The judges
- Yuri Bender, editor-in-chief, Professional Wealth Management magazine, London.
- Shelby du Pasquier, co-head of the banking and finance group at Lenz & Staehelin, Switzerland.
- Seb Dovey, partner at Scorpio Partnership in London.
- Simeon Fowler, CEO of Fox Partnership, Singapore.
- 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.
PWM/The Banker's second annual Global Private Banking Awards have seen a focus among wealth managers in most regions on operational strength, asset allocation and how these topics are communicated by client advisers to their wealthy customers.
"This year's submissions showed a huge degree of introspection in the wake of the credit crunch," says Amin Rajan, a professor of finance and CEO of Create-Research consultancy, which advises many wealth and asset managers. "Wealth managers are developing a new narrative on what they stand for and what they can deliver."
Our researchers contacted 350 institutions across Europe, Asia, the Middle East and North and South America in the four-month period prior to the judging of the awards. The judges first examined quantitative data supplied by the entrants, including three years' worth of figures detailing capital adequacy requirements, clients' assets under management, asset flow patterns, net profits, cost-to-income ratios, advisor-to-client ratios and performance figures for managed portfolios.
Following this, submissions on business and growth strategies, portfolio management, innovation, communication with clients, socially responsible investments, technology, use of third-party products and remuneration and fee structures were all observed. The banks' relative approaches to operations and the level of seriousness with which they tackled due diligence and counterparty risk measures were also crucial to the considerations.
After the shortlists had been drawn up, the panel debated and voted on the winners in an intensive, three-day deliberation process. Quantitative data supplied by the banks was verified and augmented by wealth management think-tank Scorpio Partnership, which also deployed a proprietary formula to compute - using a series of key performance indicators (KPIs) - which bank had employed the Best Leadership Team. The winner was Credit Suisse. These figures were then compared with last year's KPI numbers to find the bank with the Most Improved Leadership Team, which was Clariden Leu.
The concept of regional expansion, of being close to clients in their financial and cultural needs, drew particularly keen responses from the judges. "Following the financial crisis, it has become increasingly evident to top management of the committed wealth management providers that, despite previously miserable investment performances, they must strengthen not only their internal controls and service offerings, but also embed themselves more deeply with their clients, catering to their local needs," says Ray Soudah, chairman of MilleniumAssociates, one of Europe's premier M&A consultancies.
"Providers who have local presences, especially in growing markets such as Asia, the Middle East and other emerging regions, will increasingly feature as improving their rankings in these awards."
The rise of emerging markets
A series of strong entries arrived from developing market-based banks operating in China, Taiwan, Latin America, Turkey and central and eastern Europe. Among the legion of home-grown banks in developing countries rising through the rankings were Itau, China Merchants Bank, DBS and HDFC, who took the respective honours in the hotly contested territories of Latin America, China, Singapore and India. HSBC, which won four awards in 2010, retained supremacy in the Middle East and Hong Kong, while still contending globally, in Asia and Turkey.
"Banks in Asia have benefited from economic growth that has led the world and lessons learned from the world's own financial crisis more than a decade ago," says Simeon Fowler, CEO at Fox Partnership in Singapore. "This has made Asian banks focus on high standards of compliance, Tier 1 capital and investment into human capital."
If anything, the judges noticed a slight falling back and complacency from several institutions active in the back gardens of Europe's private banking heartlands.
That said, there was a particularly strong line-up of candidates from the Americas, where private banks have set their sights on growth, moving beyond a period of stagnation. Over the past 12 months, many banks in the region, some also with global ambitions, have tweaked their business models. Citi, for example, has embarked on a huge hiring spree of North American advisors, while now focusing on $25m plus clients.
Others, such as Northern Trust, have started to experiment with social media to better reach their clients. "Clearly, many banks see the biggest opportunities at the higher end of the wealth segments," says Alois Pirker of Aite Group, a judge known for his expertise in the North American market. "This is the area where most of the wealth creation has taken place in recent years."
The rise of the small fries
Also pleasing was the much larger range of institutions chosen by the judges, which reflects higher standards across the board and the willingness of many banks to create a regional niche for themselves, rather than trying to be all things to all people only to be bulldozed by the global juggernauts.
It has become more difficult for smaller names, without global or deep regional presence and brand recognition, to fight their way through the process. Even the intense nature of the application process, with most banks taking a week to complete the questionnaire, immediately sidelines those institutions without the capability or desire to generate the type of market data and qualitative observations their clients, collaborators and counterparties would require.
