PWM/The Banker Private Banking Awards, 2012: Central and Eastern Europe

Best Private Bank in Central and Eastern Europe
Winner: Erste Private Banking

Headquartered in Viennabut now operating across six countries – Austria, the Czech Republic, Slovakia, Hungary, Croatia and Romania – and with Ä14.8bn under management, Erste Private Banking is part of Erste Group, whose 17 million customers make it one of the largest banking groups in central Europe, and is able to offer its clients all the benefits of a universal bank. 

“Erste Private Banking combines individual customer care and private banking services with the profound knowledge, experience and reliability of the largest independent retail banking group in this region,” says Peter Ipkovich, head of wealth creation and group private banking at Erste Private Banking.

“The introduction of group standards and the combination of local management and central steering have proved the keys to our success,” he adds. “Our clients benefit from the standardised high-quality approach based on leveraged synergies and shared best practices in training, marketing, product development and asset management.”

The private bank is keen to offer its services to clients outside of the region’s major metropolitan areas, and the strong co-operation with the group’s retail branch network is a way for Erste to target high-net-worth individuals living in rural areas.

Looking ahead, Mr Ipkovich stresses that the whole group is determined to rise to the challenges posed by the new legislative and regulatory demands coming from both the EU and local governments, while striving to always improve the quality of its offerings. “Upcoming enhancements include the roll out of a group-wide asset allocation process, the strengthening of the discretionary portfolio management business and the offering of innovative portfolio solutions,” he says.

Best Private Bank in Russia
Winner: Bank Zenit

In 2011 Bank Zenit, one of the pioneers of private banking services in Russia, with 11-year history, launched a number of initiatives aimed at improving customer service, which also contributed to an increase its profits. These included the introduction of portfolio management fees for clients not reaching the minimum threshold of Rbs6m ($193,000) in assets, which also resulted in a better segmentation of its client base. A commission-based advisory service was also implemented, and fees were introduced to generate individually tailored financial reports, and to open and manage offshore accounts with the bank’s international banking partners.

“Many of our clients are becoming more aware of country risk and realise they need to diversify their portfolios,” says Andrey Likhovid, head of private banking at Zenit. “But the Russian financial market is not very sophisticated and we cannot offer as many products as our Western partners do, so we give our clients the freedom to choose bespoke products and strategies provided by our partners in Switzerland and Luxembourg.”

In Russia, a large proportion of clients’ assets are kept in foreign banks. “We want to expand, diversify and improve our services and convince our clients that private banking is also available in Russia,” says Mr Likhovid. 

Thanks to improved cross-selling, many clients of the group’s corporate bank have become clients of the private bank, boosting net new money. The bank’s new strategy is to promote products with an optimal combination of risk-return for the clients, as opposed to products that boost the bank’s margins, states Mr Likhovid. 

“The number of clients willing to accept market risks dropped significantly and as a result we have concentrated more on the quality of our services and advice,” he says. “We managed not only to maintain our client base during the period of crisis but also to grow it.” 

Zenit Bank mainly focuses on the affluent segment and the average account size was approximately Rbs18m in 2011. But Mr Likhovid is confident that the private bank’s focus will naturally shift to the high-net-worth and ultra-high-net-worth segments, also in light of the rapid growth of wealthy individuals in recent years.  

Headquartered in Moscow, Zenit’s private banking operation is expanding in the regions. “We want to further concentrate our efforts in exploring our regional client base as we see potential for new money” says Mr Likhovid.