PRIVATE BANKER

December 2015/January 2016 Issue 327-328 www.privatebankerinternational.com

'ONE RBC'

Taking a leaf out of Royal Bank of Canada's wealth management success story

• Rise of offshore life assurance bonds • Comments and predictions: Private banks & IT vendors • APAC overview: industry forecasts • Preview: PBI Middle East Conference and Awards Connect to Wealth Through Intelligence

About WealthInsight WealthInsight provides detailed data and insightful analysis on We work with and provide solutions for: the world’s High Net Worth Individuals (HNWIs) and wealth  Wealth Managers sector. With decades of experience providing business  Private Banks information, WealthInsight helps organisations make informed  Family Offices decisions and win new business.  Technology Providers  Professional Services – Consultants, Accountants, At WealthInsight’s core is our proprietary HNWI Lawyers, Real Estate Professionals Database of the world’s wealthiest individuals. Around  Fund Managers, Asset Managers, this database we have built a number of valuable research Venture Capitalists based products and services that make WealthInsight much  Non-profits and Educational Institutions more than just a rich contact list.

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IAB 545v2.indd 25 20/02/2015 16:55:07 lysis Private Banker International

Editor’s Letter An a

Contents ‘Tis the season to reflect

NEWS t is the question we always ask at the end all about robo-advisors and their fast rise. In 2, 16: news digest of the year – how did the private bank- 2015, robo-advisors were still top-of-mind 3: news briefs ing sector perform in the last 12 months? for private bankers, but it also became clear 20: tech round-up Looking back, 2015 was a year of nec- that, despite the popularity of online-only I investment managers, the role of the relation- essary rectifications, reviews and revisions. 21: Regulation ROund-up It was a year of accepting both mistakes and ship manager (RM) is still crucial to wealthy 23: people moves changes, and establishing ‘new best-practices’. clients. Equipping RMs with sophisticated IT Some key themes from 2014 carried on in tools, and opting for the hybrid model – of Analysis 2015, as expected. Industry consolidation marrying automated advisory capabilities

6: wealthinsight's 2016 predictions continued – smaller players struggling with with traditional wealth management – is the costs, across the globe, got scooped up by big- way forward for firms. 22: Liquidity Profiles ger banks – some in the quest of entering dif- Technology also continued to make its ficult markets and the others with the aim of importance felt in the back and middle office Feature expanding their client base. sections, more than ever, highlighting the need 4-5: Interview: RBC WEALTH Some big M&A deals took place as well – a for agile, flexible, and scalable IT systems at MANAGEMENT - Cover story notable one being UK-headquartered Coutts’ private banks for progress. Douglas Blakey meets Wayne Bossert, vice sale of its international wealth management Data, and the importance of it, became even chair of RBC Wealth Management, to discuss business to Union Bancaire Privee (UBP), greater in 2015. Going forward, data govern- the bank’s strategic imperatives as well as which was finalised in March. The deal boost- ance will be a crucial aspect that private banks leveraging RBC’s strengths and capabilities to bring the best of RBC to its clients ed UBP’s assets under management (AuM) need to successfully tackle. A major concern and client-base significantly, particularly in that arose this year was around cyber threats 7: Offshore life assurance bonds Asia, making it a player to watch on the global and as private banks prepare to open up their Offshore life assurance bonds present HNWIs wealth management map. internal systems and databases to more third- with an attractive option of enabling tax deferrals resulting in compounded portfolio Several lenders – big and small – also con- party vendors and regulators, these concerns gains. John Schaffer finds out more tinued to review their core geographies and can be expected to intensify. opted for slimmed down footprints, operating The private banking sector seems to be 18: geneva roundtable - overview in regions where they can truly add value and going into 2016 optimistically, even though The executive roundtable in Geneva to pulling out of those that had become too com- there were challenges along the way. For us at reveal findings from the white paper Tryst with Transparency: How private banks in plex and/or costly. PBI, it was extremely interesting to witness all Switzerland and Singapore are ensuring best- In the last few years, regulation has been dis- the happenings this year and report on them. of-breed service in a demanding regulatory rupting the way private banks have tradition- Our flagship event, PBI Global Wealth Sum- ecosystem led to valuable insights ally operated, and in 2015 banks seemed to be mit, which takes place annually in Singapore, 24: PBI MIdDle east event: preview making their peace with the heightened trans- turned 25 this year, which was a most notable What is in store for Private Banking: Middle parency environment that regulations such milestone. The PBI Global Wealth Awards East Conference and Awards 2016? as the Foreign Account Tax Compliance Act 2015 also received a record number of nomi- (FATCA) and the upcoming Common Report- nations, which was humbling. Next year, it Comment ing Standards (CRS) demand. Most private will be bigger and even better. banks renewed their operational strategies We thank every one of you for your con- 8-11: comments and forecasts: this year to work in tandem with new regula- tinued support on PBI and look forward to Private banks tory obligations, balance cost efficiencies, and working together in 2016. From team PBI, we Leaders from six global private banks share wish you a Merry Christmas and a prosperous their views on how the wealth management remain client focused. market will develop in 2016 Like regulation, technology continued to new year! be a key area of focus and investment for pri- 12-13: Technology forecasts: vate banks. In 2014, the conversations were Meghna Mukerjee Industry experts give their predictions [email protected] about how technology will shape wealth management in the year to come

14-15: comments and forecasts: APAC Experts comment on key themes and trends that will dominate APAC's wealth market

Country survey Follow Private Banker International

17: Mexico A forecasted increase in Mexico's HNWI numbers presents opportunities for the private banking sector to flourish further Search for ‘Private Banker International Search for @BankerNews – Timetric Financial Services’ www.privatebankerinternational.com December 2015/January 2016 y 1 Private Banker International News Digest

Products & Services tomers can now access Goldman Makkawi added, "QFB is Banking Regulatory Commission Scotiabank unveils new Sachs' equity offerings, including evolving its business model from (CBRC) to open a branch office in wealth management IPOs. The deal will include ongo- merely focusing on maximising Shanghai. ing servicing of the equity capital returns for its own portfolio to a The new branch office is the brand markets needs of Commonwealth more outward client focused insti- first one to be launched by BBVA Canadian lender Scotiabank has Bank's corporate customers. tution." in mainland China. Since 2005, the introduced its new Scotia Wealth The alliance will see Goldman He also said that the banking bank has been present in the city Management brand as well as an Sachs offering the bank's custom- environment in the Gulf is "chal- through a representative office. integrated approach to serving ers access to its range of Austral- lenging" and that investors in the The new office will become oper- clients' wealth management needs. ian and New Zealand investment region were behaving cautiously ational in February, concentrating This approach will enable research, as well as its global mac- at a time of low oil prices and a on foreign trade, corporate finance Scotiabank to collaborate with roeconomic and strategic research. liquidity crunch. as well as treasury products. clients by providing advice across Additionally, CBA is planning "The investment climate is not The branch will house 16 spe- all stages of life to help meet their to shut down its institutional going to be as hot or as bullish cialists having extensive experience financial and life goals. equities team, which is part of the as when oil prices were at $100 in the Chinese banking industry, The new brand will offer a full Group's institutional banking & a barrel. People are looking for a led by May Yao. range of client services including markets business, on 16 Decem- bit more certainty and are staying In addition to the Shanghai financial planning, investment ber 2015. The closure is expected away from speculative kinds of branch, BBVA operates with five management, private banking, to affect up to 50 staff. investments," he said. < branches in Hong Kong, Seoul, insurance, business transition plan- Commonwealth Bank Group Taipei, Singapore and Tokyo. It ning, estate and trust services, and executive for business and pri- M&A also has representative offices in more, for clients. vate banking Adam Bennett said: Beijing, Mumbai and Sydney. < Scotiabank said that this new "This alliance further enhances the BTG to sell BSI, three brand is an innovative and collabo- products and services we deliver months after purchase M&A rative approach to wealth manage- to our customers, providing them approval ment that focuses on a new way of with high-quality independent Stifel completes thinking: Enriched Thinking. perspectives as they invest in equi- Brazilian investment bank, BTG Barclays Wealth The launch of the new brand ty markets. Pactual, is looking to sell off Swiss Americas acquisition follows extensive global research, "In addition, many of our private bank, BSI, only three conducted over the past two years CommSec advisors, Common- months after it received regulatory Stifel Financial has completed the through conversations with clients, wealth Private bankers and wealth approval for the purchase. purchase of Barclays' Wealth and customers, investors and relation- managers and our corporate The troubled bank is looking Investment Management, Ameri- ship managers in key markets. bankers will have the added ben- to raise liquidity after its former cas franchise in the US (Barclays According to this research, cli- efit of accessing research on over CEO, Andre Esteves, resigned fol- Wealth Americas). ents would like to have two-way 3,100 stocks across five regions lowing his arrest in relation to the Under the agreement, Stifel will conversations and work with their globally." < ongoing Petrobras scandal. be the US private wealth distribu- advisors in a way that will lead to No details have been released tion partner for a certain portion collaborative decision-making. Products & Services regarding the potential size of the of Barclays' equities and will credit As part of the rebrand, Hol- deal, or of any prospective buyers. new issue securities in the US. lisWealth and Scotia iTRADE will Qatar First Bank BTG completed the purchase of Stifel chairman and CEO Ron- continue to operate under their launches private BSI in September for CHF1.5bn ald Kruszewski said: own brand identities. banking ($1.5bn), from Italian insurer "Through the combination of Scotiabank group head of Cana- Generali. The deal increased the depth of Barclays' franchise dian banking James O'Sullivan Qatar First Bank (QFB), a Shariah BTG's employee base from 3,500 and the breadth of Stifel's prod- said: "We are breaking down tradi- compliant institution, announced to 5,400, and created a group uct offerings, we are creating a tional silos and taking a team-based on 6 December that it is to launch with $186.5bn of assets under premier wealth management plat- approach to deliver an integrated a private banking service. The management (AuM). form. We've already initiated, and wealth management offering to our bank is also set to list its shares The bank had hired a number of are committed to making signifi- clients.” < on the Qatar exchange in the first heavyweight professionals in con- cant investments in our platform quarter of 2016. junction with the September deal, with the goal of providing our cli- Deals QFB established in 2009 as such as Reto Kunz as chief risk ents with a superior set of products an investment bank that concen- officer (veteran in risk consulting) and services." Commonwealth Bank trates its focus on Shariah compli- and Yves Bonzon as CIO (banking Barclays CEO of wealth and forms strategic alliance ant banking. The potential listing veteran from Pictet). < investment management Aksh- with Goldman Sachs would be only the second new list- aya Bhargava said: "Barclays is ing in Qatar since 2010. Strategy pleased to have completed the Commonwealth Bank (CBA) has Speaking at a press conference transaction which brings our US entered into a strategic alliance in Doha, Ziad Makkawi, QFB BBVA gets approval to investment representatives under with Goldman Sachs to allow CEO, said that offering a private open first branch office the Stifel banner. We look forward CommSec and CBA private bank- banking service was not a move in mainland China to our continuing collaboration ing clients to access Goldman away from its difficulties in pri- through our distribution agree- Sachs' pipeline of equity offerings. vate equity, rather the bank is Spanish lender BBVA has secured ment." Financial terms of the Under the deal, the bank's cus- "building on it". the green light from the China deal have not been disclosed.<

2 y December 2015/January 2016 www.privatebankerinternational.com Private Banker International briefs News

Technology Objectway: Facilitating the hybrid model

Objectway, an Italian headquartered related to an investment strategy. He that establishing a client's goals was technology vendor who provides demoed a typical goal of a client also beneficial to advisors, as they software and services to the EMEA by entering in a target of buying a would be better equipped to offer investment management industry, property in London. The amount of more bespoke advice. demonstrated its Conectus platform capital that was available to invest, Objectway's technology propositions as a way to implement a hybrid alongside a timescale was also sub- are clearly aimed at implementing model of investing - a mixture of mitted. The software then returned a a hybrid model as opposed to auto - engagement with both technology potential asset allocation, with asso- mated technology solutions. He sug- and advisors. ciated risk rating, based upon this gested that a hybrid model is a more Speaking on 2 December at Object- goal. beneficial strategy as opposed to robo- way's International Customer Confer- After the client input stage, the advisory services, suggesting that the ence in London, Michele Tanzi, cli- information is then sent to the advisor passive management approach of robo- ent solutions director at Objectway, where a more detailed solution can be advisors was not true financial advice. spoke about the importance of cli - proposed - thus illustrating the process Tanzi also said that the traditional ents' goal based investments and how of the hybrid model. approach of only having personal they could be implemented through Tanzi said that the importance of interactions with advisors was not Conectus. goal based investments is that it "plac- sufficient for the current day, where Using the Conectus software on es clients at the centre" where they wealth management clients have a an iPad, Tanzi demonstrated how are far more involved in the decision significant requirement for technol- a goals based approach could be making process. He also suggested ogy provisions. <

Research HSBC Private Bank: Female entrepreneurs in Hong Kong worth more than male counterparts