Among those institutions with a particularly strong showing were Citi, selected as Best Global Private Bank, ahead of last year's winner HSBC and challenger JPMorgan; Northern Trust, which not only retained its title as Best Private Bank in North America but also scooped the Best Private Bank for Innovation; Standard Chartered, judged Best Private Bank in Asia; and Julius Baer, beating Vontobel to Best Private Bank in Switzerland and retaining its Best Private Banking Strategy for Growth award from 2009.
UBS, a giant in transition, was hit hard by the global crisis, reputation issues from its investment bank and a damaging dispute with US authorities, leading to significant customer outflows. Yet despite this turmoil, the global bank was highly commended in the Asian, Turkish, central and eastern European and Middle Eastern categories. Moreover, the bank's recently recruited CEO, Oswald
Grübel, previously responsible for successes at Zurich-based rival Credit Suisse, was voted Private Banking Personality of the Year, in recognition of not just his high profile in the Swiss market, but his persistent and successful attempts to turn the institution around, despite the tide often flowing against him.
Those banks entering the awards were asked to nominate favoured third-party service providers. Franklin Templeton won the coveted title of Best Emerging Market Fund Management Group hands down; iShares took the ETF Provider title in a similar fashion. But Schroders took BlackRock to a tie-break for Best Fund Management Group, with the US giant eventually beating the UK stalwart in a dramatic debate and judges' final vote.
Best Global Private Bank
Winner: Citi Private Bank
Highly commended: HSBC Private Bank, JPMorgan Private Bank
Citi Private Bank's change of business model, with a new concentration on clients in the $25m-plus assets bracket, has enabled it to reduce its key advisor-to-client ratio to an industry-beating 1:30.
Having disposed of asset management and brokerage businesses, the bank is keen on integrating private banking with investment banking and offering foreign exchange, loan and other institutional-style services to cross-border ultra-high-net-worth individuals.
Now one of the few global banks working totally on an open architecture basis, Citi is currently promoting its HedgeForum services, through which it offers externally managed hedge funds in areas such as distressed US real estate with a keenly negotiated, simplified fee schedule.
"I am excited about this chance to put new markets down on the table and drive it from the client's interest, changing the way the private banking world works," says Jane Fraser, who was appointed CEO of Citi Private Bank in 2009.
She has been hiring aggressively across all divisions. This includes operations, where due-diligence teams have been significantly boosted across Asia, the US, Latin America and Europe. She is adamant that these research teams, while supporting private bankers, will be kept totally separate from sales people.
"If you are going to give clients access to the best opportunities, you need to make sure you have the best due-diligence teams out there," she says.
Best Private Bank in Central & Eastern Europe
Winner: OTP Private Banking
Highly commended: UBS
Since introducing a dedicated value proposition for high-net-worth investors in 2002, OTP Private Banking in Hungary has seen its number of clients double to almost 16,000, and assets under management grow fivefold to €2.1bn, accounting for 40% of the total wealth management assets in the country.
Today, the bank's strategy is to preserve its incumbent position, while focusing on product and service innovation. "Our most challenging task is to find a balance between the need for launching innovative products and services while liaising with our clients, who have a more conservative investment attitude than the market average," says András Takács, managing director for wealth and investment management at the bank.
In order to drive profit growth, heavily affected by decreasing revenue margins, OTP implemented cost-saving strategies aimed at allocating its resources more efficiently. These included the set up of a middle office, the development of a headcount model which aims at finding the right balance between generating profit margins, and providing adequate client care by estimating the optimal time an advisor should spend with each client. By increasing threshold limits - to €75,000 and €265,000 for its private banking and its prestige private banking customers, respectively - the bank stated its intention to focus on the wealthier and more valuable segments.
Best Private Bank in the Middle East
Winner: HSBC Private Bank
Highly commended: UBS, Société Générale Private Banking
See Hong Kong award.
Best Private Bank in Asia
Winner: Standard Chartered Private Bank
Highly commended: HSBC Private Bank, Julius Baer
Since the opening of its global hub in Singapore in May 2007, Standard Chartered Private Bank has experienced rapid organic growth, strengthened by the acquisition in 2008 of American Express Bank. With 31 offices across Asia, Africa, the Middle East, Americas and Europe, Standard Chartered Private Bank employs 1300 employees. Two-thirds of its total $43bn in client assets are sourced from Asia.
"Over the past few years, we have outperformed the market growth considerably and we continue to do that," says Shayne Nelson, the new Singapore-based CEO and global head at Standard Chartered Private Bank, previously CEO of the Middle East and north Africa. "One of the secrets to our success is around our heritage and deep trust from our local communities. Standard Chartered Private Bank has the capacity to grow very aggressively in this space."
