Private Banking and Wealth Management Survey 2011: Private banks rebuild trust and sharpen their focus
Credit Suisse retained its position at the top of the global rankings in Euromoney’s latest private banking survey. But market share is hard fought for as firms seek out key opportunities in emerging markets and among ultra-high-net-worth clients. Helen Avery reports.
|Private Banking and Wealth Management Survey 2011|
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COMPARED WITH 2008 and 2009, 2010 seemed a more peaceful year in private banking. With no investment banking-related blow-ups, and no Bernie Madoff-style scams, private banks that had lost clients in the previous two years were able to concentrate on rebuilding trust. For those that had benefited from the turmoil of the financial crisis, it was a year to focus on revenue-generating businesses such as emerging markets or ultra-high-net-worth clients.
Credit Suisse tops the global rankings for the second year running in Euromoney’s annual private banking survey. As UBS was preoccupied with investment banking losses, Credit Suisse managed to topple its Swiss rival from its throne in 2010, and has succeeded in holding on to its position this year. Credit Suisse’s private banking chief executive, Walter Berchtold, attributes the firm’s continued success to its shift to a more client-focused business and global build-out between 2004 and 2009. "This started to pay off in 2009 and 2010 and we believe that the momentum we have created will increase," he says.
UBS Wealth Management has regained some ground, however. Last year, the firm dropped from first to third place globally, and has now nudged back up to second place. It will be a challenge for the firm to regain its former reputation as the world’s best private bank after the financial crisis and allegations of aiding US clients evade taxes but there were signs last year that the tide had turned for it. In the third quarter, UBS Wealth Management finally returned to positive net inflows of wealth. Chief executive Juerg Zeltner says that clients are regaining confidence in the firm, and he says it now has the right business model – one that is client-centric and broadly diversified globally. Zeltner says the firm sees a clear shift from asset gathering towards holistic investment management. According to the rankings, UBS will be well placed for this trend. It ranked first globally for range of investment products.
UBS’s steady turnaround has knocked HSBC Private Bank from its position as second-best global private bank, but it retains its ranking as first for lending and financing services, and first for corporate executives worldwide. In Asia, HSBC continues to be ranked number one for overall private banking services.
In other emerging markets, the competition has proved fiercer. Credit Suisse now ranks as best private bank in the Middle East, and in central and eastern Europe. Berchtold says the firm has benefited from the growth of wealth in emerging markets like many of its peers. He says that about 60% of the bank’s net new assets come from emerging markets. The Swiss bank moved up the rankings from sixth to second place for best overall private bank in Latin America this year – although it will be hard to push Citi from its long-standing position at the top. In Brazil, Hedging Griffo, in which Credit Suisse holds a majority interest, is an important driver of the bank’s net new assets. Overall, for net new assets, the bank is targeting a growth rate of 6%.
In western Europe, BNP Paribas has made big strides. No doubt helped by the acquisition of Fortis, the French private bank moved from fourth place to second-best private bank in western Europe. Credit Suisse kept its top place.
Goldman Sachs’s wealth management business proved immune to negative press. In North America, the firm moved up to third place from fifth last year for overall private banking services. JPMorgan maintained its position in first place.
By client segment there have been some interesting developments over 2010. JPMorgan drops back to third this year in the category of best private bank globally for ultra-high-net-worth individuals, handing the reins back to UBS. Credit Suisse has pushed out Goldman Sachs to be ranked second. Emerging markets and ultra-high-net-worth are continually echoed by private banks as being the battleground for revenues. Consultants say that business with ultra-high-net-worth clients is more difficult to turn into profits, as these clients tend to demand lower fees and require a greater range of services and advice than other clients.
Berchtold says that for a truly integrated bank, the ultra-high-net-worth segment is nevertheless a highly attractive one, both strategically and financially. "We are able to differentiate ourselves from classical wealth managers as we offer additional services such as investment banking," he says. In 2010, Credit Suisse began a strategy of training its relationship managers who serve ultra-high-net-worth clients to bring the bank’s full range of solutions to its clients. It’s a strategy that nearly all of the largest global private banks with solid investment banking arms are implementing.