New research from HSBC Private Bank the tendency to indicates that 48% of entrepreneurs in start earlier and Hong Kong worth more than $1m are rely more heavily female - with half of them being under on support from the age of 35 - and that they are worth, family and friends. on average, ($3.7m) more than their male On average, these counterparts ($3.3m). entrepreneurs set The study is based on a survey of more up their first busi- than 2,800 active business owners worth ness at the age of more than $1m, which will form part of 27 (compared to the HSBC Private Bank Essence of Enter- 34 in the West). prise report that is due to be released early More than four in in 2016. The interviews were conducted in ten (44%) of those Hong Kong, Singapore, mainland China, surveyed are still United States, United Kingdom, Germany under the age of 35. and France. Entrepreneurs These figures are favourable as com - in Hong Kong pared to the number of female entrepre- were also found to neurs in other markets - Germany seeing be more focused the lowest proportions (21%) and the on their ventures United Kingdom coming in at 28%. for the long-term According to the study, there is also a than their Western greater proportion of women higher up counterparts. Less the wealth scale - 67% of entrepreneurs than a third (32% in Hong Kong with a net worth of over ) intend to exit - compared with those in the mented Bernard Rennell, regional head of $15m are female, compared to 33% in the United Kingdom, 55% of whom expressed global private banking, Asia-Pacific and West. intention to sell their business. global head of family governance and fam- Apart from that, it was also found that "For Asian entrepreneurs who are proud ily enterprise succession at HSBC Private entrepreneurs in Hong Kong display nota- to have built successful empires, there Bank. "We often see family members in bly different career trajectories as com- is more of a focus on consolidating and Asia reinvesting into the business to drive pared to those in the West. Many have growing their current enterprise," com- further growth." < www.privatebankerinternational.com December 2015/January 2016 y 3

e

Private Banker International fea tur interview: RBC WEALTH MANAGEMENT

Disciplined execution key to ongoing success of ‘One RBC’ Douglas Blakey meets Wayne Bossert, vice chair of RBC Wealth Management, to discuss the bank’s strategic imperatives: leveraging and growing its high-performing asset management business; servicing ultra and high net worth clients in its priority markets; and leveraging RBC’s strengths and capabilities to bring the best of RBC to its clients

oyal Bank of Canada’s (RBC) wealth relationships. management business unit, the coun- try’s largest wealth manager with a lead- DB: How important are ing share of the high net worth (HNW) the last two of those four R dimensions of capital – market and Canada’s largest fund company con- tinues to pick up award after award with a near human and social? monotonous regularity. The clear message from Wayne Bossert, vice WB: They have been chairman of RBC Wealth Management, is that growing in importance there is no danger of complacency and that chal- for some time and are lenges remain to achieve the unit’s goals. becoming a key measure One of the world's top five largest wealth by which UHNW families managers, RBC Wealth Management directly choose and value their serves affluent, HNW and ultra high net worth private bank. In today’s (UHNW) clients globally with a full suite of highly competitive private banking, investment, trust and other wealth banking industry, financial management solutions, from key operational and business capital hubs in Canada, the US, the UK, and Asia. planning are considered table stakes. DB: RBC has been making major investments Douglas Blakey met with Bossert in the bank’s What clients really want is an integrated plan in relationship management technology to help quiet period, just prior to RBC releasing its fiscal that also addresses their human and social capi- its advisors serve its private banking clients better. 2015 results: record breaking annual earnings tal needs. In other words, how we can help their Can you give some recent examples? smashing analyst forecasts by becoming the first family manage inter-generational transition, Canadian company to top the C$10bn ($7.2bn) family governance issues, stewardship of wealth, WB: We’ve just launched a new interactive annual earnings. next generation education, strategic philanthro- tool in Canada that improves the ability of our py and foundations, and more. advisers to have a goals-based conversation Douglas Blakey: How is RBC continuing to deliver a consistently high performance in its wealth management business unit? CITY NATIONAL AT A GLANCE

Wayne Bossert (WB): First and foremost, it is a • RBC will introduce City National’s full suite of US • Deposit synergies: the deal offers RBC the ability to disciplined execution through investment in our private and commercial banking products and attract additional deposits from RBC Wealth Man- people and fostering a culture that delivers the services to RBC clients - 340,000 RBC US Wealth agement and Capital Markets clients and utilise low “One RBC” experience through collaboration Management households :204,000 RBC Canadian cost sweep balances from RBC US wealth manage- and a client-first focus. cross-border clients and 88,000 RBC Canadian ment as an additional competitive funding advan- Our relationship managers identify their cli- commercial clients; tage to support future loan growth, and ent’s individual needs and then use a customised, holistic team approach to preserving, building • Enhancing US wealth & asset management plat- • Future growth initiatives: introduce City National’s and stewarding family wealth across genera- form: combined US-based client assets of C$393bn: private and commercial banking solutions through tions. In doing this we evaluate the needs of our brings RBC’s wealth management segment to over RBC’s US Wealth Management advisor and client clients across four dimensions of capital – finan- C$1.3trn in client assets globally; base; Leveraging RBC’s platform and financial cial capital, business capital, human capital strength to increase City National’s market pen- and social capital – and seamlessly coordinate • Expanding distribution channels: RBC and City etration and accelerating expansion into other experts from across RBC to meet each need, National wealth management products to be ser- new high-growth markets through an expanded while maintaining primary responsibility for viced by 2,100 combined advisers; network. the client relationship. As a result, our clients have the benefit of the personalised service from their primary relation- RBC WEALTH MANAGEMENT AT A GLANCE ship manager as well as the breadth of expertise available to them from specialists across the • C$382bn in client assets, generating over 65% of share by 2016; RBC Wealth Management earnings on a full year • Consistently driving revenue per advisor of over RBC business. As a clear leader in capital markets, basis; C$1.2m per year, 42% above Canadian industry commercial banking, and investment manage- • Largest fund company in Canada with 14.5% market average; ment in Canada, we will continue to leverage these share; leader in last twelve months of asset inflows; • Top performing investment firm with 79% of strengths and the expertise of our people to bring • Grew HNW market share by 400 bps to 19% in the AUM outperforming the benchmark on a three-year last four years and anticipate reaching 20% market basis. the best of RBC to our clients and deepen

4 y December 2015/January 2016 www.privatebankerinternational.com e

Private Banker International INTERVIEW: RBC WEALTH MANAGEMENT fea tur

n net income rbc wealth management City National: a “milestone acquisition” - Bossert (C$M) (2012-15) The US is RBC’s second home market, which is why it the City National franchise, which serves very similar made the strategic decision to acquire City National customers on the wealth side. 1200 and create a powerful platform for long-term growth. That organising philosophy of 'one bank, one client'

1100 Wealth business is an important part of the bank’s is consistent with how RBC thinks about its franchise franchise, serving 350,000 households in the US. globally, particularly in Canada and, argues McKay, the 1000 It is, says Bossert, a ‘milestone acquisition that results will show up in the consolidated global wealth significantly expands our growth platform in the US’. segment. 900 With the transaction – RBC’s biggest ever acqui- Adds Bossert: “This acquisition creates a new leader sition - having closed in November, the bank’s focus in providing banking and wealth services to HNW and 800 is now on integrating – to bring the best of both commercial clients in key US markets by combining our organisations to its commercial, capital markets and capabilities to deepen client relationships and to serve 700 wealth management clients. a broader client base with the aim of being the preferred CEO Dave McKay has spoken of City National provider in the US to corporate, institutional, commer- 600 12 13 14 15 client growth having been exceptional and early cial and HNW clients and their businesses. 20 20 20 20 progress being made to launch RBC’s synergy pro- “Together we can offer more expertise, locations, grammes. products and services to clients in existing markets, Source: RBC RBC will focus around its ‘one bank, one client’ and expand into new high growth markets. We’ve with their clients. myGPS allows advisers to pull strategy, the HNW and UHNW client in the US, put- developed a phased rollout of City National private and and integrate relevant client data into one place, ting together its existing US wealth franchise with business banking capabilities to RBC WM-US clients.” enabling them to define and prioritise goals for their clients, pursue the most appropriate Internationally, we will look to n EARNINGS BY BUSINESS SEGMENT(%) RBC - fiscal 2015 opportunities, and track progress against build investment management milestones. The myGPS tool is so effective capabilities in the US and UK that it has already won an innovation award to strengthen our distribution Capital Markets in the 2015 Global Private Banking awards network, and grow our institu- as “Best Initiative of the Year in Relationship tional market share. 24% Investor & Treasury Services Management Technology.”

DB: Which client segments are 52% Insurance DB: RBC has been realigning its Wealth you targeting and where will you 6% Management Business around the globe. What serve them from? 7% Wealth Management steps have you taken to deliver on this strategy? 11% WB: A p a r t f r o m G A M , o u r WB: We have been refocusing our operating wealth businesses will primarily Personal & Commercial footprint and realigning our international wealth serve HNW and UHNW clients Source: RBC business over the past few years, to better serve from our key operational and deepen relationships with clients from our hubs in Canada, the US the British Isles and We are investing in digitally enabling wealth priority markets. Asia because we know we succeed best when managers to enhance their ability to serve cli- We are prioritising our efforts in the regions we leverage and build on the strengths of ents, and in finding ways to improve the client and countries where we can add the most value RBC’s other businesses. experience through technology. to our clients and provide a high level of service for generations to come. Our wealth manage- DB: CEO Dave McKay has spoken of the DB: Can you give me some details about your ment international business is focused on build- massive importance of the bank’s investment strategy towards millennials? ing and growing a scalable and more focused in digital, with more than five million of the business serving HNW and UHNW clients bank’s clients already actively engaged in acces- WB: Our millennial strategy is enterprise from our key operational hubs in Canada, sing RBC products and services using online, wide. We understand that the needs and the US, the UK and Asia. mobile and tablet channels, a number up conversations with this generation are not that by more than 30% since 2012. With major much different from generations before but DB: What about your global asset management additional investment being made in design- what is different is how we engage them. They business? ing new products and services specifically for want to do it their way. We support client digital channels in the coming year, what is the choice,and believe that this segment, like all WB: Our Global Asset Management business wealth management unit's strategy for clients of our other client segments, should be able is among the Top 50 global asset managers by who may prefer to be self-directed and rely less to select the advice and service model that suits AuM, has an investor asset mix of 45% Indivi- on personal service and advice? them depending on their available time, interest dual / 55% Institutional client assets, is the largest and/or knowledge. fund company in Canada and continually recogn- WB: Digital capabilities are increasingly critical We are empowering them with solutions ised for its fund performance. to client experience. We recognise the demand and focused on delivering a seamless, digitally- It has grown significantly through both Blue- for digital engagement, while also understanding integrated, multi-channel experience. Likewise, Bay Asset Management and our GAM teams in that clients value our wealth managers as we recognise their needs will change as they move London and Hong Kong and remains a key focus the centre point of their relationship due to their through life stages. As an enterprise, we want outside of North America. This business will be knowledge of clients, expertise, advice, and ability to be ready to help them transition between a continued focus of our global growth efforts. to offer broader RBC capabilities. value propositions as their needs evolve. < www.privatebankerinternational.com December 2015/January 2016 y 5 ysis Private Banker International

An al wealthinsight predictions

WealthInsight’s 2016 predictions: A bad year for unicorns The tech sector has given rise to several millionaires in last decade. Will we see more of the same millionaire making from the tech sector in 2016 or have we seen the outer edges of a tech bubble? Oliver Williams, head, WealthInsight gives his views

or the past year or so, published n research from WealthInsight has US City HNW Growth, 2010–2015 (%) followed much the same theme: The rich getting richer and the tech F 12 industry as a major source of wealth. We’ve seen Silicon Valley imitations crop- 10 ping up all over the world, from London to Lagos. For the past decade or more, 8 the holder of the ‘world’s richest’ title 6 has nearly always been in tech and/or telecoms. So, when asked by The Times 4 to predict the next ‘trillionaire’, we said 2 that he or she (another trend has been the rise in female wealth) would probably 0 on ton Dallas Bost have made their money from tech. Phoenix York City ancisco Chicago Hous San Jose San Diego Los Angeles Looking ahead, then, to 2016, will we New San Fr see more of the same millionaire making

from the tech sector? In a world of uni- Source: WealthInsight corns (private companies valued in excess of US$1 billion) and decacorns (the same 11.1% increase in the number of HNWIs valued (unicorn) companies that but over $10bn), is there still room for earning their wealth from this sector, it are struggling to prove profitable growth, or have we seen the outer edges has slowed significantly since its peak of business plans. These companies of a tech bubble? a year-on-year growth of 12.7% in 2012 and their owners are therefore In our most recent published research, to 2.7% currently. shedding money as valuations WealthInsight’s US Wealth Book, we Just as the recent tech boom has cre- are realised. This is particularly looked specifically at trends coming out ated a wave of new entrepreneurs, the prevalent in emerging countries of the tech sector. About a year ago, tech curbing of their ranks is reflective of the where private funding has with- and telecoms outdid financial services as industry’s slowing. While this is evident ered in the face of slowing econ- the largest source of wealth for HNWIs in the US, the causes are global. Here are omies and turbulent currencies. in the US. the three main origins of this finding: The knock-on effects are evident, par- Whether a bubble or not, it would ticularly geographically: San Jose and • Much of the subsiding in HNW appear that a slowing in tech as a source San Francisco are among the five fast - growth has been caused by the of wealth is on the cards for 2016. But est growing cities for HNWIs in the US, industry’s maturity. It is apparent those looking over the precipice are not with the former in first place (see chart). that there is less room at the top only the shareholding entrepreneurs. With Wealth managers and luxury companies for the successful start-ups that few asset classes performing as well as have been flocking to these areas for are the key drivers of wealth tech start-ups in recent years, there has a piece of the pie (even as fintech and been pronounced interest from finan- e-commerce innovations eat away at their • With venture capitalism at an cial firms of all stripes. This means that own industries). all-time high we are seeing less the wealthy financiers – the venture However, what we also saw was a founder-owned companies at the capitalists and alternative investors – are slowing in the number of HNWIs making top. Entrepreneurs are sacrific- often more exposed than those in the their wealth from the tech and telecoms ing equity for investment and thick of it. sector (we bracket them both as one skyrocketing valuations so that, Diversification is therefore crucial to since there is no longer much differentia- when a tech firm does make it, financial planning in 2016. Financial tion between them). There are currently there are less billionaire benefi- advisors must take a pragmatic view to 865,600 HNWIs who have earned their ciaries. tech. Overexposure to illiquid compa- wealth from the sector in the US, which nies with spiralling valuations proved amount to 16.1% of the 5.3 million mil- • The venture capital investments fatal to some during the dot com bub- lionaires currently in the US. Though in that have fuelled these staggering ble in 2000 – those lessons could be the past four years there has been an valuations are drying up for high well learnt.<

