Private banking 2008: When the ultra-wealthy bump into the sub-prime
Goldman Sachs is truly the bank of ultra-high-net-worth clients. Its target clients have a liquid net worth of at least $10 million. Regarded by some as more of a service to complement the investment banking clients, the firm’s wealth management business is becoming more a focus.
Efforts to increase private banking offerings globally have been recognized by its competitors – in this year’s survey, Goldman Sachs ranked eighth-best global private bank, up from 12th last year. The firm also ranked second globally to UBS in hedge fund investments, and managed futures, and first in private equity investments, showing its dedication to alternative assets classes.
Global head of wealth management Peter Scaturro, who joined from US Trust in July, says the firm has taken several measures to expand its business over the past year. "In 2007 we created the banking financing and liquidity capabilities in the US, and are now rolling that out in Europe," says Scaturro.
In terms of regional expansion, Scaturro says next year Goldman will be focusing on China, Latin America (where the firm has just hired HSBC’s head of Latin American private banking, Betty Sanchez), India and the Middle East. Over 2007, Europe was a key focus, and will continue to be so next year. Goldman Sachs launched a bank in Ireland in December, and hired a new team in Switzerland to increase its open architecture capabilities.
The firm has often been criticized for not offering sufficient third-party products but Scaturro says this is unfair. "We have several teams in place who look at best-in-class products, and for many years have carefully vetted, and recommended, external managers in every asset class, and with the new team in Switzerland we will be building on that in Europe."
Goldman Sachs as a whole has avoided the writedowns suffered by its Wall Street peers, which should stand the private bank in good stead in 2008. Scaturro says: "When markets become more complex and volatile, there is a flight to quality, and we see clients come to us based on our solid reputation and intellectual capabilities. In 2008, that will continue at an even greater rate than last year."