Global Private Banking Awards 2019: Winners’ Profiles – National Winners (Central and Eastern Europe)
Best Private Bank in Central and Eastern Europe;
Best Private Bank in Austria;
Best Private Bank in Croatia
Erste Private Banking
Celebrating its 200th anniversary in 2019, Erste Group knows the importance of its traditions, but also of having a forward-thinking mindset.
Its ‘George’ online platform now handles the banking needs of more than 5m customers in Austria, the Czech Republic, Slovakia and Romania, with Croatia and Hungary next in line.
“Private banking clients in Austria have access to state-of-the art asset reporting through George,” says Thomas Schaufler, the Erste Bank Austria board member responsible for Private Banking. “This interactive reporting allows clients to view their entire portfolio of assets online at any time. Its comprehensive functions makes it possible for clients to, among other things, choose the period of the report, easily find all securities positions, and retrieve detailed evaluations.”
Erste’s private banking operations now cover 19,000 clients across Austria and the CEE region, with AuM standing at €22.6bn ($24.9bn).
Alternative investments are of increasing interest to these clients, with real estate funds proving particularly popular. “Private equity is starting to be perceived as an interesting vehicle for enhancing the portfolio return,” says András Kállay, head of Erste Group Private Banking CEE Competence Centre. “However, this type of investment is still at an early stage for most of our clients.”
ESG investments are also a growing part of client portfolios, especially in Austria, where responsible investing has a long history, he says.
To enhance efficiency and profitability, Erste has initiated the process of downgrading some clients below the official private banking threshold. “Those downgrades that we did undertake – mainly to the top affluent segment – went really smoothly because we have a very broad product and service offering and due to the fact that the impacted clients still have a well-qualified personal adviser, quite possibly a mid-level adviser,” says Mr Kállay. ES
Best Private Bank in the Middle East;
Best Private Bank in Qatar;
Best Private Bank in Russia;
Best Private Bank for Entrepreneurs
Credit Suisse
Credit Suisse’s distinctive trait is its ability to deliver its services through an integrated franchise, across private banking, investment and corporate banking. Founded 163 years ago by Alfred Escher, the Swiss business leader, politician and railway pioneer, the bank keeps entrepreneurial thinking as one of its core principles, and prides itself in being able to support entrepreneurs through every stage of their business cycle.
In Russia, where private wealth and corporate activities are much more intertwined than in western Europe or the US, many clients are entrepreneurs, having major stakes in Russian companies. “Our clients are looking to us beyond wealth management and we can provide them access to our other capabilities, including project finance, export finance, structured lending and investment banking,” says Robert Cielen, head of International Wealth Management Emerging Europe at Credit Suisse.
Many of the bank’s relationship managers have backgrounds in corporate and investment banking, which enables them to better understand client needs and deliver across a broad range of corporate and investment banking opportunities.
In Russia, increasing numbers of UHNW clients have their own family offices, employing seasoned investment professionals and the bank is investing in a dedicated UHNW investment delivery function for the Russian market. This includes continuing to hire investment professionals that are “true investment partners” to the most sophisticated clients and their family offices, as well as providing clients access to Credit Suisse’s Global Markets’ trading platforms and institutional-type services.
In the Middle East, the UHNW client segment provides the biggest source of wealth but entrepreneurial wealth is rising too. “Although still relatively nascent, entrepreneurship is beginning to flourish in the Middle East, as the region’s economic growth prospects diversify from traditional industries and move towards new sectors,” states Bruno Daher, head of International Wealth Management Middle East and Turkey at Credit Suisse. Moreover, as part of a drive to build a self-sustaining non-oil sector, GCC countries such as Saudi Arabia, the UAE and Qatar, are building a framework that is more supportive for start-up enterprises and allows for greater competition.
Middle Eastern investors, including Qatari nationals, are looking for global and local solutions that address both their business and personal needs. When compared to other emerging market investors, such as from Asia-Pacific, the Middle Eastern investor has less developed capital markets and local solutions in their own region. “Credit Suisse is well positioned to partner with these clients and support the region’s appetite for a unique, complex, and cross-regional offering, utilising our private bank, investment bank, and asset management franchise,” explains Mr Daher.
A further client benefit of this approach is risk diversification. Many clients hold a large portion of their assets in a single country or region, but the bank’s offering of lending against local shares allows the firm to provide clients with the required liquidity, offering diversification and yield enhancement through reinvestment in well-diversified investment solutions. “We can help our clients to diversify internationally without having to sell their assets,” he says.
