Standard Chartered has underlined its financial strength by raiding the job market for new private banking staff. Its wealth and wholesale businesses have proved natural complements in a tough climate – and may provide lessons for other players swamped with cash by risk-averse clients.
Standard Chartered Private Bank is to recruit another 100 relationship managers globally, or a 30 percent increase, within the next 12 months to accelerate operations in its fast-growing markets. This makes the bank the biggest hirer currently in private banking, taking the crown away from former high-growth rivals like EFG International which are retrenching because of tough markets. StanChart Private Bank currently has 350 relationship managers globally.
In addition, Marianne Hay, former chief executive of Citi Global Wealth Management for Europe and the Middle East, is to join as head of its European private banking business. She previously worked at Morgan Stanley, where she headed its private wealth management group in Europe.
The extra hires are to support planned expansion in its key markets in Asia, Europe and the Middle East, in response to increasing demand from high net worth individuals for the bank’s services, it said, in a statement.
Peter Flavel, head of StanChart private bank, declares the “current market dislocation” is highlighting distinct opportunities for his bank: “We are seeing ‘flight to quality’ in terms of liquidity across our markets. It has given us an opportunity to get closer to our clients and increase the depth of our relationships.”
Flavel considers Standard Chartered as an attractive place for senior advisers, based on its distinguished brand, local market expertise and the bank’s outstanding performance so far in the financial crisis. He stresses that the bank is focused on leveraging existing client relationships in the group’s businesses – wholesale banking, SME and priority banking.
“Relationship managers understand and like the power of that strategy,” he says. “That means they’ll be able to speak with potential clients who are already doing business with the bank.”
Preferred hires will be candidates with exceptional people and advisory skills and a commitment to building long-term partnerships with clients, Flavel said.
“They’ve probably been with their existing bank for quite some time and understand the latent opportunities that exist in Standard Chartered,” he added.
Meanwhile, Standard Chartered is moving to reconfigure its mass affluent wealth management operations, after what it describes as a muted performance of late. Across much of Asia, investors have taken big hits on structured products as well as highly-leveraged instruments, depressing levels of new business for all banks.
At StanChart, the mass affluent side of the business will be moving to a client-household focus rather than the present largely investment product-led approach, PBI understands. In future, the premium mass affluent strategy will look to meet all of the needs of the client, not just their investment requirements.
StanChart, driven by the strength of its wholesale business, has been one of the top performing banks since the onset of the financial crisis. But its wealth management operation, along with much of its consumer banking business, has failed to maintain the same momentum.
In 2008, consumer banking operating profit fell $561 million, or 33 percent, to $1.12 billion on static revenues and rising costs, while the wholesale bank increased profit by $654 million to $3 billion, or 28 percent.
The bank has been working on developing its capital markets business, and recently hired Henrik Raber, previously co-head of European credit flow sales and trading at UBS. The strategy is seen as a sensible one for wealth managers, who are stuck with increasing amounts of cash and near-cash instruments on their balance sheets because of risk aversion among clients.
While smaller wealth players have historically been unsuccessful in developing this side of their business, the margins in corporate lending are currently high and it is seen as an appealing opportunity if it can be executed effectively. The bank says that while it has seen demand dropping in its wholesale business, competition between banks across capital markets is falling at a faster rate.
“Some smaller private banking players may look at Standard Chartered, and the success they’ve been having in their wholesale business, and think about using some of that capital they’ve acquired recently by developing a capital markets business,” said an industry figure.
“You can make decent money out of cash, putting it to work in overnight markets, but you can do much better if you move into areas like corporate lending. The only problem with that is you can make 80 good loans, but if one turns sour you’re back to square one.”