Formed in 1969 through a merger of two banks - The Standard Bank of British South Africa, and the Chartered Bank of India, Australia and China - Standard Chartered's international network spans over 70 countries. In 2009, its assets under management increased by 26% in Asia and 12% globally, and its client base grew by 25%. Similar growth rates were recorded during the first six months of 2010.
Best Private Bank in North America
Winner: Northern Trust
Highly commended: Citi Private Bank, JPMorgan Private Bank
See Innovation award.
Joao Medeiros, CEO, Itaú Private Bank
Best Private Bank in Latin America
Winner: Itaú Private Bank
Highly commended: Bank Hapoalim, Santander Private Banking
Itaú Unibanco, based in São Paulo, Brazil, is a regional bank breaking the mould. It has a strong local presence in Latin American countries such as Argentina, Chile, Paraguay and Uruguay, as well as about a dozen international offices.
Formed in November 2008 from the merger of two large Brazilian banks, Itaú and Unibanco, this created the largest privately controlled bank in the Southern Hemisphere with the scale, expertise and capital base to increase its range of products and grow even in turbulent times.
"We are the dominant bank in Brazil with between 25% and 30% of marketshare," says Joao Medeiros, CEO of Itaú Private International. "The idea is to maintain a dominant position in domestic markets, but also to put a big effort into the regional marketplace. We have just opened a branch in Switzerland - the first Latin American bank to do so - and we see this as the last of our three main pillars - to have a presence in Europe, the US and Latin America."
"We always try to tell clients that as they usually have a large proportion of their wealth caught up in their country of origin, that they should look out at their global investments from the perspective of where they are. This makes us distinctive, as we can give advice on global investments but our point of departure is local."
Jian Jun Liu, general manager for retail banking, China Merchants Bank
Best Private Bank in China
Winner: China Merchants Bank
Highly commended: Bank of China, The Bank of East Asia
Since opening its first private banking branch in Shenzhen in 2007, China Merchants Bank (CMB) has enjoyed an annual growth rate of 35%, to reach 12,000 clients and Rmb250bn ($37.5bn) in total assets. The bank now operates from 19 private banking centres in 15 Chinese cities.
"The rapid growth of China's economy and the accelerated accumulation of wealth is a key driver for the development of private banking in China and a big opportunity for CMB," says Jian Jun Liu, general manager for retail banking at the firm. But the private banking industry can develop successfully only by drawing on the private banking experience of more advanced foreign countries and combining it with a deep understanding of the Chinese culture, while adapting to the domestic regulatory requirements, warns Mr Liu. "CMB strives to achieve the combination of local blood with a global perspective."
The most significant characteristic of CMB private banking service is its ability to thoroughly understand the real needs of its wealthy customers, providing them with personalised service, while respecting their privacy, says Mr Liu.
Although the main sources of the private bank's revenue derive mainly from the margin income from deposits and loans, as well as the sales proceeds from financial products, the bank boasts a broad product platform, mainly focused on low-risk investment products, as well as medium- to high-risk equity products.
Best Private Bank in Hong Kong
Winner: HSBC Private Bank
Highly commended: Standard Chartered Private Bank
HSBC says Hong Kong and the Middle East are "important contributors" to the $7bn of net new money reported by HSBC Private Bank in the first half of 2010, with intragroup referrals playing a key part.
One new development has been the Family Office Partnership between the bank's Private Banking, Global Banking and Global Markets divisions. "Asia and the Middle East, where the private sector plays the driving role in business, are at the heart of this recently formed partnership," says Chris Meares, chief executive officer for group private banking at HSBC.
He has presided over a difficult period for the bank. Earlier this year, the head of his Swiss business "unreservedly" apologised to 24,000 clients, whose personal details had been stolen by a former employee. Luckily for Mr Meares, the Hong Kong business has started to deliver assets after significant investments.
Despite outflows in 2009, blamed on competitors offering high deposit rates, he has managed to keep the advisor:client relationship to 1:36. About 50 new advisors in emerging markets will be hired during the next three years.
The group has laid down expansion in Russia, Asia, Latin America and the Middle East as its key private banking priorities and continues to expand its hedge fund, private equity and real estate alternatives business, currently managing $30bn.
