PWM/The Banker Private Banking Awards, 2012: Teams

Best Private Banking Boutique

Winner: Schroders Private Banking

Although Schroders possesses a highly renowned brand,associated with the institution’s blue-blooded origins, resonating well beyond its Gresham Street headquarters in the City of London, Schroders Private Banking remains a small, though profitable, highly targeted operation. It has won the newly created Best Private Banking Boutique award in recognition of its achievements in this sphere.

In the three years to the end of September 2012, Schroders has enjoyed net inflows of £2.7bn, although the challenging environment of the past 14 months has seen these flows slowing down.

Some contrarian asset allocation calls have been shared with private clients during 2012, including a call to invest in developed markets at the expense of emerging markets. China in particular has been underweighted by portfolio strategists at Schroders. This has proved a successful call, because Chinese equities have indeed lagged other markets in performance terms, as the economy has slowed. Together with the asset management arm of Schroders, the private bank is soon expected to issue a major call for European clients to invest on their own doorstep, in advance of an anticipated resurgence in the fortunes of continental European bourses.

“For the longer term, however, we are retaining a modest exposure to emerging markets,” says Rupert Robinson, London-based CEO of Schroders Private Banking. “This reflects the healthier finances of most emerging market governments compared to their developed world counterparts.”

In order to implement investment calls, structured products are used only ‘highly selectively’ in order to give clients exposure to specific investment scenarios, with an internal team tasked with buying in these products from investment banks and breaking them down into constituent parts to ensure the best pricing deals for Schroders’ customers.

Mr Robinson gives an example of a particular scenario where such products are sold on to private clients. “We have recently created an instrument that gives investors exposure to dividend growth without exposure to underlying share prices,” he says.

The prime focus for future expansion will be the UK, where client assets have increased from £4.5bn ($7.2bn) in 2007 to £9.3bn today, with particular success in the bank’s ultra-high-net worth client book, servicing individuals and families with more than £20m to invest. Now those clients with fewer assets, but potential for growth, will increasingly become a target for Schroders.

“We are working on adding high-net-worth clients – those with investable assets of £1m-plus,” says Mr Robinson. “We are looking to attract those people who see the value in working with an independent, investment-led private bank.” 

Best Management Team
Winner: Credit Suisse

With offices in 57 countries around
the world, Credit Suisse is a global private bank which has made the ‘one-bank model’ its distinctive feature. Combining its strengths and expertise in its three
main business lines – private banking, investment banking and asset management – the bank prides itself in offering wealthy clients advisory services and customised products. 

“We are convinced that our business model helps us deliver the best products and solutions to our clients, across our organisation and division,” says Hans-Ulrich Meister, CEO of private banking at Credit Suisse. “We have established a dedicated governance structure in order to drive, measure and manage collaboration between our divisions.” Credit Suisse claims it is the only institution including this specific activity within its annual reports. “We are targeting collaboration revenues of 18% to 20% of net revenues, and in 2011 we recorded collaboration revenues of SFr4.3bn ($4.6bn), representing 16.8% of net revenues.” 

Last year, Credit Suisse saw strong inflows in net new assets of SFr31.7bn from its international businesses, particularly from emerging markets and the ultra-high-net-worth segment.

The bank also gained market share in its home market of Switzerland across most client segments and generated SFr12.8bn of net new assets there in 2011. 

New clients have been attracted by
the bank’s financial standing and a Tier 1 capital ratio of more than 18.2%, which makes the bank “one of the strongest financial institutions in the world”, according to Mr Meister.

Only the most experienced investment partners provide advice to ultra-high-net-worth individuals and they look after no more than 10 to 20 clients. The ‘solution partners’ group sits at the heart of Credit Suisse’s ‘one bank’ strategy and helps leverage the bank’s best services on behalf of the client, working closely with the investment partners and wealth planning.

‘Best people’ is one of the core elements of the private bank value proposition
and Credit Suisse has formalised its training programme in its business school,
a fully fledged corporate university
which employs 230 staff worldwide to deliver nearly 7000 customised courses at every level. 

