All articles by PBI Editorial
PBI Editorial
ABN AMRO brand gets ready for return
ABN AMRO will be promoted as a major private banking player again, after the Dutch government announced plans to revive the long-standing Netherlands financial services brand. But after one consortium member, Fortis, ran into difficulties amid the financial crisis this summer, a major part of the Fortis Belgium and Luxembourg operations was sold to BNP Paribas.
News Digest
UBS enters Dutch market…Merrill, Deutsche seek Russian clients…Vaduz moves to end EU tax fraud dispute…Client list hits JPMorgan LatAm operations…Taipei wants to be Asian financial hub…NetherlandsUBS enters Dutch marketUBS is acquiring VermogensGroep, an independent Dutch wealth manager to form what it said would be one of the leading wealth firms in the country
Banks follow the money to Hong Kong
Big Asian sovereign wealth funds have plenty of clout to help bankroll acquisitions and other transactions, bankers point out. While Citigroup, Morgan Stanley and other firms have been relocating senior executives to Hong Kong, Deutsche Bank has made the strongest commitment, announcing plans to raise its head count in the city to 4,000 from the current 1,500. Colin Grassie, CEO Asia Pacific for Deutsche said, We are experiencing rapid growth in the region and in Hong Kong in particular. Deutsche wealth head Pierre de Weck said that his private banking expansion in the region would call for 200 more staff. Within private banking, the whisper in Asia is that some wealth managers are quietly moving back to Hong Kong from Singapore because the costs in the latter are becoming too high, even compared to expensive Hong Kong. The one-time British colony has long held claim to being Asias leading wealth management centre in terms of fund management, with 80 fund houses currently operating there, including firms from the US, Britain and Switzerland.Perfectly positionedA big attraction is that fund managers can leverage Hong Kong to tap the huge domestic savings of China.But Singapore is considered to have the lead in classic private clients banking, with some 50 foreign and domestic banks offering services out of the city-state.The latest entrant to the Hong Kong funds business is Britains Threadneedle, which manages $125 billion of assets
Culture fit key as East meets West
Its about finding your niche and developing relationships, Alameddine said. You can have the best product in the world but it doesnt matter if you dont have the right relationship. However, Alameddine did imply that the region is prepared to meet bankers halfway, noting that the tendency for new wealth to increasingly materialise in the hands of business entrepreneurs is as evident in the Middle East nowadays as it is across Europe and the US.These are people who have been educated in the US and have worked in Western society so they understand how business works, the private banker commented.Alameddine added that wealth in the Middle East is no longer exclusively the preserve of those involved in the oil and gas businesses, highlighting other sectors such as IT, with Middle Eastern technology companies gaining prominence at home and further afield in Africa.The real estate boom seen in Dubai and other emerging Middle Eastern wealth centres means it is this kind of asset which clients in the region are most familiar with and hence most likely to invest in, with private equity also finding favour because of its role in supporting infrastructure and real estate products.Though no single private bank has built up a large market share in the region, areas being targeted include Bahrain, Qatar and Kuwait as well as Dubai and Abu Dhabi
Liechtenstein affair jeopardises future of EU offshore banking
Fresh doubts have been raised over the future of the offshore private banking industry as a much publicised tax investigation in central Europe balloons into a major tax havens controversy..The investigation of Liechtensteins LGT bank by BND, the German intelligence service, which paid a whistle-blower a reputed 4.2 million ($6.3 million) for a list of 1,400 names, has escalated into an EU-wide probe that has provided unwanted attention for a host of private banks and jurisdictions.Initial raids made in Germany last month culminated in a series of arrests, most notably that of Deutsche Post chief executive Klaus Zumwinkel Since then the enquiry has rapidly expanded across the EU and beyond; 15 other countries including the UK and the US are investigating the activities of their citizens in the principality.Liechtensteins banking industry is very different to those now seen elsewhere in the EU, with few concessions being made to transparency
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Asia is where it’s at
Europe is being relatively eclipsed, although Citigroup strongly rejects rivals claims that it has placed this region on the backburner.Citigroups $1.8 trillion Global Wealth Management (GWM) operations are being increasingly driven by a hugely successful business across Asia.Of total international net revenues outside the US for the first nine months of 2007, more than 70 percent came from the Asia-Pacific region These revenues included new business in Japan, where the acquisition of brokerage Nikko Cordial is helping to create fresh growth after Citis private bank was closed in 2004 for regulatory infractions.The powerful performance across Asia now far outstrips the scale of Citigroup GWM across Europe, Middle East and Africa (EMEA).Asia, including Japan, produced net revenues of $2.25 billion in the nine months, or 70.6 percent of international business
Surge in number of Asian ultra-wealthy
Asias population of super-wealthy individuals with more than $30 million in assets is growing at a faster pace than in the rest of the world, propelled by economic growth, rampant stock markets and an accelerating trend towards foreign investment.The number of ultra high net worth individuals increased 12.2 percent in 2006 compared with 11.3 percent worldwide, a survey of Asia-Pacific wealth carried out annually by Merrill Lynch and consultancy Capgemini found The assets of the wealthy, from conventional millionaires through to the ultra-wealthy, will increase by an annual 8.5 percent to $12.7 trillion in the next four years, according to the study The actual number of wealthy in Asia grew to 2.6 million, up 8.6 percent during 2006.Overall, the wealth of Asias HNW individuals with more than $1 million in assets grew 10.5 percent to $8.4 trillion in 2006 from a year earlier, the survey showed
Full steam ahead
But are many advisers, relatively recent recruits into the industry, really up to the job if a downturn comes amid the subprime crisis and clients decide to head for the exits?Global high net worth assets will surpass $100 trillion this year and will go on to soar to nearly $129 trillion by 2011, according to new projections by the Boston Consulting Group (BCG)
Foreign banks moving into Japan face an uphill climb
Resistance to the arrival of foreign institutions may mean progress is limited, with regulators and the Japanese people themselves unfamiliar with typical private banking procedures, warns an Asian wealth expert, Heinrich Wegmann, the former head of Credit Suisse Japan.The banker, in a briefing for Swiss wealth consultancy Arvetica, said that the overwhelming majority of the Japanese public is not interested (in having) any financial relationship with a foreign institution, implying that these banks would be forced to divide up a limited number of interested customers.Nonetheless, the Western private banking industry appears to believe that opportunities remain within Japan, which has the second largest population of high net worth individuals (HNWIs) in the world after the US.Japan takes the lions share of personal high net worth wealth in Asia, despite the rapid development of countries such as China and India
Staring into the unknown
Now, economic slowdown and the mauling of major banks by the subprime crisis make diversification of wealth through clever asset allocation an imperative.For the past four years, virtually all asset classes have climbed steadily, albeit by varying degrees, on the back of a benign macroeconomic and financial environment During 2007, however, the advent of an economic slowdown in North America, Japan and Western Europe, the emergence of a credit crunch and the popping of the US housing market bubble have caused the behaviour of asset prices to become much more volatile, with obvious implications for portfolio performance.Initial reports suggest that some portfolio managers had a particularly scorching time towards the latter part of 2007