Su Shan Tan, group head of wealth management, DBS Bank
Best Private Bank in Singapore
Winner: DBS Bank
Highly commended: Standard Chartered Private Bank
What sets DBS apart from its peers is a strong focus on its Asian connectivity, Asian insights and Asian relationships, according to Su Shan Tan, who joined the firm as group head of wealth management in July.
"Our roots are deeply entrenched in Singapore, as we continue to seek growth in the region. The wealth creation story in Asia is strong and we want to be a major player in this space," she says.
DBS's 28% ownership by Temasek Holdings (Singapore's sovereign wealth fund), the bank's strong balance sheet and its pedigree have proven to be key in providing clients with piece of mind and security, says Ms Tan. The bank reported S$1.5bn ($1.2bn) in net new money during 2009, as individuals moved their wealth from foreign banks back to safety.
"We are a solution-driven private bank with excellent Asian connectivity and clients come to us for cutting edge Asian solutions," says Ms Tan. For example, DBS was the first private bank to launch an renminbi fund, the China Rail Network Opportunities Fund, exclusively for its clients earlier this year, she adds.
One of the bank's recent senior hires, Lim Say Boon, was brought on board as chief information officer to develop insights and formulate a global investment strategy with an Asian bias for Asian clients.
Best Private Bank in India
Winner: HDFC Bank
Highly commended: Kotak Wealth Management, Standard Chartered Private Bank
HDFC Bank's private banking business has grown three-fold in the past three years. Nitin Rao, executive vice-president for private banking and third-party products at HDFC says this growth reflects the bank's consistent focus on providing good advice to their customers. "Giving good advice resulted in more customers coming to us at a time when markets had collapsed and customer confidence was low."
In the coming months, Mr Rao says the bank is focusing on transparency and is continuing with its traditional conservative approach. "We refrain from high-risk asset categories and funds which tend to offer abnormally high returns. We build long-term portfolios rather than encourage short-term churn."
The bank's value proposition revolves around integrating the values of HDFC Group, asset allocation with a focus on equities, and product innovation across banking and investments. Unlike most other private banks, which focus primarily on Mumbai, Delhi, Chennai and Bangalore, a unique aspect of HDFC Bank's strategy is to tap the wealth beyond these top-tier cities. It has adopted a hub and spoke model, where the offices in the larger cities are used to target the nearby smaller towns and cities. Currently, the bank has private banking clients spread across 29 cities in India while it has private banking offices in 20 cities.
Best Private Bank in Taiwan
Winner: Chinatrust Commercial Bank
Highly commended: Taishin Bank
Since entering the wealth management space in 2001, Chinatrust Commercial Bank, a subsidiary of Chinatrust Financial Holding, has gained a dominant position both in terms of wealthy individuals - the bank serves 130,000 'VIP' clients, defined as those holding more than T$3m ($98,000) with the bank - and sales volume of wealth management products.
"What differentiates Chinatrust from the competition is our advisory system, team and also our product platform," says Peter Wei, senior vice-president for the general retail banking group at the bank.
In late 2009, having learned the lessons from the financial crisis and the Lehman Brothers collapse, the bank upgraded its client risk-prediction platform and advisory system. Client segmentation is at the heart of the advisory process, says Mr Wei, as it enables the bank to identify customers' needs and provide them with the most appropriate investment solutions. Chinatrust offers four different model portfolios, depending on the client risk profile, as well as more customised solutions. A product and risk committee team was recently established to improve the due-diligence process: currently about 90% of the clients' assets in funds are in third-party offshore funds.
"At Chinatrust, we continuously improve our service model to fulfil our customers' needs. We are further improving our risk management, compliance and advisory systems, and we have a strong commitment to our private banking business," says Mr Wei.
Best Private Bank in Switzerland
Winner: Julius Baer
Highly commended: Vontobel Private Banking, UBS
Naming Asia as its second home market after Switzerland has finally marked the transition of Julius Baer from cosy Swiss boutique to globally ambitious player.
Although the key stage in the transition was the acquisition of three former Swiss Bank Corporation-owned private banks in 2005, in terms of size, firepower and culture, the ambitious growth strategy laid down by chief executive Boris Collardi, following the death of Alex Widmer in 2008, has also been significant.
At 36 years of age, Mr Collardi has been accused of being too young and radical to be fully convincing to conservative private clients. But he is never afraid to delegate to expert minds around him, and has installed key product design and investment brains in Asia.
Having worked in Asia for Credit Suisse, Mr Collardi is ideally placed to lead the expansion strategy, with contacts in the major regulatory authorities, as well as a feel for client needs. That is why Asian expansion, currently centred on Singapore, but likely to focus on Hong Kong in the near future, is perceived by management as a "low-risk strategy".
