Northern Trust once again wins the award for Best Private Bank in the US, while Santander Private Banking picks up the award for Best Private Bank in Latin America.

Best Private Bank in the US: Northern Trust

The types of innovations introduced by Northern Trust clearly testify to the key role technology and digital communication are now playing in private banking.

Last year, the US bank rolled out its goals-based investing approach across the country, powered by proprietary software, and delivered by its client portal, Passport Mobile, to the Apple and Android app stores.

“What resonates with our clients is that they know we understand them,” says Jana Schreuder, president of wealth management at Northern Trust. Clients have, she says, responded “enthusiastically” to innovations such as goal-driven investing and Passport Mobile. 

“The goals-driven investing approach gives clarity to clients through a collaborative experience that improves confidence in reaching financial objectives and ties a specific, dynamic asset allocation to each goal,” she adds. And this close alignment of priorities and investments can help investors avoid some common mistakes, such as trying to time the market.

The bank’s smartphone app allows clients to perform transactions and access information while providing easy access to the bank’s thought leadership via social media. 

According to Northern Trust’s most recent client survey, 84% of its clients prefer digital communication to paper, compared with 42% four years earlier. “In response to these preferences, we have shifted a great deal of our outreach efforts to electronic, digital and social channels,” says Ms Schreuder. Over the past three years, Northern Trust allocated more than half of its technology capital to further enhance its digital channels.

The US bank also has a social media presence on Twitter, LinkedIn and YouTube and is actively using these channels to share content from its subject matter experts. Client-facing social media efforts – via Twitter and LinkedIn – will soon be integrated into the bank’s mobile app. An iPad app, Wealth Path, allows clients to access content tailored to their goals.

These tools, along with the bank’s integrated wealth management approach, led to record results for 2012, with assets under management growing 14% from the previous year to $198bn.

Best Private Bank in Canada: RBC Wealth Management

RBC Wealth Management takes this award for the second consecutive year. The sixth largest wealth manager in the world, with client assets approaching $1000bn, it is a strongly differentiated private bank with coordinated wealth and asset management businesses providing a range of solutions, including banking, credit, discretionary investment management, full-service advisory, estate and trust services and tax consultancy. This is attractive for its high-net-worth clients, whose needs are varied, and who therefore benefit from this cross-business connectivity. 

RBC’s investment approach is solution-led, rather than product-led, using an open-architecture platform to select the most appropriate solutions for clients. It also has some best-in-class capabilities in fixed income, natural resources and Canadian equities, and is expanding its global capabilities, primarily through fixed-income specialist BlueBay Asset Management, which brings in clients from more than 30 countries. 

The wealth manager has a firm approach to client discovery, taking time to understand what is important to clients. In 2012, it conducted research to measure awareness of its brand, and says the knowledge of its wealth managers stands out. The firm strives for a collaborative culture and deep expertise in its people, and has enhanced its recruitment processes to ensure it hires 40 to 50 of the best wealth managers each year, who participate in an in-depth introduction to the culture, as client service begins with having the right people. Looking ahead, RBC has an eight-pronged strategy to improve client experience, such as increasing the sophistication of global analytics, building its digital capacity, and improving its integrated client reporting. 

“This honour recognises the success of our integrated approach in addressing the full range of our clients’ wealth management needs, from personal and family wealth planning to corporate planning,” says David Agnew, head of RBC Canada. “Our expertise in business succession and ability to coordinate both personal and corporate wealth planning has positioned us as the firm of choice for business owners. We are committed to delivering quality customised advice, and we work together with our colleagues to bring clients the best of RBC, such as our market-leading capabilities in banking, commercial banking, insurance and capital markets.”

Best Private Bank in Latin America: Santander Private Banking

Despite slower economic growth across Latin America, and in particular Brazil, wealth management continues to be a booming sector in the region. Santander Private Banking knows this well. 