6 y December 2015/January 2016 www.privatebankerinternational.com e

Private Banker International products & services: offshore bonds fea tur

Wrapping treasures offshore Private banks and HNWIs are continually on the look out for ways to lift tax burdens, especially in a low yield environment where gains are already modest. Offshore life assurance bonds present an attractive option, enabling tax to be deferred and allowing portfolio gains to be compounded. John Schaffer finds out more about these bonds that are growing in popularity

ax-efficiency has always been an Luxembourg Insurer, Lombard Internation- Offshore bond structures based in Luxem- important area of focus for private al, differentiates itself by offering its clients the bourg tend to be more expensive in terms of fees; banks and clients. However, tax ability to structure “unquoted assets” within however they can be advantageous if the policy avoidance has come under a harsh its offshore bonds service. The insurer employs holder wishes to liquidate their assets in a juris- T a team of 15 specialists for on-boarding and diction with a lower tax liability. The demand is spotlight for private banks and their wealthy clients in the last couple of years, leading to maintaining non-traditional assets. certainly present; Lombard International, one of hefty fines and reputational issues for several Jurgen Vanhoenacker, marketing and wealth the larger providers in Luxembourg, has $75bn lenders. structuring at Lombard International, tells PBI: in assets under administration. Leahy, Pruden- In an increasingly demanding regulatory “Some countries allow for non-traditional tial, suggests that insurers in both Ireland and environment where aggressive tax strategies assets like private equity funds to be structured Luxembourg will write EUR15bn in offshore are being continually scrutinised, private banks within an offshore bond. Apart from these life assurance policies in 2015. are looking to insurance companies to issue off- home country restrictions, we need to respect The costs of placing assets within an offshore shore bonds as they provide a transparent tax the Luxembourg investment rules as well. bond, however, have become competitive in efficient solution for their clients’ portfolios. Depending on the size of the client, the latter recent years as more insurers enter the market. Offshore life assurance bonds are particularly allows greater flexibility as long as the assets From the insurers’ perspective, the commer- relevant in high tax jurisdictions such as the are securitised and transferable. “It is impor- cial benefits are beginning to weaken. Leahy tells UK. Their primary use is to act as a tax “wrap- tant to highlight that many countries require PBI that as the provision has become “more per”, allowing assets to be housed within a life a full discretionary management of the port- commoditised in recent years”, Prudential is assurance policy. folio and do not allow any investment influ- stepping back from offering “vanilla” offshore The European offshore bond market is pri- ence from the policy holder. The UK is a clear bond solutions due to the price of the insur- marily centred on the Isle of Man, Ireland and example of this.” ance wrapper being driven down significantly. Luxembourg where many insurance companies Lombard’s use of structuring non-traditional “We’ve stepped back, as a commercial decision, have offshore units. assets is the exception rather than the rule. In and we focus more on the bespoke end of the The most significant benefit of an offshore most non-Luxembourg offshore bonds, clients market where we can add more value.” bond is tax deferral. Housing a client’s assets will be restricted to collective investments. Passing on wealth to the next generation is one within this investment wrapper means that no Dion Lindskog, head of life and pensions of the key concerns for HNWIs, and offshore tax is to be paid annually – taking away the products at Royal Bank of Canada (RBC), bonds are an attractive option for wealth succes- burden of yearly capital gains and income tax says that although RBC advises on using the sion. Leahy says that offshore bonds can have charges. A private client can also withdraw an instrument for the majority of its private bank- advantages in jurisdictions where there are income from the assets, when encased in the ing clients, he suggests they shouldn’t put all of forced heirship regulations, including France bond, with an allowance of 5% of the original their assets within the bond. “Typically we rec- and the Middle East, where Shariah law restricts investment per year. ommend that clients hold some assets person- the passing of assets. According to Lindskog, However, tax does have to be paid eventually, ally to use their tax allowances. For example, another advantage is where multiple lives can be at the point when the benefit is taken out of in the UK there's a capital gains tax allowance assured on the life insurance policy: “It’s what’s the insurance policy. Steve Lawless, global head of £11,100, and there’s a new £5,000 a year known as a last survivor basis – so you could of banking distribution at Old Mutual Wealth, dividend allowance coming into play next year. have six lives assured and the plan continues says that tax deferral is also beneficial for banks: Clients would need to hold assets personally to until the last of those six people die, giving “The bank with the underlying assets can man- take advantage of these allowances,” he says. control over when the policy is surrendered.” age the money purely in terms of buying exactly The restrictions on the type of assets that Lindskog adds that the policy is normally split what they want, when they want, without wor- can be held mean that offshore bonds may up into segments. This can be useful, for example, rying about timing and tax payments.” be a less efficient solution for UHNWIs, with when parents want to help their children with In terms of assets that can be wrapped a larger proportion of direct investments. university costs, segments can be given to the within an offshore bond, there are limi- Michael Leahy, international wealth direc- child. The segments can then be encashed by the tations depending on where the client is tor at Prudential, says that although there child using their tax allowances meaning that domiciled. In the UK, wealthy individuals are are some cases of ultra wealthy individuals there is often little or no tax to pay. restricted to wrapping collective investments using offshore bonds, the majority are within Despite there being varied opinions around such as mutual funds. Although most countries the £1-20m space. the commercial benefits of offshore bonds from allow for collective investments to be wrapped Where the UK has offshore structures pre- the insurers’ perspective, their popularity among within an offshore bond, there are some juris- dominately based in the Isle of Man and Ire- HNW clients seems to be on the rise. This pre- dictions that will allow clients to have direct land, Luxembourg’s focus is more centred on sents opportunities to further develop and cus- holdings such as equities or corporate bonds. cross-border HNWIs. tomise these products. <

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omm e Private Banker International c private banks: comments and forecasts

View from the top It has been a year of high-profile M&A deals, cost-income ratio conundrums, greater demands from regulators, and increased transparency. We hear from leaders at global private banks about where they think the wealth management market currently stands, and what their expectations are of 2016. Do they have any expert advice? Read on

Three critical shifts fundamentally Investment & Insurance Products regimes. We support their aims, but shaping the wealth management regulatory initiatives like these will demand significant investment in systems and much more industry collaboration than we have seen landscape: Barclays W&IM before. The third, and perhaps most important shift, is technology, which is driving fundamental change across many industries – and financial services is no exception. Clients expect instant, direct, on demand and transparent access to their bank account and investments at a time of their choosing. We think that the personal service offered by bankers can be enor- mously enhanced with technology and, while technology shouldn’t be an end in itself, it does have the potential to create a level of client engagement that has not been seen in our industry so far.

Adapt or risk losing the next generation of HNWIs: RBC Wealth Management

Tim Houghton, Head of Client Akshaya Bhargava, CEO, Wealth and Investment Management, Experience and Channel Strategy, Barclays RBC Wealth Management We live in rapidly changing times, and the wealth management busi- The fact that young high net worth ness is no exception. Three critical shifts are occurring which are individuals (HNWIs) are vital to the fundamentally shaping the way we will do business and the services future of wealth management is evi- we will provide as wealth managers in the future. dent. Within the US alone, an esti- The first of these shifts is about the changing nature of wealth: mated $36trn of wealth is expected the speed at which wealth creation is accelerating and the increasing to be transferred from estates to heirs mobility of the wealthy. More first generation wealth exists today between 2007 to 2061 , in what has than ever before - it is now possible to create a billion pound com- been described as the greatest wealth pany in three to four years when it used to take three to four genera- transfer in US history. This is only tions. Today’s high-net-worth individuals are also more mobile than part of the story, of course. Increas- ever before, with nearly half (43%) of the 2,000 wealthy individuals ingly, young HNWIs are entrepre- Barclays Wealth and Investment Management recently surveyed hav- neurs, with plenty of hard-earned liquid assets and a list of distinctive ing lived in more than one country. wealth management needs. The wealthy are increasingly mobile geographically and move But what makes young HNWIs tick, how will this influx of young between countries in order to fulfil their international career aspira- wealth shape the wealth management landscape, and are wealth man- tions, seize financial opportunities and ensure a better quality edu- agers ready for the complexities of engaging with today’s younger cation for their children. The offspring of the current generation of generation? wealthy individuals are even more likely to lead international lives, Young HNWIs –those under the age of 45 – are already driving with most of those we surveyed expecting their children to live in wealth management firms to adapt. They have grown up in the digi- more countries than they have lived. tal age and expect to be able to access and manage their money online. Secondly, the regulatory environment in which we operate is It won’t be long before the majority of the clients that wealth manag- becoming more rigorous and stringent. Wealth managers need to be ers service are digital natives and for some this is already the case. sophisticated and have sufficient scale in order to provide a robust Wealth managers have not been oblivious to this evolution and control framework that makes sense for a complex matrix of client have responded by improving digital and online service offerings. profiles, geographical markets and product offerings. This is doubly important in the face of the growing proliferation of Regulators increasingly require a heightened level of transparency automated advisory services. Differentiating against the backdrop of charges, transactions and product features, both for themselves of the rise in digital wealth management services – most of whom and for clients through regulation like Markets in Financial Instru- provide simple services which only address a small percentage of the ments Directive 2, Retail Distribution Review and Packaged Retail needs of HNWIs – is a real opportunity for wealth managers who

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Private Banker International private banks: comments and forecasts c

wish to retain and grow their client base and remain relevant to their touch with our clients all the time and through different channels. clients. Digital banking will continue to develop and grow in the coming Indeed, whilst most wealth managers are clearly taking steps to years. Leveraging and integrating the multiple interactions via vari- introduce digital services to take into account an increasingly mobile ous channels into personalised service offerings will be a major chal- client base, we must not underestimate how much young HNWIs lenge. At the same time, it offers great opportunities for clients as well value professional advice. Despite their use of online services, the as for private banks. 2015 World Wealth Report from Capgemini and RBC Wealth Man- agement revealed that young HNWIs actually have a higher prefer- Added value ence – and need – for support and professional advice from their In the changing digital and regulatory environment, a key question wealth manager than older HNWIs. for many private banks will be: how to remain meaningful to clients They also have less brand loyalty, showing a higher propensity to in a sustainable way. MiFIDII will require many private banks to leave their wealth manager if their advice needs are not met. This is adjust their current operating models, to distinguish their investment particularly the case for the first generation of young HNWIs, whose services more explicitly and to create total transparency of costs. attitude to wealth management and exposure to advice is less likely In view of these developments - digitally enabled investment solu- to have been passed through generations. tions as well as the steady growth of passive alternatives - the need There is also evidence to suggest that some wealth managers are for real value addition will become even more prominent. One way of not sufficiently aligning their services with their young clients’ biggest turning this into opportunities will be clear client segmentation and financial concerns. The World Wealth Report showed that wealth well defined investment propositions. Socially responsible investment managers today are overestimating the degree to which they under- strategies, applying ESG criteria, are becoming increasingly impor- stand the needs of younger HNWIs, with a 15 percentage point gap tant components of these propositions, especially in Northern Euro- between how well young HNWIs believe they are understood by pean countries. their wealth manager and the perception of the wealth managers Another trend we can expect to continue is the ongoing growth themselves. of discretionary portfolio management, with more and more clients According to the report, the primary concerns of young HNWIs entrusting the management of (part of) their wealth to professionals, revolve around health and financial planning, fears around assets and choosing clear investment strategies. lasting through their lifetime, being able to afford their preferred lifestyle in retirement, and rising education costs. Regrettably, some Client due diligence wealth managers underestimated the importance of these issues to For very good reasons, the requirements we ourselves, regulators and younger clients by up to 23%. society at large, apply to knowing our customers, understanding their This points to a shift in the way wealth managers will seek to nur- source of wealth and funds, their legal structures, their transactions ture their client relationships in the future. Beyond what is being and our own documentation of all this knowledge, have a profound done at an individual firm level, joint industry initiatives have also impact on our industry. It requires serious investments in system been launched to improve the understanding of the needs of young capabilities, and training of staff - all tailored to select the right clients HNWIs. and countries, of which one can manage the associated integrity risks. Whilst the points of access with the new generation of HNWIs have In this respect, the current trend of many private banks evaluating undoubtedly changed, there is no replacement for a skilled wealth and refocussing their cross border services will continue. The ongoing manager who can provide holistic advice on a client’s unique cir- attention of regulators and the public at large, around these sensitive cumstances. topics, will continue as well. The most successful wealth management firms of the future will be those who can differentiate themselves to appeal to the new genera- Focus tion of HNWIs both online and in person. These firms will empower Given the aforementioned trends and the associated and required their wealth managers, invest in training and education, and support investments, the earnings model of various private banking opera- full financial planning based on the comprehensive needs of their tions will remain under pressure, especially if markets are not buoy- clients, whatever their age. ant. This will continue to drive the pursuit for critical mass and on- going consolidation in the industry, i.e. the review of smaller, low growth operations. Of changes and opportunities: ABN AMRO At ABN AMRO we focus on a selective number of markets, pri- marily domestic, where we can leverage and grow our critical mass. Jeroen Rijpkema, CEO of In those markets we want to be the leading private bank, pursuing a ABN AMRO Private Banking multi-brand strategy in order to preserve local authenticity. International In private banking, client So only change? behaviour is rapidly chang- Whilst it is tempting to think about new developments only, many ing. Our clients do business things do remain as important as always and the basics of private with us more and more, banking remain as relevant as ever. 24/7, via various channels. Clients continue to value solidity, stability and reliability. Banks For instance, ABN AMRO’s need to take care of the trust that is invested in them. Bankers should Mobile Banking App in the not over-reach. We can only be successful through the success of Netherlands - which was our clients. An adequate return on investments, wealth preservation, only invented five years ago - wealth transfer to the next generation, philanthropy - all these ele- is now used 53 million times ments remain as relevant as ever. Capital requirements and regulatory a month! This offers great pressures have increased, which has had an effect on clients as well. opportunities. We can be in We have to deal with it to the best of our capabilities. www.privatebankerinternational.com December 2015/January 2016 y 9 nt

