risk in the long term.

The wealth manager’s approach has proved popular with prospective clients as well as existing ones, enabling it to grow. The number of staff in wealth management within the EU has increased from 405 in 2015 to 488 in the first quarter of 2018, with a rise in Switzerland over the same period from 482 to 562, as Pictet’s expansion over recent decades continues. The wealth manager has also seen strong recent growth in Asia.

Asked what he thinks clients value about the wealth manager, Mr Adami cites various factors, including performance, its financial independence from larger banking groups, and, as he puts it, “a culture of service, emphasising the understanding of clients’ needs first, away from a short-term product-selling approach”. This chimes with the private bank’s wider reputation in the market, and is at odds with the emphasis among some private banks on hawking their own funds. DT

Best Private Bank in Central and Eastern Europe;
Best Private Bank in Austria
Erste Private Banking

Erste Private Banking is one of the prominent wealth managers in Central and Eastern Europe and the largest wealth manager in Austria.  The bank has more than 16,000 private clients with combined assets of €17bn ($20bn), serviced from its headquarters in Vienna and its local private banking units in the Czech Republic, Croatia, Hungary, Romania and Slovakia.

Christoph Kampitsch, the head of private banking at Erste Group, has maintained the unit’s leading market position in Austria in particular, and in Central and Eastern Europe as a whole, increasing the number of private clients by 15 per cent in 2017 to above 18,500, with a growth in assets under management of 20 per cent to €21bn ($24bn). 

But the division is equally proud of George. 

This is the rather un-Austrian name given to the group’s state-of-the-art online banking platform, developed by Erste Group Bank AG’s in-house fintech team. George allows each client to create their own version of the platform, tailored to their specific banking needs. Although George is a mass market product offered to the group’s clients in Austria, the Czech Republic and Slovakia, the private bank also offers an interactive reporting tool that enables it to address clients in a timely way with new offerings, market updates and additional valuable information. The private bank has also newly introduced a MiFID II compliant tool for its clients, known as the Digital Advisory Workbench. 

The importance of such technological innovations is sometimes underrated by the often conservative private banking industry, whose senior ranks tend to be occupied by men in their fifties and early sixties who came of age long before the digital revolution. But although clients like innovations which provide convenience, they themselves are often conservative in other ways. 

In 2017, the private bank’s implicit understanding of this conservatism did much to drive its successful absorption of Citigroup’s private bank in Hungary, a country which accounted for 30 per cent of new clients for Erste’s private bank as a whole in 2017 – with another 49 per cent from Austria.

Erste cites several reasons behind the level of churn in Hungary, which it describes as “almost zero”. It offered the full range of products and services previously accessible at Citi, thus keeping clients “in their comfort zone”, according to the bank. However, it also offered new products, including a wider range of Hungarian funds, special tranches of Hungarian government bonds dedicated to private individuals, and mortgage loans. DT 

Best Private Bank in the Middle East;
Best private bank in Qatar;
Best Private Bank in Russia
Credit Suisse

While Credit Suisse competes mainly with other larger global banks, the Zurich-based player, overseeing SFr784bn ($787bn) in assets in its private banking arm, is increasingly coming up against a new group of local rivals.

“We are increasingly offering local solutions to our clients, so we are gradually entering the space where we compete more with local banks,” says a Credit Suisse spokesman.

The Russian market has been a key priority region, where Credit Suisse prides itself in having offered “uninterrupted presence in the market” since the early 1990s, offering the services of more than 250 relationship managers and specialists covering the region.

“In the environment of economic turmoil combined with increasing regulatory complexity and challenging cross-border requirements, we ensure continuous monitoring of the market and development of a deep understanding of the requirements,” says the spokesman. “This allows us to provide a solid platform for our customised service and unique product solutions for Russian clients.”

Many Russian clients use the Swiss bank as their core banking relationship to meet both corporate and private family needs. These client needs are well served by a holistic “one-bank” approach, claims Credit Suisse, a business model currently being closely scrutinised by shareholders and international investors.

Enhanced due diligence, practiced by the bank in all emerging markets, has been particularly important in Russia, with an international sanctions regime to comply with, against a backdrop of geopolitical unrest and some prominent money laundering cases.

“Continuous monitoring of the market by our Russia-dedicated business and controlling functions allows us to dynamically adjust policies and procedures for onboarding and maintenance of client relationships,” says the bank. YB

Best Private Bank in Asia;
Best private bank in Singapore;
Best private bank for customer service (Asia);
Best Private Bank for Innovation
DBS Bank

DBS Bank is fast rising from a national champion in Singapore, to more of a regional leader in pan-Asian wealth management, praised for its innovation in digital technology. It now manages $108bn in wealth across the Asian region.

