Northern Trust picks up the award for Best Private Bank in the US and Itaú Private Bank picks up the award for Best Private Bank in Latin America.

Best Private Bank in the US

Best Private Bank for innovation
Best Private Bank for Socially Responsible Investing
Winner: Northern Trust

Despite increasing competition,last year Northern Trust saw personal client assets under management grow 12.5% year on year, to $173.7bn, with deposits rising 22% up to $22.5bn, as clients were attracted by the bank’s strong balance sheet.

The introduction of an investment management tool, Goals Powered Solutions, was one of the bank’s major innovations in 2011, representing the culmination of more than six years of research and development. Leveraging on the Northern Trust’s extensive experience in serving clients in the institutional market space, this approach converts each client’s needs, goals and aspirations into explicit financial liabilities. Client assets are matched off according to each liability’s magnitude, duration and character. “Our investment approach is intentional, interactive and adds precision to portfolio construction by directly matching a client’s assets and risk preferences to life goals,” says Jana Schreuder, president of Northern Trust’s private bank. 

Other innovations include upgrades to the firm’s online banking tool. “Clients increasingly want to interact in ways that are digital, mobile and 24/7 accessible,” says Ms Schreuder.  

Northern Trust currently manages approximately $17bn globally in socially screened strategies. At the end of 2011, it managed more than 60 portfolios and pooled funds using socially responsible investing (SRI) screening techniques or related indices. It also offers portfolios managed by external investment firms. Among the firm’s SRI offerings is the Northern Trust Global Sustainability Index Fund, the first mutual fund to track a global sustainability index. 

“We anticipate growing demand and increasing allocation to SRI strategies in the years ahead. Our work with clients suggests that SRI demand is greater with younger generations, so as wealth transfer occurs, we expect to see more assets flowing to investments with SRI themes,” says Ms Schreuder.

Working in collaboration with financial information services company Markit and Morningstar to create customised indices, Northern Trust last year developed a line of ‘next-generation’ exchange-traded funds, which enable investors, for example, to precisely manage the risks associated with interest rates and inflation. 

Best Private Bank in Latin America
Best Private Bank in Brazil
Winner: Itaú Private Bank

Itaú Private Bank is Latin America and Brazil’s largest private bankwith more than $160bn reais ($79bn) of assets under management globally. 

“We constantly look for growth opportunities such as increasing our penetration in the Hispanic markets, intensifying our global presence and consolidating our leadership in the Brazilian market,” says Flavio Souza, director at Itaú Private Bank. 

Examples of expansion activities last year include the opening of a new office in Switzerland, the joint venture with Chile-based wealth manager Munita Cruzat & Claro (MCC), new hires and the opening of branches in specific high-growth potential regions in Brazil.

Cross-business referral agreements with the investment, corporate and retail banking teams have been responsible for more than 40% of the bank’s $19bn net new money gathered over the past three years. 

“The rise of entrepreneurial ultra-high-net-worth and high-net-worth individuals in Latin America is boosting the demand for hybrid private and corporate solution portfolios, which calls for improved cross-selling with other business units,” says Mr Souza. In 2011, in particular, asset under management growth in Brazil was driven by big-ticket deals from merger and acquisition transactions and the ultra-high-net-worth individuals drove most of the bank’s growth. 

To capture the opportunities created by liquidity events, three years ago the bank developed its solution partners and real estate advisory services, focusing on clients’ illiquid assets. 

In an environment of lower interest rates, clients seek higher returns and overlook liquidity. The bank’s offering of alternative investments, such as private equity and real estate, has largely increased as a result, and clients’ portfolios have shifted from overnight deposit to credit products offering lower liquidity. “This new macroeconomic scenario gives us the opportunity to offer more sophisticated products and show clients the value that a specialised private bank can add,” says Mr Souza. However, it is important to maintain cost efficiency to make up for lower margins, he adds. 

