Announcing its awards, PBI declared that Merrill Lynch “has embarked on a broad and purposeful strategy to be a major player in all the key wealth markets”. Increasingly, rival bankers say that Merrill Global Private Client nowadays is among the key competitors they have to beat in their particular market.
“Merrill works relentlessly to become a true global private banking power with a wide geographic base,” PBI noted. The group has $1.6 trillion in assets under management – ranking with UBS as the world’s biggest private client manager.
The awards, based on a poll of PBI readers worldwide and final selection by an independent panel of judges, were announced at PBI’s Annual Wealth Summit, held in Singapore on 17-18 September (see And the winners are...).
Top private banker
Hans de Gier, chief executive officer of Julius Baer, won the award for The Outstanding Global Private Banking Leader.
Under Hans de Gier, the ‘new’ Baer is one of the assured success stories in private banking of recent years, the PBI judges decided. “This is a bank that after the dotcom bust and pressures on traditional Swiss private banking was forced completely to rethink its model. Baer really went back to fundamentals, even to the extent of easing the traditional control exercised by the Baer family,” PBI said.
Its remarkable transaction with UBS, buying three private banks and GAM last year, has proved a transforming deal. Baer has been rapidly using this strength and its brand to expand its offshore wealth management business into new growth markets that offer the prospect of strong inflows of net new money, it was noted.
This year’s PBI Editor’s Special Award went to EFG International, for creating one of the most effective business models around. The scooping-up of top-level teams of bankers and their clients, organic growth and targeted acquisitions have made EFG an impressive ‘new money’ machine in the past couple of years. It is now the best-in-class in terms of gross margin on assets under management, at around 120 basis points.
“EFG, more than most in our wealth industry, is today punching well above its weight,” PBI declared.
The super league
Private bankers at the PBI Wealth Summit rejected suggestions that an emerging ‘super league’ of wealth management giants will significantly eliminate other competitors.
More than 50 percent of conference delegates doubted whether these giants, such as UBS, Merrill Lynch and Citigroup, all with more than $1 trillion of assets under management, will make it increasingly difficult for other players to build market share.
At the same time, delegates, responding to a PBI poll on current major wealth issues (see The big get bigger, the small will survive), overwhelming agreed with the proposition that private banking will need rapidly to update the quality of its overall advisory services. This is required to meet the growing sophistication of clients in all geographies as well as to produce above-average returns at a time of less buoyant markets.
These trends promise to create further competitive pressures on the wealth management industry, disadvantaging those players unable to meet the challenge of upgrading their advisory and discretionary services.
Most private bankers questioned also believed the crisis of confidence caused by the subprime debacle is going to make it important to persuade clients to expect lower returns in future. Most think the average total return expectation should be lowered to between 10 percent to 8 percent, far less than some of the handsome returns on portfolios of recent years, particularly in high-growth Asia.
Delegates also agreed that major wealth industry issues remained the creation of a deep talent pool to staff up expansion and the growing cost of know-your-customer and compliance.