Global Private Banking Awards 2018: Winners’ Profiles – National Winners (Central and Eastern Europe)

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

Erste Private Banking is one of the prominent wealth managers in Central and Eastern Europe and the largest wealth manager in Austria.  The bank has more than 16,000 private clients with combined assets of €17bn ($20bn), serviced from its headquarters in Vienna and its local private banking units in the Czech Republic, Croatia, Hungary, Romania and Slovakia.

Christoph Kampitsch, the head of private banking at Erste Group, has maintained the unit’s leading market position in Austria in particular, and in Central and Eastern Europe as a whole, increasing the number of private clients by 15 per cent in 2017 to above 18,500, with a growth in assets under management of 20 per cent to €21bn ($24bn). 

But the division is equally proud of George. 

This is the rather un-Austrian name given to the group’s state-of-the-art online banking platform, developed by Erste Group Bank AG’s in-house fintech team. George allows each client to create their own version of the platform, tailored to their specific banking needs. Although George is a mass market product offered to the group’s clients in Austria, the Czech Republic and Slovakia, the private bank also offers an interactive reporting tool that enables it to address clients in a timely way with new offerings, market updates and additional valuable information. The private bank has also newly introduced a MiFID II compliant tool for its clients, known as the Digital Advisory Workbench. 

The importance of such technological innovations is sometimes underrated by the often conservative private banking industry, whose senior ranks tend to be occupied by men in their fifties and early sixties who came of age long before the digital revolution. But although clients like innovations which provide convenience, they themselves are often conservative in other ways. 

In 2017, the private bank’s implicit understanding of this conservatism did much to drive its successful absorption of Citigroup’s private bank in Hungary, a country which accounted for 30 per cent of new clients for Erste’s private bank as a whole in 2017 – with another 49 per cent from Austria.

Erste cites several reasons behind the level of churn in Hungary, which it describes as “almost zero”. It offered the full range of products and services previously accessible at Citi, thus keeping clients “in their comfort zone”, according to the bank. However, it also offered new products, including a wider range of Hungarian funds, special tranches of Hungarian government bonds dedicated to private individuals, and mortgage loans. DT 

Best private bank in Croatia
Zagrebačka banka, part of UniCredit Group 

UniCredit Private Banking has devised a successful policy of using its pan-European and in some cases global expertise to build its reputation in Central and Eastern Europe.

For example, its structured products team in Munich responded to the growing demand for these assets in Central and Eastern Europe by devising cross-border products that can be offered to clients in several Central and Eastern European countries. Its structured product with robotic exchange-trade funds underlying set a new record for single product issuance in the Czech Republic, Slovakia and Croatia

Another example of capitalising on its global expertise, but this time based on investment in human capital rather than financial assets, is Educational Advisory, a new service created in cooperation with the Worldwide Educational Advisory Company and offered to private banking clients in Central and Eastern Europe from 2017. The service advises clients considering sending children to high school, university, business school and even summer camps, organises tours of universities, and also runs workshops to prepare children for entrance exams. 

“So far we have seen a clear preference among our CEE clients to send their children to universities in Europe,” says Daniela Croitoru, a head of CEE private banking at UniCredit. “However, professional help and support is normally most needed when clients are interested in sending their children to study in the US.”

In the same year the private bank introduced into its Central and Eastern European markets the Real Estate Advisory Agency service, first introduced in Italy, where clients have looked at both industrial real estate and historic castles, and in Germany. 

The private bank has built an excellent reputation in Croatia. It has faced challenges in the country, however.  

“One of the main challenges in developing our private banking business in Croatia has been the rather conservative approach and historical lack of prior investment knowledge and expertise in the local PB market segment,” says Ms Croitoru. “This is why our relationship managers are focused on educating clients in one-to-one and group meetings, explaining investment principles to them, and advising products strictly based on client needs.” 

This approach has allowed the team to increase its AuM and strengthen client satisfaction in recent years, she claims.

The private bank has ploughed resources into the region recently, which is paying dividends in terms of the bank’s reach. The number of client-facing staff and assets under management both rose in 2017.

In 2017, UniCredit Croatia (Zagrebačka banka) adopted the Open Guided Architecture approach, becoming the first bank to offer this service to clients and distribute foreign funds in the country. Throughout the year, it put substantial efforts into preparatory activities for its Guided Open Architecture approach and negotiations with preferred partners. The year ended with a client event introducing the first four partners. The intention for 2018 is to further increase the number of providers and give clients the possibility of accessing an even larger number of best-in-class products. DT

Best Private Bank in the Czech Republic
Komerčni banka, KB Private Banking

KB Private Banking has won in the Czech Republic for the second year running, and continues to reap the rewards of a strong reputation, with further strong growth in private clients, taken largely from the wealthier clients using its retail banking network. Its compound annual growth rate in the four years to 2017 totals 12 per cent for assets under management, 20 per cent for net business income, and 9 per cent for client numbers.

It is not only clients that KB takes from its retail bank. The private bankers are taken largely from the highly performing section of the retail bank’s premium banking arm. The average private banker has been working within the KB group for 14 years, and within wealth management at KB for nine years.