Acquiring Banco de Lugano in 2005 gave the bank a licence in Singapore, as well as significant potential in Italy and Switzerland. The recent buy-out of ING's Swiss-based private bank has helped Baer boost its Geneva operation to 400 and there has also been expansion in Lugano and Basel.
Gerth Svensson, global head of private banking, SEB Private Banking
Best Private Bank in Nordic Countries
Winner: SEB Private Banking
Highly commended: Danske Bank
The ability to attract and retain the best talent on the market is the key to success of SEB Private Banking, the Swedish institution which boasts a track record going back to 1856. Its much diversified client base, ranging from entrepreneurs and family offices to sportsmen and board members at large corporations, offers private bankers stimulating intellectual challenges, while the close co-operation with the group's investment bank and insurance unit enables them to learn from a wide range of professional specialists, says Gerth Svensson, global head of private banking at the firm.
"To run a profitable business, you need to be able to align the interests of the clients with that of the private bank," says Mr Svensson. "If you do that well, you will always make profit and have a healthy business."
Key characteristics of the modernised investment process at SEB include the employment of a wider range of asset classes in clients' portfolios, the rejection of fixed benchmarks, an increased focus on forward-looking return and fundamental analysis, and greater decomposition of the risk characteristics of each asset class. Family offices and entrepreneurs are the key client segments that will drive SEB's growth strategy. "New wealth is really driving the future of private banking," says Mr Svensson.
Best Private Bank Spain
Winner: BBVA Banca Privada
Highly commended: Banif, Popular Banca Privada
BBVA is passionate about its model, which is highly focused on the client relationship; its central goal is to use its strengths to establish lasting relationships with satisfied customers in Spain, Europe, Mexico and wherever it has a presence.
"In the past few years there has been a huge lack of confidence in the market so we decided to take advantage of this and get ahead and grow," says Alfonso Gomez, head of private banking at BBVA. "We took on 5000 new clients last year. BBVA is a leader in the corporate sector, giving us a great advantage in building a new franchise for entrepreneurs and directors. We are also looking for different groups with whom we currently do not have any relationship, such as elite sportsmen through our sponsorship of the professional football league and our new relationship with the National Basketball Association.
"The bank has also had particular success with its Future Generation project, extending our services to relatives of our existing clients."
More than 1000 clients have been found by targeting commercial banking, while a 'Hunter Team' has also been put together to promote to large groups.
In portfolio management, the bank puts particular emphasis on adapting to the client's individual requirements, and has developed open architecture, with an ambitious platform that analyses 3000 funds.
Best Private Bank in Turkey
Winner: Garanti Masters Private Banking
Highly commended: HSBC Private Bank
In the nascent private banking industry in Turkey, Garanti Masters Private Banking emerges from the competition for its thorough client risk profiling process, financial planning advice and strategic model portfolio offering.
"Our wealth management approach is in the tradition of our western European peers. There is no other private bank in Turkey with such a model," says Demet Apak Sermet, senior vice-president at Garanti.
Wealthy individuals, who must hold at least $500,000 with the bank to be considered private banking clients, are catered for in separate dedicated offices, as opposed to many competitors who just place 'private bankers' corners in their retail branches and try to attract wealthier customers with better deposit rates. "Confidentiality is very important; you don't see our branch name anywhere in Istanbul," she says.
Since opening in 2004, Garanti's private banking division has seen its assets under management grow to $4.5bn. "We rely mostly on word of mouth marketing, because happy clients bring or refer us to new clients," says Ms Sermet.
David Semaya, head of UK and Ireland private banking, Barclays Wealth
Best Private Bank in the UK
Winner: Barclays Wealth
Highly commended: Schroders Private Banking, JPMorgan Private Bank
One of the distinctive strengths of Barclays Wealth is its 'Investment Philosophy', which combines insights from the science of behavioural finance and psychology with the modern theories of portfolio management. "Understanding our clients, where they are on their journey and providing them with value-added advice is embedded into the DNA of Barclays Wealth," says David Semaya, head of UK and Ireland private banking at the firm.
Through the financial personality assessment, clients are recognised as multi-faceted individuals with a complex mix of attitudes, goals and aspirations. Risk tolerance is only one of the six dimensions that combined reveal how individuals think and feel about wealth and investments.