omm e Private Banker International c private banks: comments and forecasts

Private banks need to not only know who their clients are, but also 1871). Yet many investors have low tolerance for volatility—and this have to prove that they really do know their customers. That under- will become more of an issue in 2016 as volatility increases, because of lining requirement won't change, despite all relevant trends. desynchronised central bank policies. The problem is that returns on traditional ‘risk-free’ assets are poor. The reason a 60/40 portfolio was able to deliver double-digit returns for much of the past 30 years was what to expect in 2016: pictet wealth that long-term interest rates were steadily falling. As rates normalise, we expect 10-year US Treasuries to return only 1.6% annually on average management over the next decade, which means returns of 6.9% on a 60/40 portfolio (split between the S&P500 and US Treasuries). Investors need to realise Pierre-Alain Wavre – that in a world of low returns, there is no free lunch. If you want to boost Equity Partner, Head returns, you have to take on more risk—or, more precisely, to accept of Pictet Investment more volatility, which does not actually mean risk. Office, Chairman of the Investment Committee of Pictet Wealth Management key trends: lloyds bank private banking 1. Focus on Fintech will sharpen Everyone is aware that the financial sector faces a techno- logical revolution, especially in how we interact with clients. For example, robo-advisors are offering algorithm-driven automated investment services and typically charging lower fees than a financial advisor. The blockchain protocol is likely to disintermediate most processes in financial services. Busi- ness models are now becoming increasingly technology-driven, and these trends have the potential to have a big impact on margins. After a slow start, Fintech began to take off in Switzerland in 2015, and players in the wealth management sector will sharpen their focus on this area in 2016. However, it is not yet clear how the rise of Fintech will play out for the wealth management industry, specifically how far these new technologies will find favour with clients in this space. On the one hand, harnessing ‘big data’ will improve our understanding Markus Stadlmann-Chief Investment Officer of Lloyds Bank of clients’ behaviours and needs, and will make wealth managers better able Private Banking to personalise and customise their offering. (One impact of this will be to The wealth management industry in the UK continues its theme of con- increase the impact of the ‘emotional bias’ of investors, making behavioural stant change with more potential M&A activity being discussed in the finance even more important.) On the other hand, will ultra-high-net-worth press and the explosion of fintech companies seeking to help provide a individuals really be willing to entrust their wealth to an algorithm? The situ- competitive advantage. Clearly the macro factors such as the economic ation looks similar to the tech boom in the 1990s in some respects—prob- cycle and volatile market performance are going to impact on the indus- ably there will be significant changes for the industry, but less revolutionary try as they do every year but in addition there are key trends we should than initially envisaged. keep a close eye on. The rise of the ‘disruptive’ Robo Adviser and the extent to which these 2. Private equity will continue its rise new players will threaten the traditional wealth management and private Private equity is set to be the best-performing asset class in 2015, and banking models is widely published. Robo Advice is viewed by many as on our forecasts will also offer the strongest returns on a nominal a solution to the advice gap which has become visible post-RDR. How- annual average basis over the next ten years, at 13%. In a world ever with clients becoming increasingly more ‘tech-savvy’ it should not of low returns, interest in private equity has understandably risen— be ruled out that Robo Advice could impact more affluent businesses too. even though the higher returns offered by private equity need to be Headwinds to development include the fact that Compeer research weighed against its lack of liquidity (with a full investment cycle typi- consistently shows that face to face service remains important for clients cally 7-8 years). Wealth management institutions need to be prepared and recently the three European Services Authorities expressed concern for private equity to continue to grow in importance in 2016 and at the differences in rules on this advice and calls for further analysis of beyond, which means cultivating strong partnerships with private- the risks of Robo Advice. This regulatory uncertainty and client prefer- equity firms—as Pictet has been doing over the course of 25 years. ence to meet with an adviser where advice is needed are signs that the Robo Advice solution is likely to take time to develop. 3. Fear of volatility will persist But the opportunity is huge – according to PwC’s report Asset Man- People are still in a 2008-09 mindset, worrying that equities will crash— agement 2020: A Brave New World between 2010 and 2020, more than and this is likely to remain a feature of 2016. Even though, looking at it one billion more middle-class consumers will emerge globally, represent- on a ten year basis, the impact of 2008-09 on returns actually was not ing the largest single decade increase in customers in history. This increas- that dramatic: in fact, US equities returned 10.9% annually on aver- ing affluence will fuel the need for financial products for a young and age in 2005-14, compared with 8.9% on average historically (since growing constituency who it is generally assumed will be more ‘tech

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Private Banker International omm e private banks: comments and forecasts c

savvy’ and open to solutions such as Robo advice. Digital strategies are enterprise by conducting business more efficiently while reduc- expensive to develop but essential, be they Robo Advice or execution- ing costs, especially through increased automation of processes, only solutions. consolidation of providers and data aggregation. More frequently, According to a recent study from EY, the global fintech industry is we are seeing family offices conducting formal business process booming and London is at the heart of this growth which can only be reviews with providers to streamline processes and procedures good news for the private banking industry as we see the digital develop- between parties. ments becoming more main stream. Investment in our industry and adoption of innovative technology is Next Gen Engagement essential to keep up with our clients’ expectations as to how we should There is an increased desire for next-gen education and peer-to-peer look after them. Successful businesses will look outside the industry as a networking groups for both future generation family members and barometer of what good service looks like. their family office staff. Providing financial information "on the fly" MiFID II looms large on all investment firms’ radars. Key elements for family members is key while still being mindful around confiden- of the new rules are investor protection and transparency which are tiality and security. broadly welcome, but the work required to meet the requirements in a client friendly way is significant. According to the Wisdom Council’s Diversification Through Hedge Funds July 2015 survey of UK investors, 75% welcome European legislation Clients are seeking true sources of diversification, typically that offered investors complete transparency on all fees and charges through hedge funds, as they prepare for a lower return environ- but respondents also reminded us they value service and performance ment. With the return projections for conventional fixed income equally if not higher. too low for many ultra-sufficient investors, hedge funds can pro - The attitude to value for money, how to measure it and compare it vide significant and important diversification benefits to family across different providers is still a pretty vague subject – but over time as office portfolios. Generation Next become the largest segment this will be a more central issue in provider selection and loyalty. Risk Management & Security The FCA already has a focus on ensuring customers in the UK receive Cyber threats and fraud are two of the major risks to family and pri- value for money and are placed in a position where they are informed vate investment offices. Offices are evaluating their risks, performing and able to shop around. gap analysis and implementing new internal and external controls to This is a regulatory trend that will continue to develop through MiFID mitigate risk. There is an increased focus on security in all respects: II, PRIIPs and other initiatives, although the challenge will be how to technology, personal and travel – Family offices are conducting holis- provide this information in a way that all customers are able to engage tic security reviews. with and fully understand. Finally, the latest Compeer Survey highlights the most sought after Succession Planning & Governance services that remain on the podium are investment advice, financial plan- Succession planning for family leadership, office staff and trustees ning and banking services. Being able to bring the best of these together with stewardship will continue to be an area of heightened focus. secures a client’s relationship and yet there are still few who cover all Structured governance programs with multiple committees are being three well. Building trust with clients by demonstrating value for money reconsidered, but need consistent evaluation and often reorganiza- and integrity is not a new concept – we’ve just got to keep finding new tion to include future generations. ways to do it. Environmental, Social & Governance Investing (ESG) Families are looking for ESG tilted options that do not trade Seven Family Office Themes for 2016: risk or return, especially as the next generation becomes more involved in the investment decision making process. Impact Northern trust investing through direct investments or co-investing is gaining interest, but there is difficulty in sourcing these types of invest- David W. Fox, President of ment opportunities. the Global Family & Private Investment Offices Group Direct Investing at Northern Trust Investors with expertise or trusted contacts in a particular area Every year, Northern Trust are increasingly making investments directly in private companies. gathers its Global Family and Strategy is in part driven by the muted investment returns environ- Private Investment Office cli- ment, so family office clients are seeking uncorrelated sources of ents for a series of closed door returns. forums and advisor roundta- bles that offer a unique view Looking forward to 2016, the regulatory environment will con- into trends emerging among tinue to pose challenges for family offices and the financial the world’s wealthiest fami- industry as a whole. We also expect “low and slow” monetary lies and the family offices that policy, with a shallow trajectory of future rate increases and serve them. As we reflect back ongoing headwinds from the impact of global demand levels on what we learned at our and global income inequality. 2015 events and look forward to 2016, there are sever - al themes that are top of mind for our family office clients. As globalisation continues, the UHNW population and the family offices, advisors and institutions that support them will Operational Alpha continue to experience opportunities and challenges as they Family offices are working to create “operational alpha” in their navigate through the constantly evolving global marketplace. www.privatebankerinternational.com December 2015/January 2016 y 11 Technology tangents The 'whatever will be, will be' approach does not work when it comes wealth managers optimising technology. Private banks need to have long-term views around how they will maximise IT offerings – be it in the regulatory arena, for customer engagement and satisfaction, operational efficiency, or risk mitigation. Looking ahead at 2016, online investment managers and specialist IT vendors give their views

Wealth management: where tech innovation adds value Just as digital is helping retail banks improve services, revenues and profits, it will help wealth managers too. The longer they wait, the more If wealth managers want to retain clients and their top relationship they risk losing in terms of staff, clients, revenues and profits – to disrupt- managers they need to embrace digitisation and IT modernisation, ers of course, but more likely to their existing rivals. It’s catch-up time. writes Pierre Bouquieaux, product director wealth management at *Shifting Sands: Banking in the Digital Era (Temenos, 2015) Temenos Wealth management is behind the digital curve. Retail banks know that the ability to analyse customer data allows them accurately to target Nitty-gritty back end innovation, growth and the products and improve service, sales and profits. While wealth managers gender imbalance are getting there, the sector is still behind retail banks in digital planning and implementation. Given the structural changes to the market, this is Nick Hungerford, CEO and co-founder of Nutmeg, gives his fintech not good enough. It is costing clients, staff and profits. outlook for 2016 Over the last few years, the market has been going through some The year 2015 has been a boom year in UK financial technology. 2016 important structural changes. The merger of onshore and offshore will be better still. If I had to characterise the industry’s development in private banking, as a result of the elimination of bank secrecy and tax the last twelve months I would say it had succeeded in grabbing head- heaven statuses, together with the transfer of wealth to generations X lines, achieving real growth, and engaging customers. If there’s been a and Y, have opened the market and are forcing wealth institutions to problem, perhaps it is that the back-end – the underlying technology – offer new services in order to compete with new business players like has been neglected in favour of the consumer-end. mass affluent or retail banks. So in the next 12 months, I predict more work on the nitty-gritty: the There’s also been a lot of talk of the disrupters in wealth management best FinTech innovations in 2016 will be in back-end technology, or – the fintechs offering new services. These include mobile banking and B2B. I expect to see more software and tools that help existing firms do new portfolio management services via, for example, robo-advisor soft- their core business better – to manage secure payments records (Tradle), ware. But should this be considered an opportunity or a threat? It fun- compliance obligations (Behavox), corporate finance (Origin), and so on. damentally depends on how fast traditional wealth managers will be able The government, aware of this need, is developing an API standard for to digitize their platform to provide attractive and competitive services. banking, so FinTechs can create bank comparison tools for customers. Wealth managers have two key advantages over fintechs. Firstly, At the same time, I also expect the sector as a whole to keep growing. although regulation is still seen as a considerable challenge by wealth I predict more investments by incumbents, like Schroders’ 2014 invest- institutions (according to 23% of respondents of the 2015 Temenos sur- ment in Nutmeg. I expect to see fast growth in developing markets – wit- vey*), their ability and experience to cope with it provide them with a ness the growth of WeChat in Asia, of Yandex in Russia. Here in the UK, significant advantage over fintechs. Secondly, it’s the relationship they I believe mobile-only banking will finally take off (Mondo, Atom Bank) already have with their customers and the amount of data they hold on – eight new banks were authourised in the UK during the last five years, them. This has been built up over many years, sometimes generations, compared to just one in the five preceding years. And I foresee rapid and is a highly valuable resource. growth in some specific niches – for instance, PropertyPartner will track A customer-centric model supported by a strong digital offer will allow the upward fortunes of the heated property market. them to leverage this data and provide a better service. The data will I also expect to see exits, with companies sold or looking to raise cash have whole histories of transactions, preferences, risk analysis, accept- through IPOs. This will result in the first deployment of proceeds as able levels of returns and more, and can be used by the relationship generation one entrepreneurs invest in and start new businesses. manager to offer the most tailored and appropriate service. It can’t all be rosy, however. There will be some failures. I expect The fintechs will struggle to have this resource, which is probably Schwab to give up on its fee-free model of managing investments in the why according to Temenos’ survey 28% of wealth managers still con- US. Bitcoin will remain on the margins, crippled by (among other prob- sider their traditional competition as the main threat. Customer loyalty lems) volatility and, ironically, a massive trust problem. At Nutmeg we is also seen as the most important priority and retaining experienced do see a future for the distributed ledger, however, and I predict 2016 will relationship managers to liaise with them also ranks highly for 26% bring a welcome pivot from over-excited speculation at FinTech confer- of the respondents. That is because loyalty is a two-way street. When ences to the unglamorous business of actual implementation. relationship managers change jobs they take with them on average a In spite of failures, I think we’ll see further flourishing in the network third of their clients and they often move when a rival can offer better of organisations supporting FinTech’s growth. InnovateFinance will products to their clients. recruit its 200th member. I think we’ll see more innovation at the FCA Given the above priorities and perceived threats, it means wealth man- (see the recent Sandbox, the Innovation Hub, and various welcome con- agers must address the needs of these advisers. Firms need to give these sultations). I hope to see more supportive policy work from the CMA, advisers the best tools so that they can offer the best service with up to and a programme of proper reform of financial advice from the FCA and 27% of wealth managers in the survey agreeing that IT modernisation Treasury’s Financial Advice Market Review. (equally in core and mobile systems) is a key investment priority, shifting Finally, following Eileen Burbidge and Harriet Baldwin’s appoint- significantly from previous years’ views. ments during 2015 to FinTech-related roles in HM Treasury, I expect