It has been steadily increasing its total assets under management over the past few years to just under $77bn in 2012 and expects this trend to continue in the future. Santander, in fact, says it will match its wealth management market share with the one it has in its considerable retail operations in the region.

“Over the past 12 months, Latin America’s economic growth has remained solid enough to encourage continued wealth generation,” says Álvaro Morales, chief executive of Santander Private Banking International. 

“Santander is working to attain the same market share in the wealth management sector that it has in retail banking – [the bank] has launched an ambitious growth plan that seeks to increase the business by double-digit levels in the medium term.”

Looking at 2012’s data, the bank achieved excellent investment results for its clients as well as for its bottom line. It focused on expanding its client base and net new money grew by 18% in Latin America and by an exceptional 116% in Chile. Furthermore, continuous investments in technology made sure that asset quality was effectively monitored, and that communication with clients was timely and available from a variety of platforms.

Aside from generating healthy returns from Latin America, Santander is also addressing the many challenges facing international wealth managers, such as heavier regulation and compliance costs. 

Adapting to this new environment may mean a new structure that opts for a local, more independent model to a global one, according to Mr Morales. He says: “[Economic] conditions will continue to favour expansions of the business for entities specialising in wealth management. However, other issues of growing importance must be taken into account, such as more rigorous regulations and greater demands in terms of compliance. In this environment of increased pressure, we can expect the weight of the local private banking model to grow.” 

Best Private Bank in Mexico: Banorte-Ixe Banca Privada

Banorte-Ixe Banca Privada was formed in 2011from the merger of the private banking activities of Mexico’s third largest bank, Grupo Financiero Banorte, conducting mostly a mass-market business concentrated in the north of the country, with niche financial group Ixe Grupo Financiero, catering to high-net-worth clients primarily in the metropolitan Mexico City. 

“Client relationships are being strengthened and developed through a platform with national and global reach,” says Luis Pietrini, head of private banking and wealth management at Banorte-Ixe Banca Privada. “We capitalise on Ixe’s brand recognition, asset management and investment process, but above all on its strong service culture.”

Today, the biggest challenge for the private bank lies in incorporating the best attributes of those two strong cultures into a new culture with its own unique characteristics, adds Mr Pietrini.

Although total headcount and client-facing staff contracted in 2012, operating profits increased by 45% and assets under management grew by 9%. “A big percentage of our target clients increased the assets they hold with our private bank,” says Mr Pietrini.

Last year, Banorte put in place a system to improve client referrals between the private and consumer bank and set up a team of product and investment specialists to assist private bankers. The bank’s focus is to continue strengthening the client service, broaden the product platform, particularly credit, trust and estate planning services, and expand the range of asset management products. Banorte has a strategic partnership with BNP Paribas, which manages local funds with a global strategy, and offers third-party funds from BlackRock, Franklin Templeton, Alliance Bernstein and MFS.  

“Mexico is at a crossroads of historical change as structural reforms will boost productivity, and improve education and the efficiency of the labour market,” says Mr Pietrini. “We are laying the groundwork to take advantage of these changes by reaching out to Mexico’s young client base, building long-term relationships with them and investing in their financial education.” Furthermore, Banorte is nurturing relationships with Mexico’s growing middle classes by offering differentiated products and services. “Many clients will blossom into high-net-worth clients as we start to see the results of the structural reforms,” adds Mr Pietrini.

Best Private Bank in Chile: Banchile Wealth Management

Despite increased competition,in particular from foreign players over the past couple of years, Banchile Wealth Management’s understanding of local markets and its ability to provide innovative investment solutions to clients retains strong competitive advantages, says Andrés Bucher, CEO at Banchile Inversiones. Last year, the Chilean private bank saw its clients’ assets increase by 30% to $3.2bn.

