SG Hambros out to make life less taxing for offshore clients

With expanding numbers of Continental European expatriates now considering the UK as home, British banks are increasingly broadening wealth management offerings to cater for this new type of client.

SG Private Banking Hambros is no exception, with wealth planning boss Christine Ross now accepting a broader, cross-border remit, following the merger of her UK team with its international counterpart.

“It’s all very well having an international offering for offshore assets,” comments Ms Ross. “But once you are paying UK taxes, you need expertise in UK issues. This means that no client of ours is falling through the gap.”

In a recessionary climate, where politicians and other officials are regularly accused of creative minimisation of taxes, Ms Ross is keen to draw an ethical line in the sand. “The tax planning we do for our clients is benign and on a particular side of the line,” she says, adding that most clients’ views of what is morally right or wrong are typically shaped by their lawyers and tax advisers, with the debate about what is acceptable moving on fast, particularly since the onset of the crisis in 2008.

Ms Ross has an intimate knowledge of tax planning schemes, including controversial devices such as Employee Benefit Trusts (EBTs), now at the centre of investigations at Rangers Football Club in Scotland. Her belief is that while there are many excellent tools in the box, the value of the wealth planner lies in their correct, skilful and ethical use.

“EBTs, when used well, are there to benefit employees. Some firms pay out health insurance or gym membership fees from them,” says Ms Ross, freely quoting case law and Inland Revenue regulations to back up her theory.

“They are often used responsibly. They are not just used to channel money and avoid taxes. They are there to provide benefits and in some case, longer-term incentives.”

Once key tax issues have been addressed, the next big challenges Ms Ross currently sees among clients is converting paper wealth into income-producing assets. This particularly relates to those families who have recently sold their businesses and need to combine yield generation with “sensibly managed” portfolios.

The bank is seeing “something of a renaissance” in portfolios composed of individual stocks and bonds. But there has been another, more surprising development. While the conversation about alternative assets and hedge funds in particular was a tough one to hold in the nervousness of the immediate, post-Madoff aftermath, SG’s private bankers now talk openly and enthusiastically about the benefits of being able to offer hedge fund products.

This is done through a liquid and transparent range from the group-owned Lyxor managed account platform, which is seen a big plus, particularly by new recruits arriving from smaller boutiques with limited product ranges. Although the French parent bank is watching closely in the background, this cross-selling of hedge fund products is clearly one area which SocGen is keen to encourage.

“While they have a couple of people on our board in the UK, the French have understood the balance and are not too intrusive,” says Ms Ross. “They are here to support us,” providing input into both business and investment strategies on a hub and spoke basis.

This gradual build-up of client confidence has seen assets surging well beyond £9bn (€11bn), though still well below their £15bn peak. But Ms Ross is quietly expectant of further growth, both organic and through acquisition, with the sense of expanding scale backed by group investments in risk management and compliance systems.

Recent deals included the acquisition of £280m of client assets from Barings, following a similar story with ABN Amro. “We are really good at integrating our people and mixing them in,” suggests Ms Ross. “I don’t see anyone looking around pointing and saying: ‘that is a Barings person.’ It is not them and us, as with acquisitions in so many places.”

It is this idea of helping staff feel at home, in terms of identifying talent, training and encouragement, which Ms Ross particularly values at the French bank. This is a notion she has developed through a long career. Ms Ross started off as a childrens’ clothes buyer for Debenhams in London, before creating products for branch customers of building society Abbey National, advising wealthy individuals at UBS and eventually settling down as a wealth planner at SG.

Indeed much of her bank’s expansion has been down to finding good relationship managers in different regions. The move to open in Scotland is a case in point.

“Edinburgh was never on the radar of our previous expansion,” says Ms Ross, talking about the establishment of UK regional operations. “Yet we found some good people there so decided to have an Edinburgh office. There were other, more promising, potential locations where we just could not find the right people to expand the business.”