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Private Banker International ea tur technology forecasts F

to see more women taking prominent roles in the industry. I hope to see Regulatory change is one of the key themes in the private banking firms engaging more actively with female customers, to correct today’s industry today and technology’s role in helping banks to manage the new gender imbalance across the FinTech customer base. Women have to requirements is increasing every year. make international payments, women have to put their money some- where – but, today, far fewer women than men are using FinTech prod- ucts. We recognise, however, one welcome fact: the number of journalists The ever growing importance of technology in wealth writing about FinTech seems to be balanced in favour of women! management

Technological innovation has become essential to ensure that the From FATCA to Basel – the impact of regulation will wealth management industry serves the future needs and demands continue to be significant of the customer, market, and regulatory landscape, writes Thibaut Jacquet-Lagreze, head of marketing and sales HQ at Avaloq Ed Royan, COO EMEA, AxiomSL comments on the regulatory As we head into 2016 the wealth management and private banking requirements that private banks will have to keep up with in 2016, industry is facing a dramatic change. More demanding clients, digital as well as the technology provisions that need to be put in place to transformation, regulatory changes, internationalisation and growing remain compliant competition are increasing the overall costs of operations and hitting From anti-tax evasion measures to liquidity metrics, the private bank- profit margins. As a result of such challenges, traditional business models ing industry has been kept busy with a range of new regulatory require- are being forced to transform. This presents three distinct challenges for ments over the past year. With no let-up in sight, many firms are now wealth managers. carefully assessing the technology they will need to stay ahead in 2016. The first being costs versus profitability and how to strike the right Arguably the most significant regulatory milestone for private banks balance. Wealth managers face increasing pressure to demonstrate they this year was the beginning of reporting under the Foreign Account Tax are providing value for money to their clients. Their service offering has Compliance Act (FATCA). This US anti-tax evasion regulation requires to stay relevant in a market where fintechs such as robo-advisors are financial firms around the world to identify and report on accounts held now aggressively targeting affluent and tech-savvy investors, with new by US taxpayers and citizens. In 2015, firms were only obliged to report investment management services at a very low-price. Wealth managers on accounts opened between July and December 2014. As a result, many therefore need to improve their efficiency and level of service in order to of them used short-term, tactical solutions to do their reporting. increase profitability and competitiveness. However, in 2016, the scope of reportable accounts will be expanded The second challenge sees wealth managers continuing to navigate significantly and banks are therefore looking to technology to automate their way through the increasing costs and complexity of financial regu- their compliance. lations. Global and local regulatory changes make international growth The US is not the only country toughening its stance on tax evasion. highly challenging. Utilising technology to comply with new and chang- In 2016, banks in Crown Dependencies and Overseas Territories, such ing regulations in a cost-effective way has become more critical. as the Cayman Islands, will need to begin reporting to the UK authori- The third challenge is digital transformation and the gauntlet it lays ties on accounts held by UK taxpayers. Meanwhile, banks around the down for wealth managers. The cornerstone of this is to meet client world will need to start collecting the data that will be required for the expectations in digital channels. Clients want transparency on their Common Reporting Standard (CRS). Often referred to as ‘FATCA on investments' risk and performance and expect informative, continuous steroids’, this regulatory initiative will involve more than 100 countries interactions from wealth managers no matter what channel is being used. exchanging data about offshore accountholders from 2017. Adapting the digital channels to an appropriate level of service is also Aside from tax, liquidity has been one of the key areas of change in imperative and for wealth managers this means tailoring the right level recent months. As part of Basel lll, banks have had to adopt two com- of information and self-service depending on the type of services offered plex new metrics: the Liquidity Coverage Ratio (LCR) and Net Stable - managed accounts, advisory or execution-only. Funding Ratio (NSFR). In 2016, those in the European Union (EU) will Although in the coming years wealth managers will move towards also need to begin calculating and reporting the results of the Additional greater communication through digital channels, this will not replace Liquidity Monitoring Metrics (ALMM). face to face meetings or phone calls as human interaction will remain In order to run the calculations mandated by the LCR, NSFR and a fundamental part of the relationship between wealth managers and ALMM, and produce an accurate picture of their liquidity, banks need HNW clients. Looking further ahead, as technology continues to devel- to aggregate granular data from the different systems in which it is main- op, wealth managers will get the opportunity to further increase their cli- tained. The large volumes of data involved mean the banks cannot do the ent experience with the use of artificial intelligence. There could be inter- calculations manually and are instead migrating to technology solutions. esting applications in the fields of risk and performance optimisation, As part of the Basel reforms, in 2016 private banks will also need to behavioural finance or wealth planning. However, this is a topic that prepare to use a number of new calculations that have been developed is still currently being widely debated and undoubtedly will continue to ensure they have enough capital to mitigate different types of risk. throughout the coming years. So far the Standardized Approach for Measuring Counterparty Credit In the meantime, wealth managers have already started to leverage Risk Exposures (SA-CCR) has garnered the most attention. However, market data available. For example, they have started implementing this is just one of a long list of calculations, which banks will need to plan innovative portfolio construction engines to optimise the risk/return of for strategically because many of them are interdependent. client investments. So, as big data becomes increasingly relevant and Traditionally, many banks have chosen to use separate IT systems to small data remains equally important to support client relationships, it manage individual regulatory calculation and reporting requirements. has never been more vital for wealth managers to take advantage of However, with so many new regulations being rolled out, this model smart technology to add further value to their proposition. One thing is becoming increasingly complicated, expensive and impractical. As a is clear - the wealth management industry should continue to change result, a growing number of banks are now looking to use a single flex- at a rapid pace. As a result, technological innovation has become more ible platform to manage all of the different regulatory calculation and essential to ensure the industry continues to serve the future needs and reporting requirements. This trend is going to continue in 2016. demands of the customer, market and regulatory landscape. www.privatebankerinternational.com December 2015/January 2016 y 13 nt

omm e Private Banker International c EXPERT comments and FORECASTS: APAC

APAC overview: Through the looking glass A flourishing and diverse region providing ample opportunities for wealth managers to capture big shares of wallets, Asia Pacific is still the golden spot that private banks are flocking to. However, the region also presents its unique share of challenges. Industry experts look back on the year gone by, and give their views on the themes and trends that will shape APAC's wealth market in the year to come

A recap of private banking in Asia in 2015: EY

Jan Bellens, Asia-Pacific Banking & Capital Markets Leader, EY, and Jeroen Buwalda, Asia-Pacific Wealth & Asset Management Advisory Leader, EY Asia continues to forge ahead as the bat- tleground for private banks, with statistics indicating that at 4.7 million individuals holding $15.8trn, it superseded North America as the geography with the larg- est pool of HNWIs in 2014. The region is creating wealth at an astonishing pace, with more funds coming into the orbit of professional managers as HNWIs diversify from liquid assets like cash or real estate into equities, fixed income and alternative investments. nology enablement to support the build-out to support evolving investment behavior, The growth was most phenomenal in of digital capabilities and big data analyt- and spending on advanced analytics to China, with a 17.5% rise in nouveau riche ics and to facilitate control and compliance, enable deeper segmentation, multichannel residents to 0.89 million in a corresponding the lack of trained talent (a very real issue in integration, and better lead generation to wealth expansion of 19.3% to $4.5bn in emerging Asia, where relationship manag- expand share of wallet. The drive to raise 2014*. While full-year data for 2015 has ers with financial expertise and investment efficiencies saw progressive institutions not been released, preliminary findings indi- acumen are prized assets), and increasing investing in technologies (such as leveraging cated that exponential growth in the emerg- regulations. digital technology like robo-advisors for ing nations of China, India, Indonesia and Regulators, for instance, continued to automated advisory) and enhancing the Thailand will have propelled Asia's HNWI focus on know-your-customer, anti-mon- overall productivity and competency of population and wealth value to the highest ey laundering, client onboarding and tax client-facing advisors. globally by end-2015. transparency, and this entailed significant changes to internal systems, corporate gov- What Lies Ahead Trends and Implications: 2015 ernance, control frameworks, processes and The future of private client management Even as private bankers battle for a big - procedures that escalated GRC expenses for is resplendent in Asia, but private bankers ger slice of the burgeoning Asian pie, real- the year. with a toehold in the industry cannot afford izing the exciting potential of the region's Traditionally, Asian private banking cli- to sit on their laurels. New players and the wealth hubs remained challenging. Success ents -- the self-made entrepreneurs and first entry of FinTechs, an evolving landscape stories mask a tough reality, particularly generation HNWIs -- have favoured trans- and increasingly demanding clientele mean for players with less than $20bn in AuM actional capital markets products. How- that skills and tactics need to be continu- -- the tipping point below which asset bases ever, as intergenerational wealth transfers ously refined. struggle to generate sufficient revenue to increase, product mix is moving to longer- EY believes that the successful wealth be profitable. Such institutions had to con- term wealth protection and succession plan- managers of tomorrow are the ones who tend with higher operating cost-to-income ning solutions. can articulate strategies that adequately ratios (CIRs) in the 80s-90s (as compared Therefore, faced with higher cost-to-serve emphasise their investment expertise and with tier-one players with CIRs in the low yet increasingly sophisticated and price-sen- technological innovation, understand and 60s), and 2015 saw those with sub-scale sitive customers, top private banks rightly cater to clients' investment objectives and operations withdrawing, downsizing or focused on client service models in 2015. financial goals, attract and retain skilled otherwise attempting to scale with M&As This necessitated building more targeted cli- talent, and swiftly respond to Asia's com- and partnerships. ent engagement models, further expanding petitive environment to engender profit- Increased operating expenses in 2015 from traditional transactional services to able growth. were typically a result of the need for tech- the higher-margin strategic advisory space *Capgemini

14 y December 2015/January 2016 www.privatebankerinternational.com nt

Private Banker International omm e EXPERT comments and FORECASTS: APAC c

Steady expansion and a period of growth and wealth creation that increasing sophistication matches Hong Kong’s development since the early 1990s. of the APAC industry: HSBC Robust growth in both of these regions Bernard Rennell, Regional Head of Global translates to significant wealth creation not Private Banking, Asia-Pacific, Global only from existing businesses, but also from Head of Family Governance and Family rising entrepreneurs who are building their Enterprise Succession, HSBC Private legacies. In a recent HSBC Private Bank Bank study, we found that many entrepreneurs in There is no crystal ball to see into the future. Asia tend to start their businesses earlier in However, we do see a number of trends life. The average age for these entrepreneurs unfolding which will continue to gain There is also a new wave of wealth being to set up their first business was 29, com- momentum next year and beyond. Many generated through rapid economic growth in pared to 34 in the West. They also tend to clients are becoming more sophisticated and parts of Asia. Specifically, we see increasing be focused on their businesses for the long- are looking for equally sophisticated solu- wealth and demand for private banking ser- term. For example, in Mainland China, less tions, and an investment philosophy that vices from the Pearl River Delta region and than a quarter (24%) of entrepreneurs sur- matches their own. They are looking for ASEAN. If the ASEAN region were a nation, veyed intend to exit compared with those in advice over and above just execution. it would have the world’s seventh-largest the UK where over half (55%) intend to sell Sophisticated wealthy families increasingly economy. In fact, the Asian Development their business. realise the benefits of diversification through Bank forecasts the region will grow 4.6% in Asia-Pacific continues to be a strong growth thoughtful asset allocations and are eager for 2015 and 5.1% in 2016. area for private banking, and we expect to see more tailored solutions from their private Similarly, the Pearl River Delta (PRD), the steady expansion and increasing sophistication bank. At HSBC Private Bank, we believe in region in southern China that neighbours of the industry as increasingly wealthy clients viewing clients' wealth holistically and offer- Hong Kong, is responsible for more than a seek both investment management and preser- ing a range of services to suit their increasing- quarter of the country's trade volume and vation solutions. We are an international bank ly complex needs, from investment advisory 10 per cent of its GDP (Statistics Bureau of that is truly at home in this dynamic region, services to intergenerational wealth transfer. Guangdong Province). The PRD continues ready to support our clients.

