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  1. Analysis
March 23, 2022

Why are private banks setting up shop in Spain?

By Patrick Brusnahan

Spain is a popular destination for all holiday goers, never mind ex-pats and retirees, and two big private banks have decided to launch branches in the country, but why? What opportunities lie there? Patrick Brusnahan writes

At the end of 2021, Barclays Private Bank established a presence in Spain by appointing Juan Vilarrasa as head of private bank coverage. He aims to bring a full range of advisory and discretionary products to family offices and UHNWIs in the country.

Under the leadership of Gérald Mathieu, head of private bank Europe and Middle East, Vilarrasa will connect clients in Spain to Barclays Private Bank European Bankers and Product Specialists and leverage the Power of One Barclays, which connects clients to a broader offering, including the capabilities of Barclays’ leading Corporate and Investment Bank to bring enhanced, tailored propositions to clients.

In addition, Switzerland-based Julius Baer established a new team in Spain in January 2022. Led by Claudio Beretta, it will drive the bank’s intermediaries business in Madrid and across Spain.

The development of the intermediaries Spanish market will be under the remit of Claudia Linares and the bank will strengthen with new hires.

So why Spain?

Speaking to PBI, Beretta, head intermediaries Western Europe and Iberia, Julius Baer, says: “The segment of financial Intermediaries has reached a relevant size and role in the Spanish market over the last years. The Intermediaries market will continue developing with a strong correlation to the expected growth in the number of HNWI/UHNWI in Spain. Leveraging on our deep know-know and expertise in the field of Intermediaries worldwide, this step reflects our strategic conviction to expand coverage for Intermediaries in a key market like Spain.”

Vilarrasa adds: “Barclays Private Bank has significant growth potential in Europe, and in Spain, France and Italy specifically, where we are investing for future growth to complement the Barclays Group’s broader expansion across Europe. Spain, in particular, is a very attractive country for us, where we see a lot of investment opportunities for clients in the region, especially in areas such as real estate, business, clean energies, industrials, tech, culture, art and tourism.

“Being on the ground will enable the Private Bank to be closer to the needs of our Spanish clients, to whom we will be able to bring enhanced investment and banking products and solutions by leveraging on our strong synergies with Barclays Corporate and Investment Bank, which already have a very strong footprint locally.”

What are the wealthy like in Spain? What makes the Spanish UHNWI so attractive to a private bank that makes one set up a whole new team?

Sergio de Miguel, general manager for Iberia, Julius Baer, explains: “Spain is one of the top 10 countries in the world in terms of number of millionaires, with expected growth over 50% over the next five years, by some estimates. The market is vastly dominated by the local Spanish banks which provide universal banking services.
“As a result, many clients cannot gain access to expertise provided by the truly specialised players.”

“Our clients in Spain are Family Offices, UHNWIs, corporate clients, charities and foundations with a minimum of €20m ($22m) of assets invested with Barclays although our target are clients which would have investable assets well in excess of €100m. We would of course open accounts for clients with smaller amounts relying on the support of our European headquarters in Dublin,” Vilarrasa says.

“We have a wide spectrum of clients from different generations and with different needs. Our job is to fully understand our clients´ requirements and offer them the products and services that meet their needs, often remaining with our clients and their descendants throughout their lives. Many of them come to us seeking access to sophisticated investment opportunities across different geographies and asset classes, whilst others are more interested in our wealth advisory and management services, such as succession planning.”

How to compete with private banks already in Spain

Spain is a fully developed market and there are local private banks helping wealthy clients. It is a competitive country, down to its sports teams and the rivalry between Barcelona and Real Madrid. How can foreign players make a dent and take a share?

“Local banks account for the largest portion of market share, thanks to having leveraged their extensive branch network across the country. The large international players have included wealth management services as part of their broader offering but without a dedicated focus and often subject to potential conflicts of interest when it comes to the products they offer.

“Consequently, they have traditionally struggled to compete. Thanks to its pure focus on wealth management and its global capabilities and expertise, Julius Baer has a unique standing and opportunity, being the only market player with these characteristics,” remarks de Miguel.

Vilarrasa comments: “Whilst capitalising on our European headquarters in Dublin, from which we serve clients of the EU, we bring highly sophisticated business and investment opportunities across Europe to Family Offices, UHNWIs, corporate clients, charities and foundations in Spain. This type of clients often have complex personal, professional or cross-border situations, which bring unique challenges that not all private banks and asset managers can address.

“Barclays Private Bank can serve those clients by developing a deep understanding of their needs and surrounding them with the right team of advisers and specialists, ensuring they receive bespoke support for any situation.

“Some of the other key things that I believe differentiate Barclays Private Bank from other private banks are its international presence (especially its strong connections with the UK, US, Asia and Europe as part of the wider Barclays Group), the quality of our banking and investment products and services, and its capacity to leverage the Power of One Barclays, which connects clients to a broader offering, including the global capabilities of Barclays’ leading Corporate and Investment Bank.”

He continues: “Being on the ground will enable the Private Bank to leverage the Power of One Barclays, which connects clients to a broader offering, including the capabilities of our leading Corporate and Investment Bank to bring enhanced, tailored propositions to our clients locally. This would allow us to increase the breadth of investments for European clients providing them access to unique investments in Spain and expand the investment opportunities for Spanish clients across Europe.

“At the same time, Spain has historically been a gateway to Latin America markets and an excellent entry point for Latin American clients looking for investment opportunities across the Spanish and European markets.”

How can you judge success in a new market?

Beretta concludes: “The team starts its activities with a strong foundation and with a comprehensive offering which is specifically designed to cater for the needs of professional Intermediaries and Multi-Family-Offices looking for wealth planning, wealth management and wealth financing solutions. Our ambition is to become one of the major partners for Spanish Intermediaries over the next years.”

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