Bringing harmony to open architecture
Recent acquisitions have transformed Unicredit Private Banking into a truly pan-European player, but this has brought with it the challenge of standardising its approach towards third parties. Elisa Trovato reports.
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| Andrea Lacalamita, Unicredit Private Banking |
From its headquarters in Milan, Unicredit Private Banking is rolling out its “preferred partner” approach to fund selection to its core markets in Europe, including Austria, Germany and Poland.
With the acquisitions of HVB Group, a major bank in Central and Eastern Europe, and Bank Pekao in Poland over the last decade, the Italian institution significantly boosted its private banking business, which now includes HypoVereinsbank and WealthCap in Germany and BankAustria and Shoellerbank in Austria from HVB Group, as well as Pekao’s private banking. The pan-European player now manages €140bn in private banking client assets, with approximately 50 per cent sourced from Italy.
Today, the firm’s main challenge is to harmonise the approach to open architecture across all markets in which it operates, explains Andrea Lacalamita, Unicredit Private Banking’s global head of product development and innovation. In Germany and Austria, the bank can count on a 10 year history in offering third-party products and has established relationships with 70 asset management companies. In Italy, UniCredit only opened its fund platform in 2007, although third-party products were already included in clients’ segregated mandates.
“We are in the process of setting up a pan-European approach with preferred partners, with which we will be in close contact and which we will be using in our recommendation list,” says Mr Lacalamita.
Today, across Europe, the private bank’s list counts 10 preferred partners, including brands such as BlackRock, DWS, Goldman Sachs, JP Morgan and Templeton, with Pimco and Schroders being the latest additions.
Despite this predominance of big names, Mr Lacalamita claims large asset managers are not favoured over boutiques, as the key is to select the best manager for each asset class. There will not be more than 15 preferred partners, he anticipates, as a higher number could make it difficult to establish in-depth relationships.
“The ability of the managers to share information, speed of communication and transparency on their portfolios became even more important during the crisis. Our preference has gone to those managers who have demonstrated they understood the crisis and who had positioned their funds accordingly,” says Mr Lacalamita.
The fund research process is centralised in Milan and the selection team, which sits in Milan, Munich and Vienna, is headed by Jean-Francois Hautemulle, who operates in the product development and innovation unit division headed by Mr Lacalamita.
Currently, the recommended list includes 50 to 70 funds in the long only space, which cover the asset classes that are in line with the bank’s views on asset allocation and financial markets. The funds are sourced from both external partners and in-house manager Pioneer Investments.
Balance attractive
In Italy in particular, where open architecture is a recent trend, most inflows go into funds recommended on the list, and particularly in the 10 to 15 funds within the balanced model portfolio. This, amongst the five difference model portfolios on offer, is the one that best represents the bank’s clients’ profile, says Mr Lacalamita.
Risk indicators such as information ratio, up/down ratio and tracking error, have gained greater importance, he says. “Performance is not the only factor. It is mainly a matter of risk.”
A new service called MyGlobe which UniCredit private banking introduced last year in Italy responds to the growing need of wealthy investors to become more involved in decisions related to their investments and be constantly updated, says Mr Lacalamita.
The innovative feature of the service, which has already gathered €2bn in assets, is its “all in one” annual fee. This is an average of 60 basis points on the clients’ assets under custody, and covers any transaction of securities and funds, along with investment advice as well as any banking service.
“The key reason why we launched the service was to provide transparency and because we wanted to be perceived as independent,” he says, adding that customers can be sure that funds are changed in the recommended list not to meet revenue goals, but just to provide best advice.
