Global Private Banking Awards 2016: Winners’ Profiles – Regional Winners

Best Global Private Bank
Best Private Bank in Asia
UBS Wealth Management

While other banks are beginning to challenge the Swiss giant in many geographical and client segments, UBS remains far ahead of the competition both globally and in its key growth market of Asia, where much of its international revenue and client asset flows are coming from.

As the world’s largest wealth manager, with $2tn of client assets under its watchful eye, the UBS Wealth Management business contributed 45 per cent of group profits in 2015, with annualised growth of 6.5 per cent, the highest since 2007.

UBS has always liked the idea of big goals, setting its relationship managers bright, visionary strategic targets of which staff are reminded on a weekly basis. For 2015, these have included “embedding” investment management and portfolio construction into the bank’s ‘DNA’; transforming advisory business by shifting advisory assets into mandates in order to boost fee revenue; growing the ultra high net worth segment while also invigorating high net worth and affluent customer business; expanding the global footprint and “balancing” offshore/onshore business by expanding in China, through boosting the Shanghai operation and in Italy, through acquiring Santander’s onshore business.

“Currently, Singapore and Hong Kong are our two key booking centres in Asia,” says Jürg Zeltner, global CEO of UBS Wealth Management. “But moving forward, we expect the domestic businesses to become increasingly important and we have exciting plans for China, Taiwan and Japan.” The bank opened a Shanghai branch in March and in April, an office in Kowloon, Hong Kong, across the water from the Central Business District, which already has 50 staff and is growing fast. 

With 2800 wealth management staff in the Apac region, 1000 of them client advisers, UBS is ahead of any other wealth managers in Asia. Many of these staff are put through internal education programmes such as the Ultra High Net Worth Academy.

At the same time, the bank is not neglecting its operational challenges, adapting its operating model to enhance efficiency. This has been achieved through a concerted effort from head office in Zurich to leverage the Swiss platform across different geographies, while outsourcing non-core functions, including various technology services to outlying countries, often in developing markets, where labour, office and infrastructure costs are much cheaper. Continued advancement to “meet the digital age” is being met with significant IT investments, responding to client expectations. However, there is an even bigger incentive for UBS than regulations, costs and meeting demands of increasingly savvy and demanding private clients.

If we look at the history of UBS as a wealth manager, the first juggernaut to almost implode, yet also the first to settle with the US authorities and become fully compliant and among the first to transform from a secrecy-led to asset management-led private banking model, there is a pride here in leadership – UBS wants to be the bank that sets the standards in the private banking industry, and currently there are few challengers to suggest that it will have to relinquish this role any time soon. YB

Best Private Bank in Europe
Best Private Bank in Switzerland
Pictet Wealth Management

For Pictet, which recently shook off its old unlimited liability partnership structure in favour of a less secretive approach, Europe is seen as the key strategic region for expansion, employing nearly 1000 staff in the old continent.

European hubs where the Swiss bank is stepping up its presence include Luxembourg, where Pictet has had a presence since 1989. Indeed the group’s Luxembourg bank supervises Pictet’s banking branches in France, Germany, Italy, Spain and the UK, as well as Hong Kong.

Pictet’s European arm has continued to grow in headcount and assets. Pictet’s Luxembourg office has recently launched Pictet Technologies, a “financial technologies factory”, established to serve group needs for IT developments. Pictet says the new start-up-style company will hire 30 IT specialists by the end of 2016 and up to 80 by the end of 2020.

Pictet has added 15 staff in France during the last 12 months, while increased regional coverage of Germany has benefited from new hires of specialist teams, with further expansion under consideration. The Italian focus has been mainly in the country’s north, following the opening of an office in Verona in 2015, strengthening the bank’s presence in one of Italy’s most prosperous regions.

Pictet Wealth Management has also been busy expanding in London, with particular emphasis on hiring senior bankers, adding 12 staff in 2014 and another six in the first half of 2015, prior to moving to new offices twice the size of previous accommodation. YB

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

Erste Private Banking is the leading private bank in Austria and in Central and Eastern Europe, with more than 10,000 clients in Austria, and another 9,000 in the Czech Republic, Slovakia, Hungary, Croatia, and Romania. Private client growth has been quite healthy, at 3.5 to 4 per cent, over the past couple of years. 