The bank’s commitment to the Middle East is underscored by the growth of its onshore footprint, through the establishment of its Saudi Arabia Booking Platform, launched in 2017. In 2019, Credit Suisse was granted a provisional Saudi Arabian Monetary Authority banking license, and is currently in the process of setting up a branch. ET
Best Private Bank in Czech Republic
ČSOB Private Banking
In 2018, ČSOB Private Banking made a significant change to its business strategy, by starting to offer private banking services to small and medium-sized enterprises, a first in the country for a private bank. The move was driven by increased demand for investment advice from business owners, already clients of the group’s investment bank.
While the new form of co-operation within the bank was tepidly received by commercial bankers, the synergy between the two divisions is expected to bring significant advantages.
In the long run, business owners will benefit from the professional management of their earnings, which would otherwise be placed in deposits, savings or term accounts, and will also be able to access post sale services, explains Pavel Tichý, private banking segment management and wealth office director.
The new set up enables the private bank to gain greater specialisation, by growing and developing tailor-made solutions for large client portfolios.
While the growth potential from SMEs is considerable, the largest part of new inflows in 2018 derived from the cooperation with the bank’s retail and premium segments. An incentive scheme encouraging affluent bankers to introduce eligible clients to ČSOB Private Banking contributed to drive 10 per cent growth in the number of new clients last year.
When it comes to portfolio management, “the most important skill is our long-time experience in serving clients throughout uncertain or shaky periods”, explains Mr Tichý. Clients need to be explained that success comes in the long-run and that sticking to a selected strategy and discipline eventually pays off, he adds.
Looking forward, in volatile and unpredictable markets where conservative fixed income solutions offer little value, a key goal for the private bank is to improve its offering of investment advisory solutions, as well as enhancing automation of processes and digitalisation. The bank also aims to grow its lending penetration rate, which is in line with the 2 per cent country average, but lags behind the 10 per cent of western European banks.
“CEE clients tend to be more conservative, but their needs should not differ so much,” says Mr Tichý. “We feel lending penetration is the way to deepen connection with clients and further grow our business.” ET
Best private bank in Georgia
TBC Bank
Strong brand recognition and a focus on digital technology helped Georgia’s TBC Bank to increase its private client base by 55.9 per cent in 2018 to reach a total of 50,756. As the largest banking group in Georgia, TBC Bank offers retail banking, micro, small and medium enterprises and corporate and investment banking. Its customer base represents around 83 per cent of Georgia’s adult population.
In addition to this strong brand recognition, the bank has built on the concept of individually-tailored services by unifying credit and operational functions, says Vakhtang Butskhrikidze, CEO of TBC Bank. This enables customers to be served by a single universal banker.
In May 2018, the bank launched Georgia’s first fully digital bank, Space, a “neo-bank” that does not operate from physical branches, existing only as a mobile app and completely separate from TBC’s traditional banking business.
“In all operational aspects, it is a fintech project; from people to processes and culture,” says Mr Butskhrikidze. “In a way, we created our own competitor and the biggest challenge was to develop a truly innovative and customer-centric daily banking experience that will change the way people access their daily financial services.”
Since its launch, Space has attracted more than 400,000 downloads.
Going forward, the bank will continue to focus on customer-centric digital services as the customer base for traditional banking is eroded by competition from the big tech platforms. The bank recently acquired a 65 per cent stake in My Group, a leading e-commerce player in Georgia. It operates four online marketplaces: automotive, automotive spare parts, consumer-to-consumer and housing.
“The acquisition of My Group is a big leap in the development of our ecosystem strategy, as it will broaden our relationship with customers and create strong synergies for the core banking business including lending, payments and insurance businesses,” he says. HM
Best Private Bank in Hungary;
Best Private Bank in Ukraine
OTP Private Banking
OTP Group is one of the most active consolidators in the CEE/CIS region, having recently completed or announced acquisitions in Croatia, Bulgaria, Serbia, Albania, Moldova and Montenegro. By the end of 2019, it will have almost 18.5m customers across 12 countries in the region.
The regional approach and acquisitions have led to a unique business model for the bank’s private banking division. “The integration of the PB business arm is among the most challenging parts of the job, since despite being in the same CEE region, there are big differences among the wealth markets of the countries,” says András Takács, managing director and head of wealth and investment management at OTP Bank Hungary. “There are considerable specialities regarding the investment attitude, sophistication level and, of course, the needs of the private banking clients.”
Private banking models, based on regional group-wide standards, are applied according to the market position and coverage of the local OTP bank but local specialties, development levels of the local wealth markets and different client attitudes are also considered.
This approach proves to be very effective in a region which is defined as unified but where huge diversity is reflected between the countries, says Mr Takács.
By the end of this year, OTP will offer a dedicated, digital-only, self-service product, DirektPB. “The new concept will be provided by a centralised virtual PB hub based on remote elements, hybrid asset management solutions and new generation contact forms,” he explains.
