Brazil private banking debate: Learn more about the panelists
|
|
EXECUTIVE SUMMARY
• Assets under management are growing by 25% a year
• Synergies with other parts of the bank and cross-selling are important for capturing wealth
• Fees are not growing in line with AUM – many clients prefer to stick with fixed-income investment that generates low fees
• Brazilian clients are growing keener to invest onshore
• Investments with tax benefits are becoming more popular, encouraged by government policies
• High interest rates are depressing interest in equities |
|
|
Euromoney I would like to start by getting a sense of how your organizations are doing in the current market. How fast have assets under management grown over the past 12 months and how do you see that rate of growth for the next 12?
JAW, Bradesco In the past 12 months the growth of our AUM has been about 25%, and this is where we see it for the next 12 months. This is what we have in our budget: between 23% and 25%.
RP, BTG Pactual We had very robust growth last year, with growth in AUM of around 50%; in the past 12 months it has been about 40%. We expect to deliver 35% growth in AUM in 2011. Our private banking story has changed a lot since 2009, when BTG acquired UBS Pactual. The robust growth we’ve had this past 18 to 24 months is a reflection of that. Since 2009, we have more than doubled our AUM.
GA, CS Hedging-Griffo We have been experiencing something like 25% growth in AUM. We expect the same growth rate for the next 12 or 24 months.
PMOS, Itaú Our trend has been similar to most in the room, with a growth rate of around 25%. We expect something similar for the coming year, mostly driven by growth in the demand for assets in the domestic market because of the opportunities we have here in Brazil with the strong real and high interest rates.
Euromoney What is your organization’s strategy for capturing the wealth created by liquidity events in Brazil?
RP, BTG Pactual That is something BTG Pactual has always been very active in doing – and doing well. We have lots of synergies with the investment bankers, both in capital markets and mergers and acquisitions. As long as you really coordinate with those guys from the outset of the transaction – whenever possible, given regulatory issues – you increase the chances that the client will become a wealth management client. It’s a two-way street.
What happens in Pactual is that sometimes we refer clients to the investment banking team, when they have a transaction of sufficient size, and then that creates goodwill with the investment bankers. And so, when they originate a deal, they bring us on board, especially on capital-market deals. If the deal is public, we tend to work with the investment bankers from the outset so that we can be closer to the client – going on the roadshow, for example.
According to our internal statistics, once we’re really involved with an investment banking client from the start of their liquidity event, as opposed to a deal that is not coordinated by our investment bankers, we are four times more likely to win their private banking business.
Euromoney Does that sound right to everyone else? Are you four times more likely to convert your own IB clients?
GA, CS Hedging-Griffo This ratio sounds correct. When the client is involved in a liquidity event, he is so focused on selling his business or selling his position that he doesn’t have time to think about what to do with the money afterwards. So it is easier if you are ready when they are ready to take this step.
JAW, Bradesco One topic that has been addressed, synergy, is something that we are very focused on. We are very focused on segmentation and getting a clear understanding of the advantages we have from having such a large client base. There is no doubt that this profile has huge potential and we are still not exploring all of it.
To give you some quick examples of what we have been doing: we go to our colleagues in other departments and these guys are generating business for us without even knowing it. We are looking for highly paid professionals who get a cheque and will eventually deposit it somewhere, so we go to the credit-card division, the marketing division, the pension-plan division and the insurance division and say, for example: ‘Who is buying insurance for boats?’ and then we do the cross-selling.
We also go back, look at our existing client base and really explore the potential for these clients. Sometimes we go hunting for clients and we can forget about those that are already with our bank. We have internal compensation programmes that reward [staff for] growing existing clients, who eventually become ultra-high-net-worth individuals and have money in two or three different situations, and we work very hard with those guys. Eventually, if you have good products and services, your share of wallet will be bigger than your competitors’. It requires a lot of work internally to promote the private banking group.
However, with such a large, commercial retail bank, there are still some areas that you don’t even know exist. Private banking at Bradesco has been established for about 10 years. I go to some branches in the countryside and they have never heard about private banking. So we have a lot of marketing to do to tell these guys: ‘This is private banking in Bradesco, and we can help you with x, y and z solutions.’
Cross-selling
Euromoney Itaú BBA has quite a lot of autonomy from the retail banking group. How do you align and reward these cross-selling opportunities? How do you ensure that you are aware of the opportunities?
