Private Banking and Wealth Management Survey 2014: The primacy of global heft and a strong home base
As banks retreat from non-core markets, domestic players are left to dominate in their countries, yet global expertise is more desired than ever.
The big global private banks dominated 2013. Although regulatory rhetoric seems to be on the side of curbing large financial institutions, the result has been quite the opposite. The large global private banks that can weather the cost of regulatory burden have been net winners of new assets seeking advice, as well as taking market share from their peers. The model that has resulted is focused on the domestic market, which has been made easier by the retreat of foreign competitors, and then selecting key markets around the globe: Singapore, Hong Kong, London, New York, Miami, Zurich/Geneva and Dubai. Those that have been able to commit themselves domestically and to those global hubs are reaping the benefits.
Asia is best evidence of the importance of being a large global player. JPMorgan and Deutsche Bank ranked in the top 10, while the positions of domestic stalwarts with less global range, such as Kotak Mahindra, China Merchants Bank (CMB) and Bank of China saw their positions fall. In his interview with Euromoney, CMB executive vice-president Liu Jianjun says that to stay relevant: "China’s banks need to respond to HNWIs’ increasing demands for cross-border asset allocation and should consider expanding their footprint to the countries and overseas investment markets preferred by Chinese HNWIs".
The US has returned to the domain of the domestic banks. The top five players are all north American retail institutions. Goldman Sachs, Wells Fargo and Northern Trust entered the top five this year, but JPMorgan and Bank of America Merrill Lynch continued to be first and second respectively. Bessemer Trust also entered the top 10 this year.
In western Europe, JPMorgan is the only non-domestic bank to be in the top five, although it swapped places this year with Deutsche Bank, which moved into third place from fourth. BNP Paribas also entered the top five as room was made by ABN Amro dropping to eighth position.
Emerging markets such as Latin America and the central and eastern European countries witnessed a shake-up in the rankings. Bullishness around emerging markets has waned – particularly in Brazil and some CEE countries, and many foreign banks that ploughed in have retreated or reduced their exposure, returning market share to domestic players.
In Latin America, the domestic players all moved up in the rankings: Santander, Itaú, BTG Pactual and BBVA. Credit Suisse moved from fourth to third, while Citi, UBS and HSBC moved down the rankings slightly. JPMorgan took first place, however, from second last year. In central and eastern Europe, domestic banks UniCredit and Alfa Bank jumped up in the rankings for the region.
One region where domestic players always dominate is the Nordic and Baltic countries. This year was no exception, although Credit Suisse made it into the top 10 to join UBS as the only non-domestic player.
As private banks moved their geographical focus, their overall global standing changed. Julius Baer ranks in the top-10 global private banks this year now that it owns Bank of America Merrill Lynch’s Asian private banking operations.
BNP Paribas, which has been investing heavily and hiring globally, added €280 billion in new assets over the year and moves to seventh place globally from ninth. It made more headway in all regions than any other bank. In Asia, BNP Paribas ranks eighth, up from twenty-second last year. In central and eastern Europe, the bank moved from eighth to fifth and in the Middle East jumped from 13th to fifth.
Citi lost rankings in nearly all regional categories, but its breadth of business globally meant it ranked higher than ever before in the top five, coming in at fourth, pushing HSBC down to fifth.
It is UBS Wealth Management, however, that takes the top ranking globally in Euromoney’s 2014 private banking survey in the second year of its new model of wealth and investment management. The Swiss bank ranks first globally for range of investment products, advisory services and bespoke wealth planning.
Investments are now the key proposition from private banks as they look to win clients based on asset allocation advice and wealth management, as opposed to traditional banking services. Battling it out in investments alongside UBS is JPMorgan. The US bank ranked first in equity, fixed income, private equity, hedge fund and real estate investing globally although it fell to fifth in structured products.
Goldman Sachs moved from third to first globally in managed futures.