more discipline and more likely to be brought back home. increased collaborations: Private banks will focus relentlessly on profits. Banks who have difficulty growing EFG Bank revenues will continue to implement cost containment exercises. Private banking is Kong Eng Huat - Chief Executive Officer a service business and the bulk of the cost for Singapore Branch and Southeast Asia, is bankers' compensation. Hence bankers EFG Bank productivity and performance management The world economy is expected to continue will be key to ensure profitability. Although to grow slowly with heightened geo politi- banks will continue to recruit senior bank- cal risks. Interest rates, although expected ers, they will also exit non performing bank- to be increased in the USA, will still be low ers more aggressively, resulting in marginal and divergent across the world. In this envi- growth. ronment, clients will still want to enhance Finally, private banks will be more disci- yields but on a conservative and defensive matic exchange of information (AEOI). The plined in terms of targeting and servicing cli- basis. banks will also have to help clients under- ent and market segments. They will also be Clients will not be keen to take aggressive stand the implications of AEOI on their more open to collaborate with other finan- speculative positions. Hence private banks existing wealth structures and their wealth cial services companies to access and lever- will accelerate the move away from transac- transfer strategies to the next generation. age expertise for their clients. For example, tions and product sales to asset allocation In line with the implementation of the pure play private banks like EFG Bank will and long term investments. Managed solu- AEOI, countries are offering tax amnesties retain an open architecture platform to tions including discretionary and advisory to their citizens. This means that there may source best in class products and work with portfolios will be the focus. In line with the be more repatriation of funds back to the or refer business to other financial services managed solutions approach, banks will home countries. Offshore banking is still companies where it makes sense. strengthen their investment leadership to the core business for most private banks The year 2016 will be another challeng- ensure that they are providing clients with and they will have to find ways to retain ing year but there are opportunities to grow the right asset allocation models and advise. the offshore funds and also consider going the business. Like the fire monkey which is Private banks will have to renew their onshore in markets with huge client bases. the Chinese zodiac sign for the lunar new efforts to refresh clients on the relevance Offshore funds that are kept offshore on year in 2016, we all need to be strong and of their Trust structures in the environment deposits with low yields and not part of a determined and be excellent in setting direc- of common reporting standards and auto- global investment and business strategy are tion and meeting them. www.privatebankerinternational.com December 2015/January 2016 y 15 Private Banker International News digest

M&A Products & Services reached CHF40bn, making it one of fessional Practices across Australia. Julius Baer to buy DBS Private Bank the top 20 largest private banks in The nine-month pilot, which is Commerzbank introduces PE Access to Switzerland. slated to commence in January 2016, Luxembourg business clients The deal, which was entirely will be available to ING Direct Liv- for EUR68m funded with internal resources, will ing Super customers who have asked DBS Private Bank has launched enable SYZ Group to expand its for comprehensive financial advice. Julius Baer has signed an agree- PE Access - a programme through reach to new markets. Under the deal, the cost of the first ment to purchase Commerzbank which the bank introduces direct In addition, the merger will allow FPA adviser consultation will be at International SA Luxembourg investment deals to its ultra-high- Banque SYZ to develop in regions no cost for Living Super customers. (Cisal), a fully-licensed private net-worth clients. including Latin America and Africa. The pilot referral program will bank, which has about EUR3bn PE Access caters to clients worth The integration has created econ- have only a limited number of plac- ($3.26bn) in AUM for approxi- S$50m ($35.4m) and above who omies of scale due to the increase in es for FPA Professional Practices, mately EUR68m. have a higher risk appetite, seek assets under management and the based on geographic requirements. As per the terms of the deal, alternative forms of investment profitability of investments required ING Direct national partnership Julius Baer will pay approxi- and prefer to have direct access to to meet new demands imposed by manager for residential and wealth, mately EUR68m to Commer- the businesses in which they invest. regulatory controls. Tim Hewson, said the partnership zbank, of which EUR25m The programme allows DBS Pri- SYZ Group CEO Eric Syz said: is launching at a time when retire- is assumed to be regulatory vate Bank to flag relevant invest- "The merger has enabled us to ment planning is increasingly on capital. ment deals to interested clients, become a top 20 banking institution. the radar for all Australians. The agreement, which would who can then perform their own I'm convinced that this strengthen- be accretive to adjusted earnings due diligence and proceed to invest ing will be beneficial to our clients Products & Services after closing, will expand Julius directly in the business. and help our company meet the new Baer's position in the Luxem- "Our Asian customers are gener- challenges facing the Swiss financial Chubb to launch bourg financial centre. ating wealth in the areas that they market." additional risk Julius Baer said in a statement do well in and know best. They management services that total restructuring and inte- want to put their money where Products & Services for art collectors gration costs are expected to their mouth is," says DBS head amount to EUR20m. of consumer banking and wealth Intesa Sanpaolo opens Chubb Personal Insurance has Subject to approval by the management Tan Su Shan, add- private banking branch unveiled four new complimentary regulatory authorities, the deal ing that clients in the region tend in London risk management services for art is scheduled to take place in the to invest in businesses within their collectors. summer of 2016. own sectors. Italian lender Intesa Sanpaolo has The new services include disaster Upon completion of the deal, The introduction of PE Access - expanded its presence in UK by planning consultation, renovation Julius Baer's Luxembourg-based which has a minimum deal size of opening a new private banking consultation, household staff train- business will manage total assets S$5m - is hoped to spur the growth branch in London. ing and post-auction review. of around CHF5bn ($5bn) on a of private equity and venture capi- The London branch will be Chubb said that its fine art spe- pro forma basis. tal deals in Asia. According to DBS, headed by Stefano Ferraiolo and cialists will create customised plans Julius Baer CEO Boris Col- it is also the first to be introduced project manager Giuseppe Bonini. to help clients prepare and respond lardi said: "The acquisition of in Singapore by a local bank. The new office will provide a to disasters, including basic salvage a fully-licensed bank in Luxem- range of services including adviso- measures they can take. bourg as well as the Temenos- M&A ry and customised portfolio man- Prior to and during renovation, based booking centre and the agement, insurance and wealth clients will be instructed on how to related IT expertise, provide us Banque Syz completes management products, asset man- protect works from vibration, dust with important strategic flexibil- RBC Swiss subsidiary agement, financing solutions and and debris, among other hazards. ity for our European businesses. merger banking products. The company added that as part "It strengthens the implementa- The bank is planning to hire a of the service, fine art specialists tion of our global banking plat- Swiss private bank Banque SYZ team of approximately 15 profes- will impart training to household form project by aligning Europe has completed its merger with RBC sionals in 2016. employees on the proper protection with our Swiss and Asian plat- Suisse, the Swiss subsidiary of Royal of collections, including securing form strategy, thus reducing the Bank of Canada, renamed Banque Deals items in high-traffic areas, main- execution risk." SYZ Suisse SA. taining environmental controls, Julius Baer region head North- The integration, which has been FPA signs advice cleaning techniques and caring for ern, Central and Eastern Europe, entirely financed with Banque SYZ's referral partnership outdoor sculptures. Gian Rossi said: "We are pleased own capital, comes five months after with ING Direct Fine art specialists will also per- to add significant scale to our the acquisition of the Swiss subsidi- form semi-annual assessments to local franchise in the important ary of Royal Bank of Canada. The Financial Planning Association determine whether insured works international financial centre of With this merger, the AuM of the of Australia (FPA) has partnered are valued in line with recent auc- Luxembourg and look forward wealth management business of with ING Direct to launch a pilot tion prices for the artists and similar to leveraging the business oppor- SYZ Group has doubled to nearly national advice referral program, works, the company said in a state- tunities provided by the full bank CHF22bn ($22bn) and the total which will connect ING Direct Liv- ment. The new services are being licence." assets managed by the Group have ing Super customers with FPA Pro- added to a suite of other services.<

16 y December 2015/January 2016 www.privatebankerinternational.com Private Banker International Survey Country survey: Mexico Country

Foreign banks dominate in Mexico Large foreign private banking players dominate Mexico’s private banking market, catering to a relatively small population of HNWIs. A recent report from WealthInsight forecasts that there will be an increase in HNWI numbers, presenting an opportunity for the wealth management sector to flourish further exico’s GDP was worth $1.283tr n Mexican HNWIs - Distribution by industry (2014) in 2014, representing 2.07% of the world economy. However, despite the 20 Msize of the economy, the wealthy popu- lation in the region is modest. 15 The high net worth individual (HNWI) pop- ulation in Mexico rose by 2% in 2014, reaching approximately 148,000 and holding $751bn 10 in wealth. This follows a 0.9% population rise in 2013. 5 According to WealthInsight, though, the Mexican HNWI population is set to grow 0 e s tics ing ing ied her 11.8% by 2019, reaching 170,500. Their icals tate FMCG Media hcare Ot tments y Goods wealth is forecast to grow by 29.9%, reaching actur eal Es Diversif Healt R $1.02tr. uxur t and Logis Manuf Basic Mater ants and Leisur Even though the wealth in the region seems Energy & Utilitie vices & Inves aur to be on the rise, as does the wealthy popu- anspor Tr uction and EngineerRest Tech & Communications lation, the wealth inequality is staggering. tr ail, Fashion and L Cons t Mexico is home to the world’s second richest inancial Ser Hotels, F Re man, telecommunications tycoon Carlos Slim, who is worth an estimated $77bn by Forbes. Source: WealthInsight According to Oxfam, however, the country’s four richest individuals are worth as much as n Mexican HNWIs - asset allocations (%) n Leading Mexican Private Banks (2014) 2010-2019 (forecast) the 20 million poorest. The wealthy population Bank AuM in the region represent a minute 0.1% of the Asset Class 2010 2014 2019 Domestic total population, which stood at 124m in 2014. Total Alternatives 4.80% 5.00% 5.30% Banamex Private Banking $65.5 bn Private banking landscape Total Real Estate 44.30% 45.20% 42.70% Banorte Private Banking $46.3 bn Mexico’s domestic bank credit is currently Total Cash 7.30% 5.90% 5.30% Corporativo GBM, SAB de CV $9.2 bn at around 16% of GDP – much lower than Total Fixed-Income 13.20% 11.90% 11.40% other emerging economies. In 2004, foreign Total Equities 13.60% 15% 19.00% bank participation accounted for 82% of total FOREIGN Business Interests 16.70% 17.10% 16.30% banking assets in Mexico, turning the Mexi- BBVA Bancomer Private Banking N/A Source: WealthInsight can banking sector to an oligopolistic market. Banco Santander (Mexico) SA N/A A Federal Competition Commission has been Asset allocation Banco Credit Suisse $1.5 tr formed (Cofece by its Spanish acronym) in Real estate was the largest asset class for Mexican order to encourage competition in the bank- HNWIs in 2014, accounting for 45.2% of total Grupo Scotiabank $80.0 bn ing sector. HNWI assets. This was followed by business Grupo Financiero HSBC $32.8 bn The country’s wealth management industry interests with 17.1%, equities with 15%, fixed- Source: WealthInsight is currently dominated by foreign private banks. income with 11.9%, cash and deposits with 5.9% With ample exposure to international markets, and alternatives with 5%. increased marginally during the review period, foreign banks are in a better position to pro- Mexican residential property prices rose by going from 4.8% of total HNWI assets in 2010 to vide more sophisticated and diverse investment 4.9% in 2014 and have been showing an annual 5.0% in 2014. HNWI allocations to commodities options to the Mexican wealthy in comparison rise of 4–5% since 2005. In recent times, the Mex- decreased marginally from 0.9% of total HNWI to their local counterparts. ican real estate market has been dominated by the assets in 2010 to 0.8% over the same period. demand of resort communities. Ever since the WealthInsight expects allocations in commodi- Source of wealth tequila crisis in 1994 – when due to the spike in ties to decline over the forecast period to reach According to the WealthInsight report, FMCG interest rates there were large scale bank defaults 0.7% of total HNWI assets by 2019, as global accounted for the primary source of wealth for – the Mexican property market had shown con- liquidity tightens due to a forecast near-term drop 15.3% of local HNWIs in 2014. Basic Mate- tinuous recovery. in demand for raw materials from China. This rials was the second-largest source of wealth, Aside from real estate - equities, alternatives is expected to cause global commodity prices to with 12.6% in the same year, followed by finan- and business interests grew during the review peri- flatten. cial services and construction and engineering od, at 42%, 33% and 31% respectively between Mexican HNWIs’ liquid assets were valued at with 11.6% and 10.6% respectively, and media 2010 and 2014. $246.0bn as of 2014, representing 32.8% of the with 8.9%. Alternative assets held by Mexican HNWIs total wealth holdings. <

www.privatebankerinternational.com December 2015/January 2016 y 17 Private Banker International Feature geneva roundtable: Overview