In the home market of Austria, where private banking manages €13.9bn ($15.4bn), this growth has been based on an aggressive approach to boosting client numbers, including a cold-call strategy using bought contact details for potential clients, and special network events.

The bank has done more than simply try to get new clients, however. It has thought a lot in recent times about the quality of the customer experience. “Supportive and straight organisational structures, a realistic sizing of client numbers for each relationship manager, as well as powerful software environment and training are just a few examples of what’s crucial in order to further increase quality,” says Wolfgang Traindl, head of private banking and institutional clients at Erste Bank Österreich – referring to both Austria and CEE. 

Socially responsible investing and philanthropy have risen in importance in private banking in recent years; in 2015 the bank produced new material showing how socially responsible clients could invest, and how they could engage in philanthropy through the bank’s network partners.

“Interest in this topic started in Austria, but it has gained more and more attention in CEE too,” says Mr Traindl. “Clients are starting to think about their ecological footprint in clothing, driving a car, but also in investments.”

Clients’ biggest challenge? “Our biggest challenge in Austria – and this is also the case in the Czech Republic and Slovakia – is the low interest rate environment, which makes it hard to find low volatility investments with decent returns,” he adds. DT

Best Private Bank in the Middle East
JP Morgan Private Bank

With its deep research base and global reach, JP Morgan is well positioned to cater to wealthy investors in the Middle East, where geopolitical issues and decline in oil price – which have negatively impacted countries’ oil revenues in the region, particularly affecting businesses reliant on government spending – have been a wake-up call for investors. 

“In the past two years clients have sought to invest a material portion of their wealth internationally, to hedge against oil price fluctuations and other geopolitical concerns,” says Tara Smyth, Middle East market manager at JP Morgan Private Bank. “We have also seen clients continuing to favour a high allocation to private equity and real estate.” 

JP Morgan’s alternative investment platform, with $172bn in assets under management and a team of more than 100 professionals globally, provides clients with selected private equity and real estate managers. 

The global bank, which sources the large majority of its $425bn client assets from ultra high net worth individuals, enjoyed $11bn in net new money during 2015. 

This positive result was also fuelled by product innovation, with 20 new alternative investment opportunities launched last year. These included thematic managed solutions, which grew to $37bn from $2bn at their inception in 2010, and are particularly appealing to business owners, who are at the centre of innovation within their respective industries, says Ms Smyth. 

The strength of its balance sheet enabled the bank to continue to meet clients’ lending requirements, even during times of extreme market stress. 

Credit offering in the Middle East has been significantly developed. “We are now able to provide an extensive array of lending solutions to help our clients meet their lending and liquidity requirements both within and outside of the region.”

Sticking to a long-term investment plan is critical when building out their portfolios, particularly in the current uncertain environment. “There has been a lot of noise, both from a markets and a geopolitical perspective, which can cause investors to pause. One of the things I’m most proud of has been our ability to keep clients focused on the long term,” says Kelly Coffey, US Private Bank CEO. 

“The worst thing you can do is to overreact to the news of the day,” she says, explaining that missing the 40 best days out of the approximately 7000 days of market activity during the past 27 years would mean annual compound returns reduced by 790 basis points.

The bank also continues to build out its digital capabilities and recently announced a partnership between JP Morgan Chase and InvestCloud to accelerate the development of new digital capabilities for individual investors, across both the JP Morgan and Chase franchises. 

The private bank is piloting a proprietary, user-friendly wealth planning digital tool, which helps clients and prospects define and prioritise goals. “Our focus at JP Morgan Private Bank is on bringing together an innovative technology platform with the advice, insights and sophistication of our advisors,” says Ms Coffey. ET

Best Private Bank in the US
Best Initiative of the Year in Relationship Management Technology
Northern Trust

One of the highlights of 2015 for Northern Trust, which has 55 offices across the US overseeing $227bn of private client assets, was a series of enhancements to its pioneering Goals Driven Wealth Management solutions. The bank describes this as a “significant pivot” away from traditional approaches to portfolio management.

