PWM’s second annual Global Private Banking Awards have seen a strong focus among wealth managers in most regions on operational strength, asset allocation and how these topics are communicated by client advisers to their wealthy customers.
Enough time has now passed since the onset of the financial crisis for banks to make some sort of decision on how their business model will work in the future.
Our researchers contacted 350 institutions across Asia, Europe, the Middle East and North and South America in the four-month period prior to the judging of the awards. The judges first examined quantitative data from the entrants, including three years of figures detailing capital adequacy requirements, assets under management, asset flow patterns, net profits, cost-income ratios, adviser-to-client ratios and performance figures for managed portfolios.
Following this, submissions on business and growth strategies, portfolio management, innovation, communication with clients, socially responsible investments, technology, use of third-party products and remuneration and fee structures were all observed and compared. The banks’ relative approaches to operations and the level of seriousness with which they tackled due diligence and counterparty risk measures were also crucial.
After the shortlists had been drawn up, the panel debated and voted on the winners. Quantitative data was verified and augmented by wealth management think-tank Scorpio Partnership, which also deployed a proprietary formula to compute – using a series of Key Performance Indicators – which bank had employed the Best Leadership team. The winner was Credit Suisse.
The concept of regional expansion, of being close to clients in their financial and cultural needs, drew particularly keen responses from the judges. “Providers who have local presences, especially in growing markets like Asia, the Middle East and other emerging regions, will increasingly feature as improving their rankings in these awards,” says Ray Soudah, chairman of MilleniumAssociates.
A series of strong entries arrived from developing market-based banks operating in China, Taiwan, Latin America, Turkey and Central and Eastern Europe. Among the legion of home-grown banks in growth economies rising through the rankings were Itaú, China Merchants Bank, DBS and HDFC, who took the respective honours in the hotly contested territories of Latin America, China, Singapore and India. HSBC retained supremacy in the Middle East and Hong Kong, while still contending globally, in Asia and in Turkey.
“Banks in Asia have benefited from economic growth that has led the world and lessons learned from the region’s own financial crisis more than a decade ago,” says Simeon Fowler, CEO, Fox Partnership in Singapore.
The judges noticed a slight falling back and complacency from several institutions active in the back gardens of Europe’s private banking heartlands. Also pleasing was the much larger range of institutions chosen by the judges, which reflects higher standards across the board and the willingness of many banks to create a regional niche for themselves, rather than trying to be all things to all people and having their efforts bulldozed away by the global juggernauts. It has become more difficult for smaller names, without global or deep regional presence, to fight their way through the system. Even the intense nature of the application process, with most banks taking several weeks to complete the questionnaire, immediately sidelines those institutions without the capability or desire to generate the type of market data and qualitative observations their clients, collaborators and counterparties would require.
Winner: Citi
• Best global private bank
Citi Private Bank’s change of business model, with a new concentration on clients in the $25m plus assets bracket has enabled it to reduce its key adviser to client ratio to an industry-beating 30:1. Having disposed of asset management and brokerage businesses, the bank is keen on integrating private banking with investment banking and offering FX, loan and other institutional style services to cross-border ultra high net worth individuals. Family offices increasingly get special treatment in their own division.
Now one of the few global banks working totally on an open architecture basis, Citi is currently trying to promote its HedgeForum services, through which it offers externally managed hedge funds in highlighted areas such as distressed US real estate with a keenly negotiated, simplified fee schedule. “I am excited about this chance to put new markets down on the table and drive it from the client’s interest, changing the way the private banking world works,” says Jane Fraser, appointed CEO of Citi Private Bank in 2009.
She has been hiring aggressively across all divisions. This includes operations, where due diligence teams have been significantly boosted across Asia, the US, Latin America and Europe. She is adamant that these research teams, while supporting private bankers, will be kept totally separate from sales people. “If you are going to give clients access to the best opportunities, you need to make sure you have the best due diligence teams out there,” says Ms Fraser. YB
