domestic private banking operations in Australia and focusing on
providing more client services from Singapore.
The bank cut up to 150 jobs in its Asia-Pacific wealth
management business at the end of 2008, according to local press
reports, and has since relied on ‘suitcase bankers’ from Singapore
to meet clients in Australia, according to a PBI source.
The strategy, which involves flying relationship managers out to
meet clients in territories where a bank has little footprint, is
typically used by wealth managers in emerging markets but is rare
in more established wealth centres.
Go deeper with GlobalData
A Citi spokesman said the term was not appropriate
for its bespoke ultra high net worth offering and insisted the bank
maintained a presence of “three to five” private banking staff in
Australia. But he admitted recent restructuring meant some
Australian client adviser functions had been shifted to its
Singapore Investment Centre, where it had previously been based
exclusively in Australia.
“Citi has been in and out of the Australian market for years,”
said the source.
The source added: “It means they do not have people on the
ground and have pulled out of having local people here.”
Restructuring paying off
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By GlobalDataThe Citi spokesman said the Australian unit had been reorganised
to leverage its global capabilities and that it was “already
experiencing positive results”.
“Citi is committed to its private banking business in
Australia,” he said. “We continue to serve ultra high net worth
clients who need global solutions in capital markets, alternative
investments, trust and estate planning and other advisory services
for their wealth management needs.
“Citi Private Bank’s unique approach in the Australian market
appeals to this segment because they seek investment strategies for
a globally diversified portfolio.”
Citi focuses on clients with assets of $50 million, though it
has a ‘sweetspot’ of closer to $250 million and caters for 30
percent of the world’s billionaires. It has $260 billion in assets
under management across Asia.
Citi emphasises the strength of its global platforms based in
London, Singapore and the US and its “best-in-class open
architecture approach”, offering innovative products and access to
a powerful capital markets business. On a global basis its
adviser-to-client ratio is understood to be between 15 and 20.
The Citi move comes after tough competition in the Australian
private banking market from global counterparts Credit Suisse, UBS
and Deutsche Bank and domestic players such as Macquarie, the
Australian investment bank.
Smith Barney, the brokerage business, is Citi’s other main focus
in the Australian wealth market. It was recently transferred to
Morgan Stanley as part of the $2.7 billion deal which saw the US
investment bank take a 51 percent controlling stake in a new joint
venture, Morgan Stanley Smith Barney.
Wealth management at Citi, which includes Smith Barney and the
private bank, was the bank’s most profitable business in 2008,
registering a profit of $1.1 billion, 45 percent down from the year
before, compared to an overall bank loss of $18.7 billion (see
PBI 244). It suffered assets under management net outflows of
$26 billion in 2008, a 1.5 percent reduction of its total 2008
AuM.
William Cain
For Private Banker International’s Australia country survey,
see Australia: growing old
gracefully
