PRODUCTS
Credit Suisse to make Lehman-related payout
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Credit Suisse will pay CHF50 million ($45 million) to 1,700 retail
investors who lost money on Lehman Brothers capital protected
products, in an agreement with a Swiss consumer watchdog.
Without acknowledging any legal liability, Credit Suisse agreed to
partially reimburse clients who had more than 20 percent of their
investments in capital products issued by Lehman, and with total
assets of lower than CHF500,000 with Credit Suisse.
Clients are to be repaid on a sliding scale of between 50-70
percent of the nominal value of the products, with the less wealthy
receiving the higher proportional payouts.
The payment to the clients, represented by Swiss consumer watchdog
Fédéracion Romande des Consummateurs, takes Credit Suisse’s total
payout to CHF150 million.
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By GlobalDataFollowing the collapse of Lehman Brothers, clients have claimed
they were wrongly advised to purchase products which were marketed
as capital protected but subsequently declined in value.
STRATEGY
BNP Paribas targets Asia mass affluent
BNP Paribas is expanding its mass affluent wealth management
business in Singapore, targeting clients with S$250,000
($171,000).
The bank is launching its Personal Investors division, currently
present in five European countries, as a new department in its
Singapore wealth management operations.
The unit will include two teams, one focused on Asian clients and
the other on Asia-based Europeans.
“We clearly see Asia as a very important region for our business as
it combines both high savings potential and long-term growth,” said
Olivier Le Grand, global head of BNP Paribas Personal
Investors.
“Given the current complex market, clients not only seek expertise
and tailor-made investment solutions that meet their needs, but
also want to entrust their assets to financial institutions with
strong foundations.”
The service will offer deposits, foreign exchange, equities, bonds,
funds and structured products. Clients will be given the option to
book assets in Europe or Singapore.
HEDGE FUNDS
Mixed fortunes for hedge funds
Hedge funds are suffering continued redemptions, despite evidence
their performance has stabilised in the first quarter of
2009.
Performance for hedge funds globally showed they were up 4.1
percent in the year-to-date, but still down over 14 percent in the
last 12 months, according to Hedge Fund Research’s weighted
composite index.
But investors are still making wholesale withdrawals from the
funds, with $103 billion removed in the first quarter, taking total
industry assets to $1.3 trillion.
Hedge funds have suffered a torrid 12 months, coming under fire for
failing to deliver uncorrelated, or absolute returns. There have
been predictions that as much as half of the global hedge funds
could fail or be consolidated and are under pressure by regulators,
particularly the European Commission, to be subjected to greater
oversight.
REGULATIONS
IRS lines up more offshore banks
The US Internal Revenue Service has identified other offshore banks
that are expected to receive ‘John Doe’ summons, a method being
used to obtain client information from UBS.
Daniel Reeves, an IRS agent in the case involving UBS, according to
a report in the Wall Street Journal, said the agency was looking to
expand the use of the tactic. The summons was used to permit the
IRS to obtain information about people whose identities were
unknown to the authority.
Strict regulation and oversight from the US has forced private
banks including UBS, Credit Suisse and ABN AMRO to close accounts
of US clients (see PBI 247). UBS was issued with its ‘John Doe’
summons in July 2008, requesting details of the accounts of around
52,000 US citizens. The Swiss government requested the US drop the
case in exchange for a tax cooperation deal, in line with a
commitment to the OECD.
REVENUE FORECASTS
Sentiment takes a dive in Asia-Pacific
A fifth of private bankers in Asia expect revenue to shrink this
year, according to a survey by Barclays Capital.
It is a considerable dip in sentiment compared to the previous
year’s survey, in which 90 percent of respondents predicted revenue
growth of 5 percent per annum in the following two years.
South Korea was the wealth market private bankers were most bearish
on, with 29 percent forecasting negative revenue growth, while
China and India were earmarked as the most attractive.
Fifty-five percent of the participants said China offered the best
opportunities. India, named by 15 percent of respondents, was
considered the next most attractive market.
In line with the findings of PBI research last month, wealth
managers said the biggest challenges they faced were in the
regulatory and compliance area. The research is based on a survey
of 123 respondents from 53 companies managing around $5 trillion of
private client assets.
MERGERS and ACQUISITIONS
Kleinwort Benson on auction block
An iconic British investment and private banking name, Kleinwort
Benson, is looking for a new owner. As expected, Commerzbank has
been ordered to divest the UK bank as one of the conditions set by
the European Union for the German bank to receive €18 billion ($24
billion) in state aid.
Potential buyers of Kleinwort are said to include Schroders,
Standard Chartered or Royal Bank of Canada.
Kleinwort Benson chief executive Robert Taylor has said a number of
“options” would be considered over the bank’s future. This could
include a management buyout, drawing on the support of the private
equity industry which is starting to find a new appetite for
deals.
Kleinwort Benson has about £7 billion of client assets under
management, considered attractive for a buyer wanting to enter – or
build scale – in the UK private client market. Kleinwort would also
give a buyer a ready-made team of private bankers and fund managers
as well as back office and systems.
It is understood an information memorandum to potential bidders
will be sent out by the end of May while management presentations
to private equity groups are also being prepared.
CORRECTION
Julius Baer NNM for 2008 was 11.3%
Julius Baer’s net new money was 11.3 percent in 2008, not 7.3
percent as depicted in a graph in PBI 247.
As a result, Baer should have appeared above Vontobel in the chart
depicting performance at selected Swiss private banks on page
eight.
The correct order was Bank Sarasin (18.8 percent), EFG
International (13.4 percent), Banca della Svizzera Italiana (11.9
percent), HSBC Private Bank Suisse (11.9 percent, 2007 figure),
Julius Baer (11.3 percent), Mirabaud (8 percent), Vontobel (7.3
percent), BNP Paribas Private Bank Suisse (6.9 percent) etc.
Other references in the survey to net new money at Baer were
correct.