The bank has a dual purpose in launching DirektPB: to improve the client experience and at the same time increase its range of services. The new generation of private banking clients are more open to digital and online banking and do not require personal contact, even in private banking, insists Mr Takács. HM
Best Private Bank in Poland
mBank
mBank started offering private banking services in Poland in 1995. The bank has recently undertaken the task of analysing behavioural patterns of their retail clients and managed to identify a previously untapped customer base. The analysis also showed significant misconceptions about private banking among retail clients.
“To tackle this, we have changed our marketing, PR and internal comms approach to strengthen our image as a wealth manager who helps with complex wealth needs – from short-term investments to succession planning vehicles,” explains Krzysztof Bratos, head of private banking at mBank.
When it comes to investment advice, building a long-term relationship with clients is a key aspect of mBank’s strategy, something that on occasions has involved sacrificing short-term gains. In recent times, the bank has removed a number of high-revenue products from its offering, ceased partnerships and moved away from absolute sales targets.
“We decided to fully focus on diversified, liquid and predictable solutions, offered only by companies with top-of-the-class risk management and corporate governance,” Mr Bratos explains. “We recently summarised our approach in one sentence: we are the only company that spends more time analysing what not to offer to our clients, rather than what to offer.”
Generally, Polish investors are still very home-biased, and mBank has directed resources into educating clients about the importance of diversification. The bank’s advised portfolios are mostly made of foreign investments and implemented through mutual funds managed by reputable asset managers.
Discretionary mandate portfolios are also highly diversified by sector and geography, with Polish equities accounting for less than 20 per cent of total assets. “Based on our research, assets of non-mBank Polish clients are on average still invested 90 per cent in Poland,” he adds.
mBank has recently launched the first environmental, social and governance (ESG) strategy in Poland and is working on applying ESG screening across all its investment strategies. PG
Best Private Bank in Romania
Friedrich Wilhelm Raiffeisen
Raiffeisen Bank Romania
Friedrich Wilhelm Raiffeisen Private Banking is the private banking arm of Vienna-headquartered Raiffeisen Bank International (RBI), one of the leading international banking groups in Central and Eastern Europe (CEE) and Russia.
In 2018, an as part of an all-encompassing MiFID II project, RBI focused its strategy around the implementation of a new advisory process for its private banking segment, the introduction of new product strategies and the launch of its new Financial Advisory Tool (FAT).
According to the bank, the introduction of FAT has allowed their investment advisory service and customer interaction to move up a level. Designed to meet specific private banking advisory needs, the tool gives easy access to detailed information about a client’s portfolio, showing positions and the degree of deviation from the advice given by the bank, as well as providing comprehensive information on portfolio risk levels and performance, among other features.
The bank’s strategy in Romania has been focused on regional expansion, with growth mainly driven by increased local awareness of the brand.
“Friedrich Wilhelm Raiffeisen is a brand well-recognised amongst private banking customers in Romania. Although we had some changes in the way we provide part of our investment services in Romania, 2018 confirmed once again that our customers are willing to move forward alongside us into the new regulatory and business environment,” explains Markus Plank, head of the international affluent and private banking division at RBI.
Mr Plank believes CEE offers strong growth potential for those combining traditional banking services with the latest technological solutions. The bank plans to continue to strengthen its presence across the region and deepen their three-tier advisory infrastructure – discretionary portfolio management, model portfolios and non-advisory services – by means of new technologies and skilled private bankers. PG
Best Private Bank in Slovakia
Tatra banka
During the past two and a half years, Tatra banka has increased its AuM by 25 per cent, from €2bn ($2.2bn) to €2.5bn. During the past year, it increased the number of its private banking clients by 5.5 per cent.
Marek Neckár, head of private banking at Tatra banka Slovakia, says the increase was due to a number of factors, including maximising its customer acquisition strategy, changing the key performance indicators of relationship managers and tailoring offerings for new clients.
Innovative technology underpins the bank’s offerings. It was the first bank in Slovakia to introduce Face biometrics, which enable new clients to open online accounts. It also uses voice biometry as an authorisation tool. The Tatra banka internet banking app was also the first in Slovakia to be compatible with smart watches.
One of the biggest challenges in being an innovative bank, claims Mr Neckár, is to align group-level requirements with a sense of local customs and needs. “The implementation itself, influenced by data quality, was also a challenge. We pay a lot of attention to communication with relationship managers in order to reduce resistance to upcoming innovations. Tatra banka is considered to be the most innovative bank in the region. Over the past year, there have been major changes in the selection and implementation of innovation projects. This fact positively influences the identification and implementation of projects with highest added value for the clients.”
During the first half of 2019, the bank launched the Family Principle service. This is focused on clients’ children and involves the construction of products such as ‘family’ credit cards to extend the bank’s offerings beyond the individual private banking client. HM