The entrepreneurial energy present in the UK and the industry fragmentation provides a big opportunity to grow market share. Despite being the UK's largest player, Barclays Wealth has 5% of the domestic wealth management market, so it sees a good deal of potential for further growth. Barclays Wealth's assets under management growth, both this year and last year, was based on a "tremendous amount of referrals" from both Barclays corporate and retail bank, which work with entrepreneurs through the cycle to get them started. "Then they continue on their journey, as those owners acquire wealth and Barclays Wealth becomes involved. It is a natural continuum," says Mr Semaya.
Sherry Barrat, president, Northern Trust's Personal Financial Services Group
Best Private Bank for Innovation
Winner: Northern Trust
Highly commended: Barclays Wealth, Standard Chartered Private Bank
Few wealth managers get close to Chicago-based Northern Trust for innovation. Its Lesbian, Gay, Bisexual, Transgender (LGBT) & Non-Traditional Family Practice was piloted in 2008 and officially launched in 2010.
Given the lack of legal protection of same-sex relationships, there is a greater potential for LGBT estate plans to be challenged by outside parties and the bank aims to make sure the wishes of this growing group of wealthy clients are fulfilled after their death.
Northern Trust has had a formal networking group, where clients can meet and swap experiences about their private bankers and investment practices, since 1990, with a similar set-up available for family offices. These forums are gradually moving online.
"We frequently see dozens of our wealthiest families interacting," says Sherry Barrat, president of Northern Trust's Personal Financial Services Group, managing assets worth more than $140bn and holding nearly $330bn in custody.
Since the crisis, 18 risk management professionals and a chief risk officer have been taken on. A guidance list of approved fund products is circulated daily among private bankers and portfolio managers, although there has been a recent trend to offering more internally manufactured products to clients.
As well as increased monitoring for red flags and an emphasis on daily liquidity, asset allocation has been overhauled to decrease correlation of assets, with allocations to gold, cash, emerging markets and high-yield bonds increased.
Best Private Bank for Socially responsible investing
Winner: Bank Sarasin
Highly commended: Bank Vontobel, Standard Chartered Private Bank
Switzerland's Bank Sarasin, which has now implemented sustainability through all private client asset management mandates, with a minimum of 75% of screened assets in more traditional portfolios, is also looking over its shoulder at the local competition, which is desperately trying to re-invent itself and jump on the socially responsible bandwagon.
"There is still a big difference between us and them," insists Andreas Knoerzer, head of sustainability at the Basel-based bank. "Sustainability is fully integrated within our Sarasin offering and not just a sideshow."
The bank can use its screen to help clients invest in emerging markets, US equities, real estate equity and alternative solutions. The previous year has seen a significant increase of coverage of companies in developing economies, through deepening relationships with local data providers in the sustainability sector. "We don't greenwash companies," insists Mr Knoerzer. "We still say on average emerging market companies are behind their counterparts in the developed markets, but they improve very quickly."
Best Private Banking for Strategy for Growth
Winner: Julius Baer
See Switzerland write-up.
Private Banking Personality of the Year
Winner: Oswald Grübel, Group CEO, UBS
Highly commended: Boris Collardi, CEO, Julius Baer; Walter Bertchtold, CEO PB, Credit Suisse
In a staff video accompanying UBS's new advertising campaign, Oswald Grübel mused on why he decided to leave a lucrative and well-deserved retirement for the challenge of running UBS.
The 66-year-old German, who rose to become chief executive of arch-rival Credit Suisse, said his goal was to create "the" bank of his ideals, based on more than 40 years in the business. Some 20 months into the job, Mr Grübel can look back with some satisfaction. Profits have been restored, morale boosted and yawning gaps in staffing opened during the credit crisis filled.
Investment banking, the area that wrote off more than $50bn in the credit crisis, has been Mr Grübel's prime focus. Through careful hiring, notably of Carsten Kengeter, a former Goldman Sachs fixed-income star, since elevated to UBS's head of investment banking, Mr Grübel has repaired serious damage and injected enthusiasm into his team.
Private banking has also been revived after the twin curses of the credit crunch and debilitating fight with the US over the role of some UBS employees in helping rich Americans evade tax. Together, the two issues prompted a severe loss of confidence among clients, expressed most clearly in the net withdrawal of more than SFr200bn ($208bn) in funds. Here too, Mr Grübel has turned to new faces, along with a firm belief that only a return to profitability at group level would restore customers' confidence.
