Crédit Agricole has rebranded its global private banking division as Indosuez Wealth Management. Although clients with modest fortunes are serviced, the focus is clearly on the ultra-wealthy and their increasingly globalised needs. John Schaffer speaks with Frédéric Lamotte, global head of market and investment solutions at Indosuez Wealth management, to find out more
At the end of January 2016, French lender Crédit Agricole united its private banking operations across Europe, the Middle East, Asia-Pacific and the Americas under a new organisational structure and worldwide brand, Indosuez Wealth Management.
The rebranding and restructure came as a bid to consolidate nascent international divisions, so as to attract a more international client base.
The Indosuez brand (which was acquired by Crédit Agricole Group in 1996) was created in 1975, but has origins dating back to 1875 with the Banque de l’Indochine (founded to mint coins across Indo-China, supporting French interests in Asia) and the Banque de Suez (the bank which financed the creation of the Suez Canal).
Indosuez currently has 30 offices across 14 countries, and has EUR110bn ($125.7bn) in assets under management (AuM).
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Speaking about the rebranding, Frederic Lamotte, global head of market and investment solutions at Indosuez Wealth Management, tells PBI: "We needed to combine the separate units of Indosuez for several reasons. First of all, clients were becoming more international with families splitting themselves up. Children were studying abroad and actually staying in the countries where they were studying,
"We also discovered that more and more of the wealth created was due to the clients being entrepreneurs, and often younger entrepreneurs. We had this need to become more international because entrepreneurs were not just locally focussed, but also becoming regionally or even globally driven.
"We really had to integrate our various units under the same name and under the same identity to be able to create a unity of culture – a culture of basically one bank in a sense, which we didn’t have before."
Although Indosuez’s entry level begins at EUR1m, Lamotte suggests that the key focus is clients with at least EUR5m of investable wealth. Approximately 36% (EUR 40bn) of Indosuez’s AuM is derived from clients with greater than EUR20m in available assets.
The focus on UHNWIs ties in with a concentration on globalised clients, and the need to maintain complex international relationships. Lamotte says that Indosuez is well placed to handle multiple international structures that are often associated with large family fortunes.
"For clients with EUR1m, some products are not accessible. We look at EUR5m in investable wealth as being an account where we can adopt a tailor-made approach in various aspects such as the advisory business – with the professional calling the client and following their portfolio, or applying a discretionary mandate under a specific constraint imposed by the client."
Lamotte also tells PBI that there is a key focus on attracting billionaires: "We tend to target global billionaires. We have an amazing market share of non-US billionaires, between 11% and 12%."
Lamotte says that being part of the wider Crédit Agricole group allows Indosuez to leverage its investment banking expertise, which is mandatory for wealthier clients who have far greater demands:
"Some of our clients are quasi-institutional clients. For them we have a specific offer with a dedicated investment committee.
According to Lamotte, what sets Indosuez apart from the rest of the global private banking players is that it is not too big, so it can give personal attention to every client. At the same time, though, it also benefits from being part of a larger group.
"We don’t apply a standard solution to our clients’ issues. We are also part of a huge group, as Crédit Agricole is one of the largest banks in the world, so clearly that’s reassuring to our clients. It also gives us access to a lot of important businesses that can help our clients globally, not only within Europe."
All that glitters
Lamotte recommends that UHNWI clients allocate large portions of their portfolios to riskier strategies.
"If you have EUR2bn in assets, the liquidity issue is not the same as if you have EUR2m. With EUR2bn in wealth, clearly you can afford to have roughly half of your assets in relatively illiquid asset classes such as private assets, private equity or some of the more risky strategies such as a high-yield diversified portfolio."
Lamotte also promotes gold as an attractive venture for ultra-wealthy clients, primarily for the benefit of subsequent generations.
"Gold has been on a downward trajectory recently, in dollar terms at least, and has not been a good investment. Most of the banks are saying that gold is not fashionable anymore, it doesn’t yield anything and it costs money to store. So it’s not really an interesting asset.
"If we look a few months ahead, maybe even a few years ahead, that’s still going to be true. Nevertheless, if you look at the time length of a generation, so let’s say 50 years down the road, it’s going to be completely different.
"We have seen all the currencies being printed massively over time, always resulting in devaluation of the paper currency. Gold is not a currency, it cannot be printed by central banks and it preserves a certain value, because it has a certain utility.
"I recommend to my extremely wealthy clients to hold physical gold as a certain percentage of their assets – between 10% and 15%. Not for themselves, not for their children, but for the children of their children. It’s a generational approach and an asset allocation strategy which goes significantly beyond what I could actually propose to a client who has EUR1m, EUR2m or even EUR5m, where the time span is actually much shorter."
Robust technology strategy
Lamotte tells PBI that Indosuez’s technology systems are fully developed in-house.
"It’s not like a lot of other banks where you have a certain piling-up of various systems on top of each other and trying to have them talk to one another, which is always quite complicated. Our core system has everything in one, which is important."
"It’s a secure mainframe system and is also providing a strong base for development for further innovations in the digital space."
Lamotte informs that Indosuez provides its RMs with a technology system that helps to migrate their clients’ portfolio positions. The technology also displays the correlations between asset classes, and also allows advisors to communicate different risk profiles to clients. Lamotte says that the platform will further be developed to make the information more accessible to clients in meetings, although there are no proposed dates for completion, as he says that it is a "complex process".
He suggests that although technology innovations are significant, he does not think that they will replace the traditional face to face private banking model at any point.
"When you have $100m to invest, I’m not sure you want your assets to be allocated by a machine, without having the full reasoning behind the decisions.
"I think digital is an area where you can add value by providing access to research and access to the various specialists that we have all over the world. But I strongly believe that the necessity to deal with a physical person is also crucial in our business," he says.
Frédéric Lamotte, global head of market and investment solutions at Indosuez Wealthmanagement