Geneva roundtable: Putting the best ideas forward The executive roundtable in Geneva to reveal findings from the white paper Tryst with Transparency: How private banks in Switzerland and Singapore are ensuring best-of-breed service in a demanding regulatory ecosystem led to enlightening discussions, potent questions and valuable insights. Meghna Mukerjee provides an overview of the event

he exclusive executive roundtable, “The banking hosted at the Mandarin Oriental in industry in Swit- Geneva, Switzerland, was aimed at zerland has made select representatives from Switzer- its peace with the T fact that there will land’s banking industry. The afternoon was dedicated to revealing key findings from the be more transpar- whitepaper Tryst with Transparency: How ency, but details private banks in Switzerland and Singa- around cross pore are ensuring best-of-breed service in a border wealth demanding regulatory ecosystem as well as management encouraging discussions and debates around are stifling small the themes that the whitepaper tackles. banks. The big Written by Private Banker International and global banks can sponsored by DTCC, the whitepaper high- rationalise book- lights how both Switzerland and Singapore are ing centres and cli- ensuring client centricity in an era of increased ent segments, and transparency and regulatory pressures, as well find ways around as establishing future best-practices. The pres- offering profitable entation of the key findings was carried out by and effective cross border wealth management fee and networking session. Going back to the Meghna Mukerjee, editor of Private Banker services, but many small banks in Switzerland key highlights from the whitepaper, thereafter, International. have to abide by several rules across different the second half of the event discussed three "Switzerland and Singapore are arguably two countries and they don’t have a physical pres- crucial topics explored in the research: 'Impor- of the world’s most important wealth hubs, ence in all these countries. tance of efficient data management in an era and they personify two distinctive financial “These small banks don’t know how to do of transparency', 'Riding the KYC and AML markets. cross border banking anymore and most wave in stormy regulatory times', and 'The "While Switzerland is the world's largest des- of private banking will remain cross border. value of promoting a culture of innovation'. tination for cross-border wealth management These small banks don’t have ways to set up Talking about the amount of data that with centuries of traditional private banking operations in more countries or service clients private banks need to collect, refresh and experience, Singapore represents a fast-grow- belonging to different nationalities, having report regularly due to recent rise in regula- ing and consistently flourishing wealth hub, different residences. Additionally, they have tory demands, the advent of banks working supported by the rapid rise in regional wealth, restrictions around the products they can offer. together in a collaborative environment was the number of wealthy individuals, and global That is a considerable issue,” said an executive. considered. This approach would particularly popularity. The topic of outsourcing was also widely be useful for the commodity-type, reference “Despite facing their unique industry dynam- discussed by the executives as a function that is data that private banks need for their KYC and ics, our research found that C-level executives gaining popularity among tier 1 private banks reporting functions. at private banks in both Switzerland and Sin- as opposed to being an offering that is only pre- An executive also pointed out that the tech- gapore are grappling with the same concerns,” ferred by tier 2/tier 3 banks. nology department at private banks - particu- said Mukerjee. An important point mentioned was that due larly the data management units - are not The whitepaper presentation was carried to the increased move towards transparency, aligned with the business side, and there out in two sections. The first half discussed outsourcing is getting a boost among private needs to be more interaction between these two key themes from the whitepaper – 'Suc- banks. Historically, a primary hindrance to units so that IT strategy and operational cessfully coping with a multitude of regulatory outsourcing was the several layers around strategy can develop together. demands' and 'Ensuring client centricity while client confidentiality that banks needed to The topic of innovation in private banking meeting reporting obligations'. adhere to, said one executive. was also touched upon. Everyone agreed that After revealing insights from these two According to the participants of the round- innovative thinking needs to become part of segments, the topics were opened up to the table discussion, despite recent reputational the DNA of the private banks for them to executives around the table for further dis- issues, Switzerland remains the premier hub remain relevant and forward thinking. This cussions and scrutiny, which led to insightful of private banking. Its wealth of expertise and was completely in line with the findings observations. quality of service set the country apart from of the research as well. The engaging after- The conversation started with the topic of all the other financial centres across the world. noon ended with a networking and drinks cross border wealth management. These conversations were followed by a cof- reception. <

18 y December 2015/January 2016 www.privatebankerinternational.com Private Banker International geneva roundtable: overview Feature

www.privatebankerinternational.com December 2015/January 2016 y 19 Private Banker International News technology

Let’s talk technology: monthly update

Vontobel launches Raiffeisen acquires 10% ber of core functions, including with a workforce of over 55,000, new decision making of Avaloq’s shares derivatives clearing, investment offering technology solutions and tool to buy structured Swiss banking group, Raiffeisen, book of record (IBOR), fund services covering retail and insti- products is acquiring 10% of Avaloq valuation, investment accounting, tutional (or wholesale) banking, Swiss asset and wealth manager group's shares. The move comes collateral management, and data payments, risk management, asset Vontobel has rolled deritrade as Avaloq, a banking technology management. solutions and insurance. SmartGuide, a customisable company, looks to expand its With approximately $58bn The combined company will decision making tool to buy number of shareholders. assets under management, Blue- have $9.3bn in revenue on a pro- structured products by utilising Raiffeisen has been a partner of Bay required a single system that forma basis. As part of the deal, FIS smart-and crowd data, for its Avaloq since 2007. The two com- enabled a high degree of automa- will repay SunGard's existing debt relationship managers and asset panies are involved in a joint ven- tion and scalability. excluding SunGard's senior notes. managers in Europe and Asia ture named Arizon, which was BlueBay COO Luc Leclercq Commenting on the deal, FIS Pacific. founded in January 2015. The said: "SimCorp Dimension gives president and CEO Gary Norcross With the launch of the new venture sees the Avaloq Banking us strong operational function- said: "This acquisition creates one platform, Vontobel Financial Suite being implemented in all ality and scalability. It is closely of the broadest sets of technology Products makes user activity and Raiffeisen banks across Switzer- integrated with our main busi- assets and market expertise in the market data accessible to deri- land. The latest share purchase ness applications and as such pro- industry, and allows FIS to present trade users. further solidifies the relationship vides a fully integrated solution. new opportunities to our existing The wealth manager said that between the two companies. "It also provides the simplic- client base as well as to financial the new tool will enable custom- Swiss headquartered Avaloq ity and flexibility required by a services markets that we have not ers to compare products against is increasing its shareholder base dynamic business like ours and historically served." a wider context of alternative to develop its capital base. Until enables us to have a timely and options, significantly increasing recently, the company was owned accurate overview of our posi- JHC unveils new wealth their confidence in the decision by employees and management. tions and exposures across our management software making process. Avaloq looks to accelerate the investment activities." The foundation for this new implementation of its growth JHC Systems, a provider of wealth service is the user and market plans. Francisco Fernandez, CEO Barclays opens Rise management solutions, has activity data from Vontobel's of Avaloq, commented: "The innovation hub in launched a new software plat- multi Issuer platform, deritrade strengthening of our successful South Africa form to enable wealth managers MIP, which is custom built for partnership with Raiffeisen is a to offer better investment services yield enhancement products. win-win situation for both com- Barclays Africa has launched a and manage more clients. deritrade SmartGuide com- panies. It will enable the Avaloq physical and virtual global start- Called NEON, the new applica- bines the large user and market group to further accelerate its up community, Rise, in Cape Town, tion will enhance wealth managers' activity data with deritrade tech- growth, while we continue to South Africa, to support fintech productivity by combining client nology and algorithms, process- foster our agility. In addition, we innovation. The bank already management and investment ing it into valuable information will be able to speed up our inno- has Rise sites in London, Man- management in a single solution, for relationship-and asset man- vation in developing sustainable chester, and New York. It has also all driven by advanced workflow agers. solutions in sectors such as Digi- announced plans to open a Rise tools. The platform will also alert Markus Pfister, head of engi- tal Banking and Managed Bank- hub in Tel Aviv. wealth managers to potential neering, responsible for technol- ing Services." The Cape Town site will offer issues and opportunities, allowing ogy at Vontobel Financial Prod- co-working facilities, events space, them to be proactive and make bet- ucts, said: "With deritrade Smart- Bluebay Asset and a bespoke setting for various ter informed decisions on behalf of Guide we combine our state-of- Management goes initiatives including the Barclays investors, the company claims. the-art technology with our inno- live with SimCorp Accelerator programme. JHC head of product Peter Mur- vation power. It's a very challeng- Dimension The bank announced its plans phy said: "NEON's mission is to ing but also extremely interesting to open a Rise hub in Cape Town in enable investment professionals project. This service confirms the London-based fixed income spe- October 2015. to work smarter and achieve more. impressive scalability of our IT cialist Bluebay Asset Manage- We have achieved this by putting architecture." ment has implemented SimCorp FIS wraps up SunGard the wealth manager at the heart of Gerhard Meier, head deritrade Dimension to support its middle acquisition our design, resulting in an incred- MIP with responsibility for the and back office operations across ibly powerful yet highly intuitive distribution of the platform, said: the entire investment book. FIS, a provider of banking and application. "With deritrade SmartGuide we Bluebay will use SimCorp payments technology solutions, "Strong investment performance offer our customers an extremely Dimension to manage its diverse has completed the acquisition of is a key differentiator for our cli- efficient tool and empower client range of asset classes, focused on financial software firm SunGard. ents, and with NEON we are advisors in their most important fixed income and currencies, in a The cash and stock deal, agreed to introducing a suite of investment duty-finding within seconds, out single system. in August 2015, valued SunGard analysis tools to help maximise of the huge universe of possibili- The platform will also allow at $9.1bn, including the assump- investor returns whilst managing ties, the best investment product Bluebay to support increasing tion of SunGard debt. risk and ensuring alignment to for each and every client." volumes of trades across a num- The combined entity will operate mandate." <

20 y December 2015/January 2016 www.privatebankerinternational.com Private Banker International regulation News

The latest in regulation A monthly round-up of the big regulatory announcements that impacted the private banking and wealth management industry across the globe

RBS to pay EUR23.8m to settle tax-evasion requesting the file, 4.5 years later". Also some tax returns filed by parents. allegations in Germany companies were found to be exploiting elderly The ATO added that it will now share the Royal Bank of Scotland (RBS) has agreed to pay customers. information with the nine key overseas tax EUR23.8m ($25.9m) to German prosecutors, to administrations. Some of these offshore advisers settle allegations that the Swiss operations of its Swiss banks Cornèr Banca, Bank Coop reach are located in Jersey, Switzerland, Guernsey, private banking arm, Coutts, helped some clients deal with US to settle tax evasion case British Virgin Islands. dodge taxes. Swiss banks Cornèr Banca and Bank Coop have The moves by the ATO come about as a result The investigation, which was revealed in reached resolutions with the US Department of of data projected from Project Do It, which February 2015, followed the leak of details Justice (DoJ) over the tax evasion cases under provides reduced taxes and penalties for people of 100,000 accounts at HSBC's Swiss banking the department's Swiss bank programme. to voluntarily disclosure offshore income and Cornèr Banca will pay $5.06m and Bank Coop business. The probe covered a 10-year period assets. until 2014. will pay $3.2m in penalties to the US to avoid prosecution over allegations accusing them of German prosecutors investigated current and Isle of Man signs tax information exchange helping Americans evade taxes. former employees of the private bank's Zurich agreement with Spain As per the terms of the non-prosecution and Geneva offices. The Isle of Man has signed a tax information agreements, the banks have agreed to cooperate It is believed that the settlement involves exchange agreement (TIEA) with the Kingdom of in any related criminal or civil proceedings and immunity for any current for former staff. Spain in London. demonstrate implementation of controls to Edinburgh-based RBS agreed to sell Coutts The agreement is part of the Isle of Man prevent misconduct. International to Union Bancaire Privée UBP Government's commitment to meet international The DoJ said that Cornèr maintained and SA (UBP) in March 2015 as part of its strategy standards in tax co-operation and transparency. serviced 898 US related accounts with over to shrink global operations to focus mainly on The pact was signed by José Manuel Gutiérrez $351m in assets since 1 August 2008. consumer and commercial banking in its home Delgado, financial counsellor of the Embassy of Based in Lugano, Switzerland, Cornèr offers market. Spain to the UK, and Eddie Teare MHK, the Isle of a full range of traditional banking services and Man's treasury minister. also specializes in private banking, payment British wealth managers still failing clients, The TIEA extends to the information held by cards and securities trading. says FCA banks, other financial institutions and any Cornèr maintained correspondent accounts at a British wealth managers and private banks have person acting as a representative or trustee and US bank to facilitate certain transactions for its made progress in demonstrating the suitability also includes information about the legal owner clients and also the bank's relationship managers of their clients' portfolios, however, some firms and effective beneficiary of companies. travelled to the US at least 10 times to visit need to make substantial improvements in The agreement allows for the exchange of existing Cornèr clients between 2001 and 2008. client information practices as well as ensuring information for tax purposes upon request The bank also allowed its US clients to enter the portfolios they manage truly reflect the between the two countries. This deal represents into hold-mail agreements in order to hide assets needs and risk appetite of their customers, the significant progress in terms of tax fraud and income from the IRS. It also provided its Financial Conduct Authority (FCA) in its thematic prevention tools and will combat international US clients with the option to request numbered review has found. tax fraud. accounts, including code-name accounts. The review, which covered 150 customer files Bank Coop offered a variety of traditional Swiss from 15 firms, found that 23% of the firms Guernsey Finance to open Hong Kong office banking services including hold mail, numbered indicted a high risk of the client having received in 2016 accounts and travel cash cards to help US clients unsuitable advice and a further 37% of the files Guernsey Finance is set to open a representative in hiding their assets. showed that the wealth manager's advice was office in Hong Kong in the first quarter of 2016. 'unclear'. ATO cracks down on tax evasion using private Guernsey Finance's China representative Wendy Overall a third of firms covered in the review school fee records Weng, who is based in Shanghai, will use the fell substantially short of expected standards. Australian Taxation Office (ATO) has ramped office as a base to conduct further promotional Britain's financial regulator said that it is up its focus on offshore tax evasion by activities on the wider Southeast Asia market. considering enforcement action against five visiting seven adviser firms linked to offshore The Hong Kong office will be used by the firms whose investment portfolios are so out of arrangements and contacting over 100 parents Guernsey Financial Services Commission (GFSC) line with client needs. The regulator added that who paid their children's fees from an overseas to provide regulatory advice to those in the these five firms may be required to undertake bank account. region. significant remediation programmes to raise The ATO said the move forms part of a new wave The new office is centrally located at Three standards. of action to combat offshore evasion which had Pacific Place in Admiralty and will add to FCA found that many firms are still unable to involved the ATO obtaining more than 5,000 Guernsey Finance's China office, which opened demonstrate suitability due to a lack of up-to- client names from wealth management firms and in 2008. date customer information, poor risk profiling or compiling a list of 100 advisers and promoters Guernsey Finance CEO Dominic Wheatley said: failure to record customers' financial positions. operating globally that have a direct link with "The Hong Kong office is an exciting development In one case, it found no indication that one people who may have evaded taxes. not only for Guernsey Finance, but also the file had been updated "between the customer The agency ATO obtained information from Island's financial services sector which has a taking up the service in October 2010 and our about 60 private schools and matched it against growing interest in the region.” < www.privatebankerinternational.com December 2015/January 2016 y 21 YSIS Private Banker International