Most Improved Management Team
Winner: JPMorgan Private Bank

JPMorgan Private Bankthinks of itself as ‘an investment bank for an individual’s personal wealth’. The institution employs an integrated team approach that aims to bring together a wide-ranging expertise to provide comprehensive solutions for clients, tailored to their specific needs. Each integrated team is made up of bankers, investors and capital advisers and serves a single set of clients. 

“Wealthy clients have complex needs and need advice-driven, holistic wealth management provided by a team of multi-disciplinary experts who share a common goal of achieving the best results for the client,” says Phil Di Iorio, chief executive officer of JPMorgan Global Wealth Management. 

In the shorter term, three key factors have contributed to generate positive financial results for the bank, explains Mr Di Iorio. 

“First, we expanded our credit book, both in traditional lending and in jumbo mortgages in the US. We stepped in to fill a void left by other providers, whose balance sheets are still under repair, and were able to use our fortress balance sheet to solve clients’ credit needs.” 

Second, the bank focused on developing innovative solutions for clients. These included identifying opportunities in dislocated markets, such as residential mortgage-backed securities, China exposure through a “unique public-private partnership that almost no other institution can offer” and investing in smaller hedge fund managers executing micro strategies. “We want our people to anticipate market trends, opportunities, risks and client needs. We also want our teams to develop innovative client solutions and bring those to market first,” says Di Iorio.

Innovation is also critical in other areas of wealth management, such as wealth planning, he says. Though its in-house research and development arm, the bank works with global families to efficiently structure their wealth across multiple jurisdictions and remain compliant with all applicable regulations. 

Finally, over the past two years, the number of client-facing professionals has grown significantly, with a 50% increase across Europe, Asia and Latin America. 

Last year, the bank welcomed 5000 new clients with a 25:1 client-to-adviser ratio. “We will continue to focus on markets where wealth is being created most rapidly, particularly in places such as Asia and Brazil. We also aim to capture additional share in areas where the market has provided opportunities, such as Europe,” says Mr Di Iorio. 

Best Leader in Private Banking
Winner: Boris Collardi, CEO, Bank Julius Baer & Co

Boris Collardi, the CEO of Julius Baer Group,has long been seen as the rising star or poster boy of Swiss private banking: young and vibrant without the typical staid, Swiss grey-haired image. But his recent acquisition of Merrill Lynch’s international wealth management business has cemented his image as a true leader.

His colleagues point out that this is by no means Mr Collardi’s first attempt at ground-breaking expansion. He absorbed the boutique ING Suisse unit, and was in for the recent Sarasin deal before Safra won the bidding process. A recent rights issue, demonstrating stock market confidence in Mr Collardi’s plans, will allow further potential acquisition activity.

But this expansion comes at a price, and the Julius Baer leader has had to break the unwelcome news of between 850 to 1000 job losses among bankers in the acquired entity in his quest for profitability. 

He is also setting down “targeted profitability improvement measures” for integration of the business. Between SFr60bn ($64.76bn) and SFr70bn is expected to be transferred from Merrill Lynch clients to the supervision of Bank Julius Baer.

The acquisition will go some way to satisfying Mr Collardi’s ambitions in Asia, which Julius Baer now claims as its “second home market”, a region he became particularly familiar with professionally during his time at Credit Suisse, and personally, having married a Singaporean. 

In addition to cementing its positions in Singapore and Hong Kong, the Merrill Lynch deal has allowed Julius Baer to boost its presence in India, with the eventual aim of lifting the portion of its managed assets sourced from growth markets, currently approaching 50%, to nearer two thirds.

This is part of Mr Collardi’s vision of re-inventing his bank against a background of international attacks on Swiss secrecy and tax-led services. Although he previously approached new business on two fronts and opened offices in Swiss regions over the past two years, it appears that domestic expansion has now reached a plateau, with Asia – and also Latin America and the Middle East – predominantly the new priorities.

Colleagues describe Mr Collardi as “energetic and restless”. When the bank was going through its initial growth stages, staff were clearly motivated by a young, easily accessible leader, who enjoyed delegating and preferred a flat, modern hierarchy.

But now that Mr Collardi’s status has been cemented by a high-profile acquisition deal and he has made significant job-cuts, staff are perhaps slightly more nervous and on edge about serving and impressing an increasingly self-confident and powerful leader.