By recruiting high performing long-stayers from within the group, the private bank keeps staff churn low, with an annual turnover of between 2 and 4 per cent.

These private bankers are grappling with what Petr Slaby, director of KB Private Banking in Prague, regards as an interesting juncture in the evolution of wealth in the country. “The increasing importance of family office and ultra-high net worth clients is very evident in the Czech market,” he says. “It is partially caused by the organic growth of wealth and the economic success of our country, but primarily by the beginning of a generational change in families, from the first generation of successful Czech entrepreneurs, industrialists, businessmen and businesswomen, who started building the new Czech economy after the Velvet Revolution in 1989.”

Responding to this, the private bank is continually developing tailor-made solutions in wealth management, succession planning and M&A advisory.

Looking to the future, the bank is implementing KB Change, a comprehensive strategic update programme, with a target horizon of 2020 and beyond. The programme is partly about digitalising the private bank, but also about organisational change, including cutting out layers of management. In both preserving quality and making improvements, it can benefit from the support of the private banking arm of Société Générale, KB’s parent company.  DT

Best Private Bank in the Middle East;
Best Private Bank in Qatar;
Best Private Bank in Russia
Credit Suisse

While Credit Suisse competes mainly with other larger global banks, the Zurich-based player, overseeing SFr784bn ($787bn) in assets in its private banking arm, is increasingly coming up against a new group of local rivals.

“We are increasingly offering local solutions to our clients, so we are gradually entering the space where we compete more with local banks,” says a Credit Suisse spokesman.

The Russian market has been a key priority region, where Credit Suisse prides itself in having offered “uninterrupted presence in the market” since the early 1990s, offering the services of more than 250 relationship managers and specialists covering the region.

“In the environment of economic turmoil combined with increasing regulatory complexity and challenging cross-border requirements, we ensure continuous monitoring of the market and development of a deep understanding of the requirements,” says the spokesman. “This allows us to provide a solid platform for our customised service and unique product solutions for Russian clients.”

Many Russian clients use the Swiss bank as their core banking relationship to meet both corporate and private family needs. These client needs are well served by a holistic “one-bank” approach, claims Credit Suisse, a business model currently being closely scrutinised by shareholders and international investors.

Enhanced due diligence, practiced by the bank in all emerging markets, has been particularly important in Russia, with an international sanctions regime to comply with, against a backdrop of geopolitical unrest and some prominent money laundering cases.

“Continuous monitoring of the market by our Russia-dedicated business and controlling functions allows us to dynamically adjust policies and procedures for onboarding and maintenance of client relationships,” says the bank. YB

Best Private Bank in Georgia
TBC Bank

Despite only being established in 1992, TBC Bank has been able to challenge incumbent player Bank of Georgia and develop an attractive value proposition focusing on innovative products and services, a dedicated multi-channel platform and “qualified” personal bankers – which has proved particularly successful with entrepreneurs and millennials.

“Entrepreneurs and early-stage businesses are the backbone of the national economy,” says Nino Masurashvili, deputy CEO, and head of private banking at the Georgian institution. “We see high growth potential in this segment and are committed to actively supporting new businesses.”

In 2017, the bank introduced a new programme – ‘Startuperi’ – a first in the country and wider region, providing financial support to start-up companies, while also offering training, master classes, advisory services and media coverage to young firms. Around 19,000 businesses have already taken part in the initiative.

Earlier this year, it launched ‘Space’, a fully digital banking app, developed in partnership with giant tech firms such as Amazon Cloud, Pulsar AI, Mambu, SalesForce and Corezoid. The service, popular with millennials, is “set to change the way people handle their daily banking needs, with beautiful and intuitive design, instant service delivery and transparent pricing,” explains Ms Masurashvili. 

The most significant benefit in targeting millennials, she adds, is their potential long-term value to a brand.

In Georgia’s nascent wealth management market, the institution is committed to offer investment solutions to help customers increase their income and diversify their portfolios. These have included alternative products, such as direct investments in locally traded bonds or tailored international investment solutions. Through its group’s subsidiary TBC Capital, the private bank also offers brokerage and investment banking services to HNWIs.

A wide range of lifestyle products, “highly valued” by very busy customers, are also available. ET

Best Private Bank in Hungary;
Best Private Bank in Ukraine
OTP Private Banking

OTP has won in its home country for the sixth year running, as it continues to increase its already dominant position in a growing market and as Hungary’s entrepreneurial class grows larger and richer. In 2017, it enlarged its market share of wealth management in the country by two percentage points to 35.4 per cent of assets under management.

However, not everything in the Hungarian garden is rosy. “Shrinking revenue margins and maintaining profitability are particularly big challenges for private banks in the CEE region,” says András Takács, managing director and head of wealth and investment management at OTP Bank. “The decreasing trend of interest rates puts more pressure on revenue margins here because the investment culture and attitude differ from Western European standards and fixed income type investments are more dominant in client portfolios.”

The private bank has responded in two ways.

“According to our new growth strategy, we shifted from growth based on client numbers approach to an AuM-focused growth strategy,” he says. “This shift in strategy served to improve efficiency by increasing the concentration of wealth.” 