A N AL liquidity profiles: liveris/harris

Liquidity profiles PBI has teamed up with sister company WealthInsight to provide monthly liquidity events and related profiles that have piqued its analysts' interest. This month we profile: Andrew N. Liveris and Parker Harris

Andrew N. Liveris Profile: Parker Harris Mr. Andrew N. Liveris Full Name: Harris Parker, Co-Founder of Salesforce Com Inc, Known As: Andrew Liveris the US based company operating in the technology sector, has sold 3,771 shares, representing a 0.0006% Gender: Male stake in the company. Age: 61 The shares were sold at a price of $79.85 each for Date of Birth / Year: 05 May 1954 gross proceeds of $0.3m. Citizenship: Nationality | Australia; Domicile | United States of America Home Town: Michigan Languages: English Andrew N. Liveris is president, chairman and chief executive officer (CEO) of The Dow Chemical Company, a global specialty chemical, advanced materials, agrosciences and plastics company based The Dow Chemical Company, a diversi- in Midland, Michigan. He also serves fied chemical company, and E. I. du Pont as director of International Business de Nemours and Company (DuPont), Machines Corp. since 2010. a chemical and life sciences company, entered into a definitive agreement to Mr Liveris is a director of the Special merge their businesses. The merged Olympics, is chairman of the U.S. Business entity will operate under the name, Council, vice chair of the Business DowDuPont. Roundtable, and a member of the U.S. DowDuPont will be dual President's Export Council. He is a member headquartered in Michigan and Dela- ware, the US. Andrew N. Liveris will of the U.S. China Business Council, the be executive chairman and Edward U.S.-India CEO Forum, the Peterson D. Breen will be CEO of DowDuPont. Institute for International Economics and DowDuPont is expected to have a mar- the American Australian Association. He is ket capitalisation of approximately a founder and chairman of the Board of The Profile: $130,000m (MM). Hellenic Initiative and serves on the board Under the terms of the transac- Full Name: Mr. Parker Harris Software, a Java consulting tion, shareholders of Dow Chemical of trustees for The Herbert H. and Grace will receive a fixed exchange ratio of A. Dow Foundation, and the United States Known As: Parker Harris firm and served as its vice 1 share of DowDuPont for each Dow Council for International Business. president (VP) from October Gender: Male Chemical share; and the shareholders Born in 1954, Mr Liveris attended Brisbane 1996 to February 1999. of DuPont will receive a fixed exchange Age: 56 ratio of 1.282 shares of DowDuPont State High School. He holds a bachelor’s Born in 1959, Harris resides for each DuPont share. Dow Chemi- degree in Chemical Engineering from the Year of Birth: 1959 at San Francisco, California, University of Queensland. He is a Chartered cal and DuPont shareholders will each Citizenship: USA United States of America. own approximately 50% of the com- Engineer and a Fellow of The Institute of Harris received a Bachelor of bined company, on a fully diluted basis, Home Town: San Francisco Chemical Engineers. Mr Liveris resides in Arts from Middlebury College. excluding preferred shares. Midland, Michigan with his wife Paula and Languages: English The transaction is expected to deliver Liquidity Event: approximately $3,000 MM in cost three children. Parker Harris co-founded 27-Nov-2015 (announced synergies, with 100% of the run-rate Salesforce.com, Inc. He served cost synergies achieved within the first Liquidity Event date) Harris Parker, 24 months following the closing of 11-Dec-2015 (announced date) The Dow as its executive vice president Co-Founder of Salesforce Com the transaction. Additional upside of Chemical Company and DuPont entered of technology from December Inc, has sold 3,771 shares, approximately $1,000 MM is expect- into a definitive agreement to merge their 7, 2004 to February 2013. He representing a 0.0006% stake ed from growth synergies. businesses. was a co-founder of Left Coast in the company

22 y December 2015/January 2016 www.privatebankerinternational.com S Private Banker International People Moves N EW

People moves This month the departure of the global head of private banking at Standard Chartered, Michael Benz, was announced, to be replaced by Didier von Daeniken, head of private banking, Asia Pacific, Middle East and Africa. Here are all the people moves that recently made news

n People Moves

Name Moved from Moved to Old position New position head of private banking, Asia Pacific, Singapore Didier von Daeniken Barclays Standard Chartered global head of private banking Middle East and Africa Sanlam Private UK Charles Cohen Canaccord Genuity head of private clients senior investment director, investment team Investments

UK Andy Thompson Intrinsic Old Mutual Wealth director of Intrinsic CEO of Intrinsic Financial Services

UK Martin Clubbs Scottish Widows Old Mutual Wealth strategic relationships manager pensions specialist

Rathbones Ashcourt Rowan UK Gaius Jones Investment CEO head of financial planning Financial Planning Management Roubini Global Baring Asset UK David Nowakowski senior director of research director of research, fixed income team Economics Management Diamond Lightsource UK Mike Kleyn Schroders scientific software developer Advanced Beta team Synchrotron senior roles in the global markets UK Duncan Shand BlackRock Schroders Advanced Beta team strategies group

UK Belinda Burgess Northern Trust Northern Trust head of Nordics head of Channel Islands

head of economic research and market Switzerland Mathilde Lemoine HSBC France Edmond de Rothschild group chief economist strategy Nomura Investment Switzerland Matthew Kates Union Bancaire Privee European equities executive director director and senior analyst Bank

Switzerland François Savary Reyl & Cie Prime Partners S.A chief strategist and head of asset services CIO

KBL European Private Luxembourg Rachel Hamen State Street Bank CFO, Continental Europe CFO Bankers

USA Julia O'Donell M&T Bank Wilmington Trust commercial branch manager private banker

State Street Wealth USA Scott Sumner Fiduciary Trust head of relationship management vice president and head of custody Managent director, UHNW Wealth Management USA Jeff Cave Merrill Lynch Eventide Funds head of distribution specialist Putnam Investment USA R. Thomas Manning Boston Private Wealth CIO CEO and president Management Emirates Investment UAE Lyad Quttaineh Credit Suisse head of Middle East team head of private banking Bank

Brazil Andre Esteves BTG Pactual N/A CEO and chairman N/A

head of private banking, Asia Pacific, global head of private banking & wealth Singapore Didier von Daeniken Barclays Standard Chartered Middle East and Africa management Manulife Asset CEO, managing director of business Singapore Wendy Lim BNY Mellon chief executive for Singapore Management development - APAC Mohamed Rafe bin CEO and executive director of CIMB Islamic Malaysia HSBC CIMB Group CEO of HSBC Amanah Malaysia Bhd Mohamed Haneef Bank managing director and head of global asset Hong Kong Ravi Sriskandarajah BMO Financial BMO Financial managing director, Australia management (Asia Pacific) Bank of China Hong Eastspring CEO for Hong Kong Hong Kong King Lun Au CEO Kong Investments

managing director, private banking managing director for private banking and UK Dmitri Rozanov EFG Private Bank EFG Private Bank Eastern Europe and Russia as well as member of the management committee, global market coordinator for CEE, Russia responsible for Central and Eastern Europe

UK David Allen AMP capital Sarasin & Partners co-head of asset management global head of equities www.privatebankerinternational.com December 2015/January 2016 y 23 e

Private Banker International fea tur PBI Middle East Conference and Awards 2016

Private Banking: Middle East Conference PRIVATE BANKER and Awards 2016 – Preview Editor: Meghna Mukerjee Following the continued success of Private Banker International’s (PBI) Email: [email protected] Correspondent: John Schaffer global event, PBI Wealth Summit and Awards, as well as PBI London, Tel: +44 (0)20 7406 6703 PBI is launching a new conference and awards event that is dedicated Email: [email protected] Contributor: Douglas Blakey to the Middle East Email: [email protected] Asia Editor: Xiou Ann Lim Tel: +65 6411 2189 Email: [email protected] he Gulf Cooperation Council (GCC) The market on the whole has very distinctive Group Publisher: Ameet Phadnis Tel: +44 (0)207 406 6561 is a region that is associated with vast characteristics that merit dedicated dis- Email: [email protected] sums of wealth. cussions." Sub-editors: Tom Langfield, Nick Midgley A captive market for the wealth The day conference will be followed by an Subscription Enquiries: Sharon Howley T Awards ceremony and gala dinner, which has management industry, the region has expe- Tel: +44 (0)20 7406 6615 rienced a steady rise in the high net worth been created to recognise the best-in-class Email: [email protected] (HNW) and ultra high net worth (UHNW) institutions and individuals making the big- Director of Events: Ray Giddings Tel: +44 (0) 203 096 2585 population. According to PBI’s sister data- gest impact within the industry. Email: [email protected] base WealthInsight, Saudi Arabia had a "The Awards function will be a great Business Development Manager: Alex Aubrey HNW population of 49,168 in 2014 and the opportunity for the industry partici- Tel: +44 (0)2030962603 UAE had the greatest population of HNWIs pants in the region to come together Email: [email protected] in the region at 50,595. and celebrate achievements, network, Customer Service The GCC has been the most consistent and potentially hone their own institu - Tel: 020 3096 2636 or 020 3096 2622 Email: [email protected] emerging market, recording growth of 16% tion’s strategy as well as competitive As a subscriber, you are automatically entitled or more each year since 2010 and doubling positioning," added Mukerjee. to online access to Private Banker International and a total private wealth to $2.2tr for an over- Nominations are now open for the Private five-year newsletter archive. Please contact customer all CAGR of 17.5%, according to a report Banking: Middle East Awards. services for more information. from Strategy& (GCC Private Banking Award Categories for Private Banking: For more information on accessing Private Banker Study 2015). Middle East Awards 2016: International content online, or to subscribe, please telephone +44 (0)20 7563 5681 or email The Private Banking: Middle East Confer- [email protected] ence and Awards is due to take place on 14 • Best Private Bank in the Middle East for London Office March 2016 in Dubai, which has a large con- Digital Initiatives 71-73 Carter Lane centration of both international and domes- London, EC4V 5EQ tic private banks in the region. • Best Innovation in Digital Initiatives – Tel: +44 (0) 207 936 6650 The conference will bring together pri- Front office Asia Office vate banks, family offices, independent 1 Finlayson Green wealth managers and intermediaries in • Best Innovation in Digital Initiatives – #09-01 active discussions about the key issues facing Middle and back office Singapore, 049246 the wealth management industry in the Mid- Tel: +65 6383 4688 Fax: +65 6383 5433 dle East. • Best Private Bank in the Middle East for Email: [email protected] The conference will ask important ques- Mass Affluent Customers Financial News Publishing, 2012 tions about the future of private banking in Registered in the UK No 6931627 the face of a dramatically changing land- • Best Private Bank in the Middle East for scape. The themes of the day will revolve Next Generation Clients Unauthorised photocopying is illegal. The contents of this publication, either in whole or part, may not be reproduced, around regulatory updates, next generation stored in a data retrieval system or transmitted by any clients, consumer behaviour, latest technol- • Best Private Bank in the Middle East for form or means, electronic, mechanical, photocopying, ogy trends and the rise of private banking Ultra High Net Worth Clients recording or otherwise, without the prior permission of the publishers. innovations. Exclusive research and case studies will also be discussed at the confer- • Best Private Bank in the Middle East for For information on additional copies or syndicated online ence. Islamic Finance access to this newsletter, please contact Customer Services. Meghna Mukerjee, Editor of PBI, says: "Having a conference focusing on the • Best Private Bank in the Middle East wealth management sector in the Middle 2016 – local East comes as a natural progression for PBI as wealth in this region is growing at a fast • Best Private Bank in the Middle East rate. 2016 – foreign "Private banks – both local and global – are offering interesting, edgy, and tailored For more information contact: products and services in the GCC region. [email protected]

24 y December 2015/January 2016 www.privatebankerinternational.com Multichannel digital solutions for  nancial services providers

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