Recent highlights include the roll-out of its iWealth “full suite digital wealth management platform”, the incorporation of portfolio and performance analysis tailored to individual preferences, 24-hour access to markets and latest research and new enhancements in online foreign exchange trading.

Whereas previous innovations have very much concentrated on digitisation of processes, the easing of trading and payments for clients, the creation of easy-to-use smartphone apps and the research and use of big data analysis in its servicing of customers, there is now a concerted effort to pioneer new investment strategies.

Environmental, social and governance criteria for investment portfolios are now firmly in the sights of Su Shan Tan, group head of wealth management and consumer banking at DBS. Ms Tan has previously focused on serving customers and offering them market-leading advice. Providing them with access to a socially-conscious investment agenda could be a valuable new string to the bank’s bow.

“We want to lead in the ESG and impact investing space,” says Ms Tan. “This year we have made great strides in educating our staff and clients that doing good can and should be good business. One does not exclude the other.”

The belief at her bank is that as more and more wealth in Asia transfers from one generation to the next, millennials will invest as much for good as for profits.

“They wish to invest in companies that do business in a responsible, sustainable and impactful manner. In addition, more and more indices are being benchmarked to be ESG compliant, hence we have seen more flows automatically channelling into ESG-compliant component stocks.”

The bank has launched a suite of products playing to this new thematic, including the Women’s Livelihood Bond, which has helped offer 385,000 women in southeast Asia access to credit, markets and affordable goods, and the ESG outperformance warrant and note, investing in the MSCI Asia ESG Leaders Index, while simultaneously shorting the MSCI Emerging Markets Asia Index.

DBS continues to add staff, with a focus on onshore markets and “domestication” of wealth, helped by its acquisition of ANZ’s wealth management franchise in Taiwan and Indonesia. India and China will also see key future initiatives for the bank, with Hong Kong’s increased connectivity to China through the Greater Bay Area project seen as a key stimulus for wealth creation. YB

Best Private Bank in Latin America;
Best Private Bank in the US;
Best Private Bank for UHNW clients
JP Morgan Private Bank

JP Morgan enjoyed strong financial performance in 2017, with $39bn in net new money helping boost client assets to $526bn, the large majority sourced from North America and ultra high net worth individuals. 

Underlying these results is focus on client advice and a “comprehensive approach to managing clients’ wealth across both sides of their balance sheets,” explains Kelly Coffey, CEO, US Private Bank at JP Morgan.

The global private bank’s offering spans day-to-day banking needs, lending, investing, trust and estate planning, as well as philanthropy.

Under the umbrella of JP Morgan Chase, wealthy clients have access to asset management, investment banking and commercial banking capabilities, with the institution continuing to focus on strengthening the relationship across these businesses. 

“By helping clients across more areas of their financial lives we can build better, more integrated solutions that meet all of their wealth management needs,” adds Ms Coffey. 

Increasingly, managing clients’ wealth means helping them meet their goals. 

“Understanding our clients’ goals and intent for their wealth allows us to help them plan and invest for better outcomes, in line with how they think about their wealth, both in the short- and long-term,” she says.

A goals-based strategy also covers lifestyle and spending goals, wealth to leave to beneficiaries, wealth preservation across generations, and growth. 

When it comes to asset allocation, alternative investments occupy a top spot. “Clients have a need for alternative investments more than ever before,” says Adam Tejpaul, CEO, Latin America Private Bank, JP Morgan. In this space, the bank is pursuing areas of growth and innovation, to tap into parts of the global economy supported by long-term, secular trends, including technology and healthcare, he explains. It is also actively looking for opportunities to invest in assets generating yield, either from private debt of mid-market corporates, or real assets across different geographies. 

“Given the length of the current cycle, we are slowly starting to set aside some dry powder that we could deploy in areas that could face a more challenging period in the next few years, whether through managers focused on distress or deep value,” adds Mr Tejpaul.

While direct investments continue to appeal to clients, many prefer liquid alternative strategies, reports Ms Coffey, and the bank’s focus has been on hedge fund strategies able to produce uncorrelated return streams, particularly in periods of heightened volatility and rising interest rates. 

JP Morgan allocates the largest proportion of its investment budget to technology, to continue to build out its digital platform, and has rolled out an online trading platform, You Invest, enabling clients to invest by themselves.  

It has also “completely overhauled” its training and development framework, and recently launched an internal forum that helps advisers share best practices and materials.

In 2017, the US Private Bank began a five-year growth plan to add 1,000 new advisers across more than 20 new and existing locations. “We want to have a local, on-the-ground presence in all the markets where clients need our advice and services the most,” adds Ms Coffey. ET