Less affluent private banking clients have been switched to the mass affluent Premium service of OTP Bank, which has also given its wealthiest clients to the private bank. This has enabled the private bank to increase AuM per client by 13 per cent in 2016 and 16 per cent in 2017. In executing this policy of shifting clients from one part of the bank to another, it has the advantage of being part of the largest banking group in Hungary.

The private bank has also responded by restructuring the portfolio of its clientele, away from cash on deposit and lower-yielding fixed income investments, and towards higher-yielding investments. Mr Takács describes this as “a win-win situation for the client and the business line as well”. 

OTP is present in nine countries across the CEE region and is one of the few institutions to offer a true wealth management service in Ukraine, where, despite the turbulent market environment in the country, it managed to boost client numbers by 20 per cent. DT

Best Private Bank in Poland
mBank 

mBank, the Polish banking group owned by Germany’s Commerzbank, has won best private bank in Poland for the second time, building its reputation with an increasingly international offering.

The private bank has decided to eliminate home bias investments as much as possible. “Two years ago, the proportion of Polish investments in a model mid-risk portfolio exceeded 90 per cent,” says Bartosz Pawłowski, chief investment officer. “We have recently managed to bring it below half and currently such a portfolio is in 55 per cent invested abroad, using mostly ETFs. We intend to continue with this process.”

mBank has done this using a range of international asset managers with whom it cooperates: Allianz/Pimco, Fidelity, Schroders and Franklin Templeton – with further relationships planned. 

The private bank has also given its advisers a large amount of latitude in devising portfolios – up to a point. 

“Since almost all of our private banking advisers hold European Financial Planner certificates, we gave them a flexibility to adjust model portfolios according to their knowledge of individual clients’ preferences,” says mBank. The advisory team is responsible for preparing a list of possible substitutes, and the relationship manager can then modify the model portfolio using other funds from that list. 

The bank believes that this combination of rigid controls on product selection, and the ability on the part of the adviser to adjust to the individual requirement of the client allows it to offer a better service.

Looking at the Polish market as a whole, Mr Pawłowski thinks Poland is a great place to be a wealth manager. “The country has been growing rapidly and producing more and more wealthy people for whom wealth management has become an essential service.” DT

Best Private Bank in Romania
Friedrich Wilhelm Raiffeisen
Raiffeisen Bank Romania

Friedrich Wilhelm Raiffeisen (FWR) Private Banking, the wealth management arm of Raiffeisen Bank International (RBI), provides its private banking clients with a three-tiered investment offering: discretionary portfolio management, model portfolios and non-advisory services.  

Vienna-headquartered FWR has a presence across central and eastern Europe, and indeed was highly commended for that award, but it is in Romania where the bank picks up the top prize. FWR opened five new offices in the country between 2016 and 2017, concentrating in those areas where wealthy customers were lacking financial advice. 

“As our Romanian business is a young and dynamically evolving one, we see potential for future growth,” says Fabian Stenzel, head of international affluent and private banking division at RBI. 

The needs of its private banking customers are similar across all locations, he says, with a desire for security and stability, combined with the reliable and steady growth of their accumulated wealth. “The local differences lie in the investment products, which arise from the local legal and regulatory framework as well as from the interest rate environment, the political situation and the level of the private banking market maturity.”

The introduction of the MiFID II directive was a major challenge for the bank, reports Mr Stenzel, but it tried to use the regulation change to revisit its business model and enhance its advisory process to create further value for customers. 

“We created a new understanding for efficient customer service and holistic advice based on our common wealth management advisory system,” he says. “It was a challenging exercise, as we did not purchase an existing solution, but rather defined the functionalities and processes by ourselves, involving the experts of all the locations of the group.” 

The bank is confident that its new setup will ensure high quality customer service in all its locations and that the IT infrastructure it has put in place is robust enough to support the new offering. ES

Best Private Bank in Slovakia
Tatra banka

Tatra banka has been providing private banking services in Slovakia since 1998. Part of the Raiffeisen banking group, the bank dominates the Slovakian wealth management sector, with nearly €2.5bn ($2.9bn) in assets under management and a market share close to 50 per cent.

The bank’s main focus during 2017 was to get ready for the arrival of MiFID II. As part of a group-wide project, steps were taken to develop and implement a new wealth management platform, to cover the complete, end-to-end advisory process across all client portfolios. In addition to complying with the new regulatory environment, the new platform aims to deliver a better client experience in terms of advisory and portfolio management services, and reporting.

“The main challenges last year were the legal changes, and implementing them on time. We also tried to bring in something new that the client will see as an innovative approach, or something with added value,” says Marek Neckar, head of private banking.  

Recent innovations include the launch of a new financial advisory tool to improve the quality of advisory services, as well as the introduction of digital signature capabilities and voice biometry technology.

Expanding its investment product offering beyond the more traditional asset classes has also been part of the bank’s strategy. In collaboration with Tatra Asset Management, the bank launched a number of private growth funds especially designed for private banking clients. It has also put in place an equity crowdfunding platform to support start-ups, and it offers clients advice and access to art, real estate and gold investments, among others. PG