The year 2015 brought about a slew of changes at Coutts & Co., with the sale of its international operations and a reshuffle of some top executives. As Camilla Stowell, head of Coutts International and Coutts Private Office, joins the PBI Editorial Board, Meghna Mukerjee speaks to the private banking veteran about what these changes have meant for the bank and how 2016 is shaping up
Camilla Stowell looks after perhaps the most evolving parts of the current Coutts business – those that are largely affected by regulatory pressures and increasing transparency.
She heads Coutts’s private office in the UK, including the UK ultra high net worth (UHNW) business and Jersey. She’s also the head of Coutts International, which is London based but has offshore booking through Switzerland and focuses on all clients with UK connectivity – UK resident and domiciled, non-resident non-domiciled, and some expatriates.
Following the sale of its international operations to Union Bancaire Privée (UBP) in March 2015, Coutts is focussing on its UK home market and international business based in London and the Channel Islands. "We’ve risk managed the business tightly. The cost of doing business is going up and you must have critical mass in the countries you operate in.
"We’ve rationalised the number of countries we’ll work in. We’re now in 30 countries as opposed to 73. Some regions we’ll fly-drive into and the others are maintain-and-hold. We have also been able to reinvest funds where we think we can get better returns. We’re open for growth," says Stowell.
Stowell, the most recent addition to PBI’s Editorial Board, is knowledgeable, open and easy to talk to. She’s candid about a key theme underpinning the wealth management industry in 2016 – increasing transparency and the advent of the Common Reporting Standards (CRS).
"We’ve been getting ready for CRS. It’s interesting to see the names of the 60-plus countries that have signed up to engage on that. The focus is on how we encourage clients and gather the right information from them in an elegant way," she says.
As the increased spotlight on transparency is affecting private banks from both regulatory as well as clients’ taxation perspectives, Stowell says she senses a shift in the way wealthy customers are disclosing information.
"Clients are increasingly more amenable to being open, which is fantastic. There’s been a mindset movement by clients who realise this isn’t institution specific, this is market specific. Everybody has to take the same position in terms of protecting their reputation and personal brands. As for us, it’s about making sure we’re doing the right things with the right clients."
Preparing clients for what the CRS entails is also a priority for Coutts. "It’s not good enough to create a new account opening form without any help or references. All the bankers and wealth managers are better versed in terms of helping clients logically around the information required."
Due to increased complexity and the number of data points banks need to gather, lengthy client onboarding has become an industry-wise issue. Stowell says a lot depends on efficiently asking for all the information upfront and contextualising it to avoid going back and forth. "Every institution is dealing with the same thing. It’s something clients, especially new ones, have had to adjust to."
This aspect is also driving clients to have fewer banking relationships, Stowell notices. "I’ve seen consolidation of five banking relationships into 2-3. Rarely do UHNW clients from any region have only one banking relationship but now they are not engaging as widely across the market."
Even though technology can help make the client onboarding process smoother, Stowell says "there’s only so much you can digitalise". "You have to obtain detailed back histories about the client and how their wealth profile was created. Every case needs a lot of human input. Accountants and lawyers are also getting far more involved in client onboarding. It’s more about the accuracy of information beyond the need to simply digitalise it," she says.
For the UK-headquartered private bank, part of that process of knowing its clients as well as possible has been around reinforcing the Coutts Club.
"Most of our clients are entrepreneurs – they are intellectually curious and love coming together. Over the course of 2015, we did events for clients – whether in a small dinner party format or a large topical seminar basis – to introduce them and let them create their own ideas.
"We’ve seen increased interest, as a result, in activities around investment opportunities to private ventures and start-ups, " she informs.
Stowell says 2015 was strong for credit and lending, and it didn’t adhere to the stereotypical perception that the London property market is being bought over by international clients. "There’s equal appetite from UK clients as well."
Stowell emphasises that liquidity is important to clients. "Entrepreneurs like liquidity. In the current markets situation, and investment opportunities, they still see attractive valuations and like to be opportunistic. For us to be able to provide liquidity on the debt against a piece of property or a portfolio is important to them, and I’ve seen a noticeable increase in clients’ demand for that liquidity," she says.
Coutts has also engaged with clients on their continued diversification in terms of passion investments, which is measured through the Coutts Index. Another key 2015 trend has been around social impact investing.
"Philanthropy is turning more towards having a sense of business around it alongside a philanthropic purpose. Our response to that is, within our Coutts Foundation we have created a sub fund called Angela’s fund (after Angela Burdett-Coutts) and we are launching a matched giving scheme.
"For example, if clients want to JV with us on some project we have identified to that fund, we will match it pound for pound and give together," she says.
Coutts is also starting to focus on the potential impact of Brexit scenarios – the affect on sterling and clients’ cash flows as well as multi-currency asset values. "I think the debate has just started and will become a key theme later in 2016," says Stowell.
Camilla Stowell, head of Coutts International and Coutts Private Office