PWM/The Banker Private Banking Awards, 2012

The judges

• Yuri Bender, editor-in-chief, Professional Wealth Management magazine, London. 
• Seb Dovey, partner at Scorpio Partnership in London. 
• Shelby du Pasquier, head of the banking and finance group at Lenz & Staehelin, Switzerland. 
• Simeon Fowler, CEO of Fox Partnership, Singapore. 
• Justin Ong, partner, PricewaterhouseCoopers in Luxembourg. 
• Alois Pirker, research director for wealth management at Boston-based Aite Group. 
• Amin Rajan, CEO of London-based Create-Research. 
• Ray Soudah, founder of MilleniumAssociates in Switzerland.

Whereas 2011 heralded a new era of structural change confronting the private banking industry – with that change now well under way – the key trend in 2012 has been a changing of the guard, reflected in the voting behaviour of the panel of judges for the fourth annual Global Private Banking Awards, from PWM and The Banker magazines.

Formerly all-conquering banks with a global reach such as HSBC and Barclays may have come to the end of a cycle of dominance, although HSBC still kept its crown in the Middle East. That was due to significant local efforts, rather than a broader global strategy. 

A combination of factors has affected these banks, including internal problems associated with compliance, failure to implement effective succession planning, and perhaps most damaging of all, a lack of innovation to business and investment models, which are slowly approaching their sell-by date. 

This is clearly a cyclical game, however. Those banks, including leading player UBS, which were once hit by similar (some would say even greater) problems, are fighting back. Not only has UBS restructured and reinforced its leadership, but it has also fought for market share in Asia, where much of its expansion-based resources have been concentrated. 

The awards process also identified those institutions, including Swiss stalwart Pictet, that have maintained their strength through providing service and sticking to the principles of traditional private banking, while also fast developing a fund and asset management capability to augment their white-gloved, old-school offering.

The judges also detected a huge improvement of quality of submissions in some, though not all, developing markets – China and Russia in particular – and an increased polarisation between those banks that are sensitive to local needs and those that take on an increasingly global approach and ignore local difficulties. 

This bifurcation, combined with a changing in fortunes of several key players, is nicely summarised by Swiss judge Shelby Du Pasquier, head of the banking and finance group at Geneva based lawyers Lenz & Staehelin.

“We can see the evolution of private banking in a rapidly changing environment, with a concentration of the market players in two distinct groups,” says Mr Du Pasquier. “On the one hand, we have large banking groups with a global ambition and the means to achieve those goals. On the other hand, we see the emergence of small, or smaller, niche players. These do not have the global reach of the former group, but at the same time they are not plagued by the compliance issues and related reputational risks that the global groups face.”

The judges also drew attention to some boutique operations, in both Europe and the US, whose business models are looking increasingly attractive during today’s challenging economic times.

“It was indeed some of these smaller entrants who provided some of the best presentations,” says Simeon Fowler, Hong Kong-based CEO of recruitment consultancy Fox Partnership. “Some of the bigger institutions have tended to trade on their historic reputations and relaxed. This has led to the domestic players being able to take advantage of this and make gains in their home markets.”

But another group of banks looks poised to grab market share in the future, not just in their own domestic developing markets, but also in those nearby countries where they have expansion plans. These newly self-confident banks, such as Itaú in Latin America, CIMB in Malaysia and National Bank of Abu Dhabi in the United Arab Emirates, are forming an ever-growing group that has broad ambitions but comes from a developing market rather than a location that would give them a global mentality and tradition.

In trying to improve their levels of service, an increasing number of private banks are using client feedback and insight to identify their own strengths and weaknesses. “I don’t think that in many cases they really know what to do with the insight or even how to get it,” says Seb Dovey, founding partner of wealth management think-tank Scorpio Partnership. “But they do appear to recognise that it might just come in useful.”

A transformation in portfolio management is also taking place, with leading Swiss institutions showing the way, particularly spurred by the shedding of Swiss secrecy and tax-led advantages. These mean that in order to survive, they must improve their investment management capacity in order to attract and keep a sceptical and more demanding client-base.

“The high-net-worth space is increasingly adopting institutional quality tools in their asset allocation and manager selection approaches,” says Amin Rajan, CEO of the Create-Research consultancy. “This reflects two trends: the adoption of good practices from other sectors and the widening of the client-base to include pension plans and institutional intermediaries.”

Global 

• Winner: Citi Private Bank
• Highly Commended: UBS, Bank Julius Baer & Co 

Asia 

• Winner: UBS
• Highly Commended: HSBC Private Bank, Standard Chartered Private Bank 

Europe 

• Winner: Pictet & Cie
• Highly Commended: UBS, Lombard Odier & Cie 

Central and Eastern Europe 

• Winner: Erste Private Banking
• Highly Commended: UBS 

Middle East 

• Winner: HSBC Private Bank
• Highly Commended: Standard Chartered Private Bank 

US 

• Winner: Northern Trust
• Highly Commended: JPMorgan Private Bank, Wells Fargo Private Bank 

Latin America 

• Winner: Itaú Private Bank
• Highly Commended: Santander Private Banking, JPMorgan Private Bank