To revive the chronically unprofitable US onshore wealth management business, Mr Grübel turned to Bob McCann, a former top Merrill Lynch executive. Elsewhere, he has looked to former Credit Suisse lieutenants. Lukas Gähwiller has been hired to revive the Swiss business - probably the UBS's franchise worst hit by the reputational damage. Such measures have helped to reduce outflows, although net new money remains negative. But the mood in Asia, and possibly the Middle East, has improved, with net inflows. Much the same has been said for the bank's richest clients - traditionally treated as a distinct group. Some analysts expect UBS to report positive net new money before the end of this year.
Best Leadership Team in Global Private Banking
Winner: Credit Suisse
Runners up: Julius Baer, Société Générale Private Banking
The achievement of Credit Suisse Private Banking under CEO Walter Berchtold in holding up inflows - with SFr41bn ($43bn) of net new business in 2009, compared with SFr41bn in 2008 and SFr53bn at the pre-crisis 2007 peak - has been partly the result of a two-pronged intervention by the bank's management team and partly due to the weakness of some rivals.
Portfolio management has been revamped, with a stronger role now played by the group's asset management division. The group's global chief investment officer, Stefan Keitel, and his deputy, Patrick Bucher, have taken responsibility for investment strategy.
Bankers are now reined in by a group-wide allocation policy. "We are quite strict in trying to get people to follow this approach," says Mr Bucher. "Asset allocation is now at the centre of everything."
The asset breakdown benchmark for private clients has been redesigned, with more of a concentration on real rather than nominal assets. Allocations to bonds have been reduced, although emerging market debt is strongly favoured, with commodities and gold recently increased.
The second key ingredient has been the increased activity of 'solution partners', a highly motivated private banking team, acting as an interface with the bank's Investment Banking and Asset Management arms. This unit has been tasked with finding the best solutions from the entire Credit Suisse spectrum for private client relationship managers.
Stephan Peterhans, head of human resources, communications and marketing, Clariden Leu
Most Improved Leadership Team in Global Private Banking
Winner: Clariden Leu
Runners up: Bank Hapoalim (Switzerland), ABN AMRO Private Banking Switzerland
Swiss private bank Clariden Leu, formed three years ago from the merger of Clariden Bank and Bank Leu, has transformed itself in a short time. While the quality of its private bankers, advisory services, and discretion are well known, the leadership team has dramatically improved its revenues and profitability in the past year.
"Clariden's management team has gone through a lot of change in the past 12 months," says Sebastian Dovey, one of the awards judges and managing partner of Scorpio Partnership. "Clariden is back on the right track. It has a strong following from clients, a strong suite of products and strong backing from its owners, Credit Suisse."
This effort has culminated in revenues of SFr527m ($549m) in the first half of the year creating a profit of SFr102m. Strict cost control has reduced operating expenses and structured product business went particularly well.
Internally, the bank attributes its success to a clear focus on target markets, and success in partitioning the bank after the restructuring of a number of Credit Suisse subsidiaries.
"We have been successful in positioning Clariden Leu as a highly profitable Swiss private bank with an excellent reputation," says Stephan Peterhans, head of human resources, communications and marketing. "Our very solid figures will give the bank the boost it needs in the future, and we will work to turn this to the benefit of our clients."
External Provider Nominations: 2010 Winners
Best Fund Management Group
Winner: BlackRock
Highly commended: Schroders, Fidelity Private Banking Switzerland
Winning the award for best fund manager for a second year, BlackRock's size has been swelled even further by the purchase of Barclays Global Investors (BGI) in December 2009. The group now has $3300bn in assets under management and maintains offices in 24 countries around the world.
"The acquisition of BGI has doubled our capabilities," says James Charrington, the firm's head of international retail business. "It is not about turning us into a bigger firm, that's not the motivation. It is about trying to be better for our clients."
One recent area of expansion for BlackRock has been in European equity, where it brought in a new team just over two years ago. "At that point we had less than a 1% market share and we now have about a 12% share," says Mr Charrington.
Although the acquisition of BGI gave BlackRock control over iShares, the leading exchange-traded funds (ETFs) provider, this has not changed the group's approach to these passive vehicles, according to Mr Charrington. "We used ETFs for a number of years before acquiring iShares, and we continue to use them now. But I wouldn't say our use of them has increased because of iShares. We use them when we do because they are the right tool for that investment."
Mark Mobius, manager, Franklin Templeton
Best Emerging Market Fund Management Group
Winner: Franklin Templeton
Highly commended: Aberdeen, JPMorgan Asset Management
Franklin Templeton Investments is one of the largest dedicated independent asset management companies in the world. As one of the first groups to develop a dedicated emerging markets team, Templeton was something of a pioneer in emerging markets investing back in the early 1990s, banging the drum for developing economies long before it became fashionable. The company has remained true to its roots in value-oriented bargain hunting, attempting to buy at the point of maximum pessimism and sell at maximum optimism.
