Part one: Middle East private banking debate: The region reconsiders its wealth needs post-crisis
Middle East private banking debate: Learn more about the panelists
|
|
EXECUTIVE SUMMARY
• Only a small proportion of relationship managers get it right, and they need to bring in revenues within two years
• The cost of RMs is more expensive in the Middle East than in Europe
• When looking at risk, clients need to think more about preserving wealth than about generating income
• Can local banks and international banks ever compete fairly?
• Moving from cash to investments will be a growth strategy
|
|
|
RB, Majlis Last month we talked about how relationship managers can be key when offering an integrated approach in the Middle East. We estimate that 70% of relationship managers who leave their employers are able to take some of their clients with them. So let’s talk about incentive structures, how to retain relationship managers and how to retain clients.
BD, Credit Suisse Whether clients stay depends on the institution and on the relationship manager. I disagree that 70% of relationship managers take their clients with them. If a relationship manager is exceptional, it’s a different case. Those RMs are authentic, the clients trust them and they know the business very well. They don’t need an infrastructure to act as an integrated banker; they make the integration. But apart from these exceptional cases, clients usually stay with us if a relationship manager leaves.
HZ, NCB And those exceptional relationship managers are taken care of. At NCB we know them by name and everybody from the chairman, the chief executive officer and the business heads down is taking care of those people in order to keep them. They are well paid, well trained and well treated within the organization.
RB, Majlis What additional training do relationship managers need to go after clients in the non-resident Indian [NRI] market? Is it as simple as giving an Indian, who knows the Indian market, a card? Is it just about the ability to communicate well or is it the level of sophistication of the relationship manager, and is that changing?
BD, Credit Suisse Training is key. If you want to be successful, you need to be well trained. That is why I am a big believer in segmentation. High-net-worth individuals with €5 million often prefer a standardized, very professional and high-quality service. They don’t want things to be complicated. But if you are talking to an ultra-high-net-worth client with very sophisticated needs, the RM needs to understand investment banking.
RB, Majlis Let’s talk about talent acquisition. Other than taking care of those who are in-house, what do you do? Do you train up or do you try to hire seasoned professionals?
MS, HSBC Both. Development is critically important. You have hungry younger bankers who are financially literate and analytical and need to learn the client acquisition and development skills. For the more seasoned bankers, it is about training them to think through the issues that their clients are facing and to understand the product solutions. It is about continuous development of talent supported by selective external hiring.
RB, Majlis How do you measure the success of a relationship manager? Clearly, there is the assets-under-management metric. What other key metrics do you use to serve as guides? Is it the ability to cross-sell? Is it the length of the relationship? Is it the ability to bring in investment banking revenue?
GD, ENBD One of the important things, particularly when our base is in retail banking, is that there are so many products that are just left out by RMs. Private bankers don’t like selling insurance policies, yet the jumbo life policy is a core product in the NRI market. They don’t like selling a car insurance policy, but who else is the client going to visit to insure his Porsche and Mercedes? The banker may not have to do it himself, but could bring the whole bank in. One of the problems you have with bringing talent in is that sometimes they will say: "At Credit Suisse, I did it this way and I used to sell these products." You have to say: "Well, yes, okay, but we are not Credit Suisse. We are something different, we have a great proposition in this direction and perhaps Credit Suisse didn’t have the same traction in the local market as us." So it is very important that the talent that comes in is flexible, and for us, one element of that flexibility is cross-selling.
BD, Credit Suisse If you have a truly integrated bank, every product should generate revenue. At the end of the day, you also want a profitable RM, so you will look at his revenues and costs, not just the annual compensation. I also want to ensure that an RM is a good team player, which means he will be able to generate revenues from across the bank.
RB, Majlis Let’s talk about the yield cycle of a relationship manager. A talented relationship manager is attempting to do the right thing by the client, and it may take three months, six months, nine months, a year, 18 months in certain cases. If you are marking him on the market, so to speak, how long does he have to deliver?
HZ, NCB It depends on the relationship manager. Some of them grow assets under management immediately after joining, and they start making money for the bank.
RB, Majlis Let’s talk about the investment in those people too, because that has an impact on how much of a runway they have to pay off that investment. What percentage of total compensation goes into the training and development of your senior relationship managers to make sure they keep up with the times? Then, at the other end of that barbell, where you have a recent graduate, how much is the bank willing to invest as a percentage of total compensation?