Brazil 

• Winner: Itaú Private Bank
• Highly Commended: Bradesco Private Bank 

China 

• Winner: China Merchants Bank
• Highly Commended: Agricultural Bank of China, ICBC Private Banking 

India 

• Winner: Standard Chartered Private Bank
• Highly Commended: HDFC Bank 

Russia 

• Winner: Bank Zenit
• Highly Commended: Nomos Bank 

Hong Kong 

• Winner: UBS
• Highly Commended: Citi Private Bank, HSBC Private Bank 

Singapore 

• Winner: DBS Bank
• Highly Commended: Standard Chartered Private Bank 

Malaysia 

• Winner: CIMB Private Banking

Taiwan 

• Winner: Chinatrust Commercial Bank
• Highly Commended: Tapei Fubon Bank, Taishin International Bank 

South Korea 

• Winner: Hana Bank
• Highly Commended: Shinhan Bank 

Thailand 

• Winner: Kasikornbankgroup Private Banking

Lebanon 

• Winner: Audi Saradar Private Bank
• Highly Commended: Blominvest Bank 

Turkey 

• Winner: Akbank Private Banking
• Highly Commended: Garanti Masters Private Banking, Deniz Bank 

UAE 

• Winner: National Bank of Abu Dhabi
• Highly Commended: Emirates NBD Private Banking 

Belgium 

• Winner: ING Private Banking
• Highly Commended: KBC Private Banking 

France 

• Winner: BNP Paribas Wealth Management
• Highly Commended: ABN Amro Private Banking 

Germany 

• Winner: Berenberg Bank
• Highly Commended: Deutsche Bank Private Wealth Management 

Italy 

• Winner: Banca Generali
• Highly Commended: Intesa Sanpaolo Private Banking 

Luxembourg 

• Winner: Société Générale Private Banking
• Highly Commended: BNP Paribas Wealth Management 

Nordics 

• Winner: SEB
• Highly Commended: Danske Bank 

Spain 

• Winner: BBVA Banca Privada
• Highly Commended: Caixa Bank 

Switzerland 

• Winner: Pictet & Cie
• Highly Commended: Bank Julius Baer & Co, Lombard Odier & Cie 

Chile 

• Winner: LarrainVial

UK 

• Winner: Coutts
• Highly Commended: Schroders Private Banking 

Canada 

• Winner: RBC Wealth Management
• Highly Commended: Scotia Private Client Group 

Brand 

• Winner: Pictet & Cie
• Highly Commended: UBS 

Boutique 

• Winner: Schroders Private Banking
• Highly Commended: Fieldpoint Private 

Customer Service 

• Winner: Citi Private Bank
• Highly Commended: Pictet & Cie, BNZ Private Bank 

Innovation 

• Winner: Northern Trust
• Highly Commended: Danske Bank, Hana Bank, Coutts 

Socially Responsible Investing 

• Winner: Northern Trust
• Highly Commended: Bank Sarasin & Co 

Philanthropy Services 

• Winner: BNP Paribas Wealth Management
• Highly Commended: UBS 

Best Management Team 

• Winner: Credit Suisse
• Highly Commended: Bank Julius Baer & Co 

Most Improved Management Team 

• Winner: JPMorgan Private Bank
• Highly Commended: Fieldpoint Private 

Leader 

• Winner: Boris Collardi, CEO, Bank Julius Baer & Co

Best Global Private Bank
Best Private Bank for Customer Service
Winner: Citi

Citi, voted Best Private Bank in the awards for the third year running,enjoyed $28bn of net new money in 2011, with improvements flagged from customer feedback in its ‘Voice of the Client’ survey.

One of the key developments has been its Asian expansion, with significant investments in the bank’s structure and staffing. It is also clear from CEO Jane Fraser’s travel schedule and the anecdotes she shares with staff and journalists, that much of her time is spent in the emerging markets of Asia and Latin America. In the coming years, she anticipates at least 40% of the bank’s private clients in terms of wealth will come from Asia.

“Most private banks are at the moment trying to get their footprints built in Asia,” says Ms Fraser, whose private client operation oversees $268bn globally. “We are already there. For us, it is now about the flows, the network and the connectivity, rather than getting the footprint itself built.”

Key recent investment communications to clients have included calls on longer dated investment grade bonds, which Citi says are up 12% in 2012 in the US and 17% in Europe.

The bank prides itself in being able to channel client funds into tactical investment opportunities which may only have a short window of opportunity. “The ongoing deleveraging is providing attractive opportunities for returns,” says Ms Fraser. “We’re able to bring our clients access to interesting deal flow in a variety of ways, including co-investment and specialist manager formats.”

Unlike some competitor banks in developing markets, however, Citi always stresses such deals need to be traded in the context of an “intelligent asset allocation and portfolio construction” format. 

This strategic asset allocation model has been totally overhauled and renamed AVS, for Adaptive Valuation Strategies, switching its emphasis of forecasting from historical averages to market valuations. That said, Citi has also extended its historical database of figures for all asset classes back to 1910, so that more market crises are taken into account. 

Citi, believes Ms Fraser, must try to help private clients negotiate their key concerns: economic instability, which leaves clients worrying about how market volatility impacts their investments; and local political instability in some countries, which can lead to clients’ assets being seized by the state or rival business interests.