The appointment in July 2009 of Blake Shorthouse as head of Credit Suisse’s ultra high net worth (UHNW) business in Emea signals the renewed push of the Swiss private bank into this rapidly growing market segment.
Mr Shorthouse, based in Zurich, and previously deputy global head of key clients at UBS, was tasked to create a specialised unit of a new breed of private bankers, called investment partners, split into seven regional teams across Emea. Although Credit Suisse has been focussing on the UHNW segment for decades, the new unit was set up specifically to target the super rich and cater to their complex needs. The multimillionaires of this world are mostly business owners, who have often set up family offices, and require help managing their wealth as well as commercial banking services for their companies. Unlike the “normal” private bankers, these specialist bankers have that breadth of experience and knowledge to be able to have an ongoing dialogue with ultra wealthy individuals, both about their personal wealth management and business banking needs.
“Our aim is to deliver across the full spectrum of financial needs – private to corporate and asset to liability when serving our UHNW clients,” says Mr Shorthouse.
Each of the investment partners handles only 10 to 20 client relationships each in order to provide that required “high touch” service.
The more generalist private bankers will continue to look after their existing ultra high rich clients, who, at Credit Suisse, are defined as those having a net worth of at least SFr250m (€200m). The new team will focus on gaining new business. At the same time, the ambitious plan is that investment partners will integrate themselves into those existing relationships and help relationship managers to develop them. Over the long term, the investment partners will gradually become the only ones responsible for the super rich.
Successful ingredients
Many banks have carved out specialist units to focus on this fast growing segment, which is also the most profitable, but very few of them have the key ingredients to be successful, according to Mr Shorthouse.
First of all, it is necessary to have a global investment bank within the overall group, which can provide access to institutional solutions which a pure private bank cannot offer, he says. The second ingredient is a healthy balance sheet, as many UHNW clients are looking for financing. The third vital element is a culture which is genuinely one-bank driven.
If some universal-service bank models came under strain in the credit crunch, Credit Suisse remains a strong advocator of the integrated approach, which has proved to deliver good results, particularly during the crisis.
“By the one bank model I mean a partnership culture where different parts of the bank routinely help each other to win business.” A referral mechanism is in place at the bank and it is bearing fruit. The amount of integrated collaboration revenues are measured and made it public in the bank’s annual report. The figure stood at SFr4.4bn for 2010. The bank aims for these collaboration revenues to reach 18 per cent to 20 per cent of net revenues.
“We deliberately place pressure on ourselves every single quarter by publicly reporting one-bank collaboration revenues,” says Mr Shorthouse. “Reporting the number and rewarding staff to refer clients creates a mental shift within an organisation, we are directly rewarded to be collaborative.”
In general, when an investment banker introduces a client to his private banking colleague, he is taking a leap of faith that that division is going to look after his client properly, and that there are not going to be any boomerang effects on their relationship.
But Mr Shorthouse states he has not detected any type of hesitancy from the investment bank to deal with the UHNW team, because they know that clients are going to be properly looked after.
When it comes to investments, Credit Suisse private banking is not just at the end of the product pipeline for the investment bank, he says. There are no sales quota that every adviser has to sell x percentage of structured products to their client base. This is also due to the fact that the private bank is an important revenue generator for the whole group.
Future ambitions
The UHNW business is a lower margin business, compared to the high net worth. The very wealthy are quasi-institutional clients, who are able to squeeze institutions on price, but because they are much bigger accounts and have a higher growth rate, they are a very attractive segment.
Asked whether this new breed of specialist private bankers will also bring new expertise and will drive to expand alternative product teams, Mr Shorhouse explains that the UHNW team will be using the existing product