Templeton's emerging market funds range from the grandfather of emerging market equity funds, the vast £1.85bn ($2.96bn) Templeton Emerging Markets investment trust, and the Templeton EM Bond fund, both launched over 20 years ago, to the Templeton Frontier Markets and Asian Smaller Companies funds launched in October 2008.
For many, the Templeton name is synonymous with Mark Mobius, who has been managing its money for almost 30 years and predicted the bull-market rally in emerging markets in March 2009. He believes the global economic recovery is still in place and remains convinced the so-called BRIC markets of Brazil, Russia, India and China will continue to drive the recovery. However, he currently expects 'frontier' markets to outperform wider emerging markets in the next decade, with banks in Nigeria and resource firms in Kazakhstan topping his picks.
Best ETF Provider
Winner: iShares
Highly commended: Deutsche Bank
A Financial Times article says it all: "For as long as exchange-traded funds [ETFs] have existed, it seems providers have been trying to loosen iShares' grip on the market."
That grip is particularly pronounced in the fixed-income space where iShares still controls 50% of Europe. Fixed interest has been in huge demand in the past few years, and as investors shake off their caution, high-yield and investment grade corporate debt ETFs are doing well.
Its precious metal ETFs are very popular. iShares Silver Trust took $345m in September, and iShares Gold Trust attracted $178m, the largest inflows of all gold ETFs. The company also plans a range of commodity ETFs.
"An increasing number of institutional investors are using ETFs as they look for low-cost ways to build and manage portfolios and gain exposure to a range of asset classes," says Dee Brown, head of UK wealth sales at iShares. "Investors also like to have simple, transparent tools to act quickly in changing situations in this difficult environment."
iShares predominantly offers physically replicated funds, which are seen as lower risk, but the firm has grown the number of its swap-based funds. In the case of its Dublin-domiciled swap-based products, clients can also see the collateral holdings, the swap counterparties, aggregate swap exposure and by how much the aggregate collateral exceeds the overall counterparty exposure.
Vito Schiro, head of derivatives, capital markets, investment products and services, UBS
Best Structured Product Provider
Winner: UBS
Highly commended: JPMorgan
UBS recognised at an early stage that structured products can meet investor appetite at both ends of the risk spectrum, both for those prepared to accept higher risk for attractive potential returns, and for those who would prefer a return that is smaller, but guaranteed.
"We've seen a recovery in volumes, inside UBS and throughout the industry, and I think demand will continue to improve for two reasons. First, that these products can be structured according to a client's individual risk appetite, and second, in a fashion that best reflects the clients' market expectations," says Vito Schiro, head of derivatives, capital markets, investment products and services at UBS.
"Clients are now slightly more cautious than [before the] crisis and particularly like simplicity and transparency," adds Mr Schiro. "There is [a big] appetite for products that are fairly common and mainstream, such as reverse convertibles, with or without barriers, and fixed-income floating rate notes and credit-linked notes."
One of UBS's key competitive edges is that it offers tailor-made structures for relatively small portfolios - in equity-based products, for example, this might be as small as SFr20,000 ($20,800). A client advisor can use the convenient and flexible UBS Investor Platform to devise a plan on the spot, choosing the underlying asset class and the terms. The trade will be good for a few seconds on the screen and he can simply click to proceed.
Best Global Custody Provider
Winner: BNY Mellon
Highly commended: RBC Dexia
BNY Mellon is the world's largest custodian, with some $21800bn in assets under custody and administration. Custody accounts for a large part of BNY Mellon's overall revenues - about 35% of group business.
"What people see is that we're making a significant investment in wealth management and private banking," says Daron Pearce, head of asset servicing for the UK at BNY Mellon. "We are putting a lot of resources into the development of our wrap facility and technology enabling wealth managers and private banks to leverage our platform and look across all types of security. It is a sophisticated online accessing tool, harnessing the kind of technology that enables intermediaries to support their clients very well. We have been developing it aggressively with a large UK retail bank."
One of the service provider's aims is to work with fast-growing financial institutions as they globalise their offerings - by being in the right jurisdiction and with the right capability. Outsourcing models have changed dramatically from a one-size-fits-all lift-out model, to something more componentised, with middle-office outsourcing the lynchpin of the next model. As the crisis has served to concentrate the minds of asset managers on the benefits and cost savings of outsourcing, many are looking for a more blended model. BNY Mellon is well placed to pick up this business.