The bank has been investing in technological developments to reduce risk, scale business and create a more client-centred private bank experience. Investments were also made in mobile technologies. “Long-term growth will depend on further investments in technology and operations,” says Mr Souza. 

Investing in talent is equally crucial and a key differentiating factor for the bank. Mr Souza says: “Talent shortage is a real issue in our market. The market has been growing faster than the talent pool and, as a consequence, we have increasingly invested in training. Today, about 70% of our bankers are certified financial planners, versus a market average of 30%.

“We strongly believe that the sustainability of our long-term results depends on our client satisfaction with investment performance and quality of advisory process.” Fundamental to that is the open-architecture approach offering. The bank works with 70 independent asset managers. “Today we are the largest distributor of third-party products in the region,” says Mr Souza. 

Best Private Bank in Chile

Winner: LarrainVial

LarrainVial is a privately held firm, established in Chile in 1934, with operations in Colombia, Brazil, Peru and the US. Last year, its private banking division saw the bank’s assets under management grow by more than 11% to reach $3bn, with its market share in its home market increasing slightly to 10%. The bank’s major achievement was the delivery of a more personalised service for its clients, with the introduction of a new mechanism to generate clients’ portfolios. 

“Traditionally, the portfolio managers of the private bank were responsible for profiling clients’ portfolios, but now this task falls on different work groups comprising people from different areas in LarrainVial,” says Gonzalo Córdova, the bank’s head of wealth management. “With this mechanism, we are able to reduce the risk for our clients.” 

The bank also implemented a computerised system which enables it to consolidate domestic and foreign portfolios, offering clients a more complete view of their assets. 

A new business management system provides relevant client information to private bankers, enhances client segmentation and allows the creation of personalised risk profiles. Finally, last year LarrainVial introduced two different client service models, advisory and discretionary, to better meet clients’ needs. 

LarrainVial has partnerships with asset managers such as UBS, Pictet, Pershing and Allfunds, and products are selected by the bank’s product committee. “LarrainVial’s products represent a small part of our clients’ portfolios,” says Mr Córdova.  

The strong economic growth in Chile and the Andean region, mainly driven by the mining sector, has considerably increased the number and the wealth of high-net-worth individuals, and the region has become more and more enticing for private banks. “Because of this new competitive scenario, we have put additional efforts into generating customer loyalty,” says Mr Córdova. New initiatives include seminars and events on various economic and financial topics as well as recreational/networking activities for clients.

Regional expansion is also on the agenda. “Through the bank’s offices in Peru and Colombia, we are able to detect new investment opportunities and deliver a personalised service,” says Mr Córdova. Private bankers at LarrainVial have started travelling to meet with potential clients in other countries too, such as Argentina and Uruguay. 

Best Private Bank in Canada
Winner: RBC Wealth Management

With Canada featuring increasinglyin global allocations of private and institutional investors and Canadian banks favoured for their strong balance sheets, RBC Wealth Management is ramping up its operations on both domestic and international stages.

Named as top Canadian private bank by the judges, against stiff competition from the likes of BMO Harris and Scotiabank, RBC has seen consistent growth of global customer assets, from $168bn in 2008 to $223bn today, claiming a leading 23% market share of Canada’s domestic high-net-worth market. RBC also boasts of the highest fee-based assets per client adviser in Canadian private banking.

RBC Wealth Management’s group head, George Lewis, says the bank is differentiated from its competitors by an ability to go beyond traditional investments, through collaboration with internal partners within the group, including RBC Global Asset Management and RBC Capital Markets.

The Canadian domestic operation is backed by a team of 180 experts focusing on tax, estate, financial planning and charitable giving.

In 2011, backed by resources from the parent company, RBC launched a long-term transformation of its wealth management business, designed to accelerate growth both at home and abroad. Priorities include building high-net-worth market share in the UK and in emerging markets, aided by increasing co-operation between asset and wealth management functions.

With its expertise in natural resources investments, RBC is currently advocating total exposure of 10% to 20% of overall portfolio holdings to this sector.

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