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PBI Editorial
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He reports to Charles Egerton- Warburton, Credit Suisses head of UKIreland Private Banking.UKNewbury elevated to Hambross chairmanSG Hambros Bank, the UK arm of SG Private Banking, has elevated Warwick Newbury to chairman to replace the retiring Nicholas Assheton.Eric Barnett, the current group head of private banking, replaces Newbury as chief executive
In IT we trust
Technology is a key driver to allow trust companies to compete.Wealth management services offered by banks, brokers and other players have moved on, leaving the trust increasingly perceived as an anachronistic holdover from yesteryear.But change is afoot, according to a new report on trust technology by Robert Ellis, a senior analyst at US wealth researchers Celent He contends that a sea change is occurring in the way technology will impact on the trust industry.The trust industry has shown itself to be a poor adapter to the new realities of the wealth management industry, having declined from the prevalent form of wealth management just fifty years ago to a much smaller market share today, Ellis says
So who are the wealth winners?
If the credit crisis does not trigger any more surprises, then these players should have a real head start on their rivals.The wealth management groups poised to be active consolidators, after successfully attracting client inflows throughout the crisis, as well as making acquisitions in the last few weeks of turmoil, are already becoming apparent.
Wealth sector assets grow by a tenth
The wealth management industry in the UK grew investment assets under management by 10 percent last year to a total of £402 billion ($747 billion), regarded as a respectable performance after financial markets began to erode in the latter part of 2007 as the credit crisis struck home. While this represented a slackening of the pace from the 18 percent assets growth recorded in the boom year of 2006, the private clients advisory industry still managed to generate higher aggregate revenue of £3.9 billion, up 16 percent, according to new data by UK researchers Compeer Pre-tax profits of the 155 wealth firms it tracks grew to £1 billion, up 28 percent.
All in the Family
The family office model will continue to enjoy rapid expansion across Europe, according to US researchers Celent. This is echoed by another US wealth consultancy Cerulli, which believes that around two to three percent of the wealth traditionally managed by private banks is now controlled by family office structures.
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The impending Blackberry challenge
Can private banking reach the new Blackberry generation?Charles Davisreports.Move past multi-generational wealth to the bulging mass affluent and emerging affluent segments and the technology becomes increasingly advanced: for example, try finding a US entrepreneur without a Blackberry in their hands.With the number of affluent individuals in North America expected to grow from 30 million to 37 million in the next three years, private banking is set to reach a younger market segment than ever before.To reach the rapidly expanding affluent market, private bankers have to be able to deliver private banking services seamlessly and on the clients terms, where they work, play and live.Little wonder, then, that private banks are pouring money into new wealth management platforms and innovative delivery systems Research company Celent reports financial companies will spend $1.5 billion in new platforms and modules in 2007, almost double what was spent in 2004.Internet technologyIn the most vivid example of the spread of popular internet technology to private banking to date, Commerce Bancorp announced that its proprietary, web-based private banking platform, Virtual Private Bank, is now available for its customers via their Blackberry, Treo or any other personal digital assistant (PDA) with an internet browser, including the new iPhone.While other financial service companies offer account aggregation services and calculators online, Commerce Bank is the first to deliver a highly sophisticated wealth-management tool on a wireless device, allowing customers to view all their pertinent banking information.The move enables Commerce Banks private banking customers to seamlessly access all of the information they need on a device that they typically never leave home without
Jumbo mortgages emerge as growth product stream
Multi-million pound mortgages from many lenders are disappearing fast as banks and building societies, nervous over the credit crisis and wholesale funding drought, impose strict new limits on how much they will advance.Even where jumbo mortgages are available, some lenders are imposed huge arrangement fees ranging up to £40,000, depending on the size of the loan.Among lenders, Abbey, Nationwide, Chelsea and Intelligent Finance have all cut the maximum amount they will lend in recent weeks Mortgages for £2 million and more are still available at the Halifax, Bank of Scotland, and Birmingham Midshires but now come with steep arrangement fees.Mortgage brokers John Charcol and advisory Clegg Gifford Private Clients have reported problems in getting loans of more than £500,000 from high-street lenders
The ultra client becomes key
The ultra high net worth client segment, which accounts for less than 1 percent of all private banking clientele, last year expanded to represent 26 percent of private banking assets in Europe, an increase from the 23 percent recorded in 2005.At the same time, assets under management held by private banks for the ultras those with net assets of at least 30 million ($44 million) grew 27 percent last year This is more than twice the asset growth of the ordinary high net worth or affluent segments, according to McKinseys 2007 European private banking survey.Success in meeting the demanding needs of these sophisticated ultra clients was a major reason why top-performing private banks increasingly outclassed their rivals last year.Top-quartile wealth players grew by 31 percent, over ten times more quickly than bottom-quartile firms, clearly indicating a rising bar for capturing the full growth potential of the continents wealth management business, McKinsey says The difference in profitability is even wider: top-quartile players achieved profit margins of 62 basis points compared to only 2 basis points for bottom-quartile rivals.The best and the restGreater competition, increased professionalism, high growth in more demanding segments and more innovative product offerings have all helped widen the gap between the best and the rest, declares Frederic Vandenberghe, McKinsey partner and leader of the European private banking practice.Still, the private banking market overall continued to flourish in Europe last year
The golden age of global wealth
Private banking has come a long way since 13th century Geneva relaxed usury laws, so spurring the development of institutions that eventually were to become Swiss wealth managers But the development of todays huge global private banking industry has stunningly been compressed into an incredibly short period of only 20 years.For when Private Banker International first appeared back in 1987, few banks outside Switzerland offered sophisticated private banking
Credit Suisse tells clients to use absolute return strategies in the new turbulence
Credit Suisse is signalling to clients that, amid the new volatility in the markets after the subprime crisis, they should consider remaining invested in the markets, and with the right strategies should still be able to grow their assets significantly in the longer term.The correct investment stance may be to invest across the cycle and mitigate the risk of losses with improved asset allocation models, its analysts say The Credit Suisse stance comes at a time when a number of private banks are starting to try to manage down clients expectations of future investment performance at a time of financial market uncertainty.Credit Suisse analysts say that total return strategies can be used to participate in long-term growth phases and control the risk of possible capital losses in the current market environment