The difference is that the asset allocation process is actually defined by customers’ goals, rather than just purely from the investment team’s recommendations. This process goes well beyond a goals-based questionnaire sitting atop a convention asset allocation process, says the bank.

The Northern approach is designed to allow advisers to have richer conversations with clients, giving them an understanding of whether their assets will prove sufficient to funds their goals and provide a definitive framework with which to address any excesses or shortfalls. A mobile goals platform has been developed by the bank to give advisers access to real-time information in client meetings.

“At Northern Trust, we believe the most important ingredient to provide outstanding service to ultra high net worth families is the combination of both human advice and advanced technology,” says Steven L. Fradkin, president of Northern Trust Wealth Management.

“Service excellence is not an either/or proposition between human expertise and technological enablement. It is, rather, the integration of these different mediums, and aligning them with how each client prefers to work with us, that is the art of our business.” 

The belief at Northern Trust is that with ultra-high net worth clients, there is a continuing need for human, personalised, advice and analysis because of the intricate and ever changing complexities and interdependencies involved with estate planning, charitable giving, tax planning and other factors. 

“It is also imperative that excellent expert advice be combined with the most advanced technology and delivery,” says Mr Fradkin. “Technology must be harnessed across a continuum of client needs ranging from goals driven planning, reporting, risk management, e-signature fulfilment and more and must be provided in a seamless manner.” 

While he expects technology to continue to help clients and increase the bank’s efficiency, there is no expectation that this will lead to a reduction in wealth advisers given the complexities of wealth management. Also, the on-going growth means that hiring will continue. YB

Best Private Bank in Latin America
Best Private Bank in Brazil
Itaú Private Bank

Despite the challenging economic and political environment in Latin America, particularly in Brazil, its largest economy, Itaú Private Bank attracted 140 per cent growth in net new money last year, BRL18bn ($5.7bn), boosting total client assets to BRL267bn. 

Winner of our country and regional awards for several years, the Brazilian institution remains the best capitalised bank in its home country, and a top regional player in technology, products, and advisory services, according to our panel of judges.

The bank’s net profits increased 15 per cent too, although high interest rates and high inflation drove most of its net new money into inflation-linked instruments and conservative solutions, such as government bonds. 

“From a margin perspective these are less profitable products, but we have a very sustainable operation, with very solid net income,” states Flavio Souza, CEO at Itaú Wealth Management Services. “It is also very important to take care of the P&L and manage costs.” 

Positive results were also favoured by the withdrawal from the region, or reduced LatAm focus, of several global banks, due to their lack of scale and costs associated with increased regulatory compliance. 

This gave the bank, perceived as a “safe haven”, the opportunity to serve new clients, says Mr Sousa. “Also Itaú has a very well defined strategy and a strong ability to generate new clients, leveraging all business areas of the bank.”

Itaú Private Bank has almost 28 per cent of market share in Brazil, which represents 40 per cent of the LatAm wealth management business. After the merger with CorpBanca in 2014, Chile and Colombia represent a key focus for the bank’s wealth management growth.

Offering a global platform of products and services is becoming increasingly important, says Mr Souza, who views tax amnesty programmes in the region as “a very positive development for the industry.” 

 “Domestic markets are not big or sophisticated enough to give wealthy clients, especially the ultra-wealthy, sufficient alternatives to build a diversified portfolio.” In the region, although to a lesser extent in Brazil, cash and deposits represent around 40 per cent of wealthy clients’ portfolios, he reports.

Itaú has a bank in the UK and a full bank in Switzerland, while from Miami it serves LatAm clients investing offshore.

The Brazilian institution has increasingly positioned itself as a digital bank, even calling itself “Digitau”. Today, 80 per cent of its wealth management clients use digital channels to execute their transaction, although robo-advisory is still “at a research stage”.

Last year, Itaú inaugurated a major facility, the Mogi Mirim Technological centre, aimed at increasing the bank’s data processing capacity. It also launched a technological entrepreneurship centre in partnership with Redpoint e-Ventures to support start-ups and innovation. ET