“Our leading position and deep understanding of local markets makes it difficult for foreign competitors to offer an investment proposition as comprehensive as ours,” says Mr Bucher. “Our most important competitive advantage is our ability to understand our clients’ investment needs and objectives, so that we are able to offer them suitable investment solutions that fully meet and exceed their expectations.”

Another advantage the bank has on foreign firms is that when Chilean investors declare their financial assets to tax authorities, they are then allowed to use local platforms to invest abroad, explains Mr Bucher. The Chilean government is also encouraging holders of non-declared financial assets abroad to normalise their fiscal position at a low cost, generating opportunities for local banks.

Moreover, the Chilean financial markets are very deep and sophisticated, and offer attractive returns. These aspects, coupled with a strong currency, low sovereign risk and positive economic growth prospects, mean local investors prefer to keep significant percentages of their investments in Chilean markets, says Mr Bucher. 

Banchile is backed by the largest local bank in the country, Banco de Chile – partly owned by Citibank – and prides itself in being compliant with multiple local and international regulations. “Given the financial scandals over the past four years in local and international markets, this high level of regulation has become an advantage versus our competitors and is highly valued by our clients,” says Mr Bucher.

Key drivers of Banchile’s asset growth last year were the implementation of an efficient referral system – Banco de Chile, with more than 1.8 million clients and 433 branches, is a key source of new custom – and improved client segmentation. 

Also, the Chilean private bank strengthened its wealth management investment team and research department and enhanced its information and client reporting systems, improving productivity and service. It is also developing a new business unit aiming to offer bespoke and integrated solutions to ultra-high-net-worth individuals.

Best Private Bank in Brazil: BTG Pactual

Over the two years to the end of 2012, BTG Pactual doubled its assets under management to 62.5bn reais ($28.7bn) through a combination of organic growth in Brazil and an impressive acquisition campaign in Latin America. 

Last year it bought Chile’s leading investment bank/brokerage house Celfin Capital, as well as Bolsa y Renta, one of Colombia’s top three brokerage houses, adding $8bn in private client assets and bringing total assets under management to 66.7bn reais today. 

“These acquisitions were important milestones in the process to become a leading Latin American wealth management firm,” says Rogerio Pessoa, head of wealth management at BTG Pactual. 

In addition to several Latin financial hubs – in São Paulo, Santiago, Lima, Bogotá, Medellín and Mexico City – over the past four years BTG Pactual has built a strong international presence too, with offices in New York, London, Hong Kong, and, from next year, Luxembourg. 

A private partnership promoting a culture based on a full alignment of interests, BTG Pactual offers clients co-investment opportunities with partners in a variety of alternative investments, including hedge funds, private equity funds and club deals in Latin America, Europe and even Africa. 

Cross-selling is key, and investment and merchant banking has been a strong source of client referrals for the wealth management business, especially in recent years, when both capital markets and merger and acquisition (M&A) activities were buoyant, says Mr Pessoa. “Last year in particular, although capital markets transactions were very limited given the general performance of the economy and stock market in Brazil, we were able to benefit substantially from M&A deals coordinated by the investment banking division and from proprietary acquisitions made by our merchant banking/private equity arms.”

In Brazil, the main growth opportunity lies in converting the many high-net-worth individuals today served by retail banking into private banking clients. “When real interest rates were very high, these clients were happy with traditional money market-type products, but in the current market situation they must look for more sophisticated advisory and a more personalised level of service.” 

In Chile and Colombia, clients will have access to more booking centres, a wider range of proprietary and third-party products as well as co-investment opportunities and cross-selling initiatives. From 2014, the firm will be able to offer credit-related products as the entities become local banks. 

BTG Pactual, which operates on an open-architecture basis, last year significantly enhanced its product offering across asset classes. “We spent a lot of time educating clients regarding the new norm of low real interest rates in Brazil and we have seen a noticeable shift from fixed-income portfolios to hedge funds and equities. The same is true with offshore allocation. This is a growing trend, but we still have a long way to go,” says Mr Pessoa.

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