PRIVATE BANKER - Verdict · Search for ‘Private Banker International . Search for @BankerNews – Timetric Financial Services’ R. oyal Bank of Scotland’s (RBS) deci-sion to

The M&A game

PRIVATE BANKERSeptember 2015 Issue 324 www.privatebankerinternational.com

•Interview: BTG Pactual•Interview: Sanctum Wealth Management

•FastgrowingmassaffluentsegmentintheGCC•CountrySurvey:Malaysia

Playing the market right

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ANAL

YSIS

EDITOR’S LETTERPrivate Banker International

Yet another exit from IndiaCONTENTSNEWS

2: NEWS DIGEST

3: PBI GLOBAL WEALTH SUMMIT & AWARDS - PREVIEW

10: REGULATION ROUND-UP

15: PEOPLE MOVES

ANALYSIS

9: WEALTHINSIGHT: EXPERT VIEWS

14: LIQUIDITY PROFILES

FEATURE

4-5: COVER STORY: M&A ACTIVITY CONTINUES UNABATED

The M&A strategy for growth in targeted markets is in full force . In September, as BTG Pactual in Brazil completed its acquisition of Swiss bank BSI to grow its private banking business outside of LatAm, RBS decided to divest its private banking unit in India to newly founded firm, Sanctum Wealth Management. John Schaffer speaks to both BTG Pactual and Sanctum Wealth to find out more about their plans ahead

7: MASS-AFFLUENT SEGMENT IN THE GCC

The mass-affluent segment has been a rising force in the GCC region, increasing at a faster rate than the HNW and UHNW clientele. However, are international private banks operating in the region maximising the prospects of servicing this growing segment?

11: APPEASING THE REGULATORS

Private Banks' increased requirements to meet regulatory and reporting standards since the financial crisis has put an added burden on the industry. John Schaffer speaks with Ed Royan, COO EMEA at AxiomSL

12-13: STUMBLING BLOCKS TO PRIVATE BANKING GROWTH IN APAC

While the fast-paced growth of the wealth management industry in the Asia-Pacific region is continuing unabated, there are still significant challenges for private banks to overcome. Martin Frick, Managing Director of APAC at Temenos, talks to Xiou Ann Lim about how private banks in the region can overcome these obstacles with the right partnerships and technology solutions

COUNTRY SURVEY

6: MALAYSIA

Malaysia’s growing economy provides fertile grounds for a rising HNW population and presents a myriad of opportunities for the private banking industry

COMMENT

16: WITHERS CONSULTING GROUP

Ken McCracken, co-founder and consultant

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Search for @BankerNewsSearch for ‘Private Banker International – Timetric Financial Services’

Royal Bank of Scotland’s (RBS) deci-sion to sell its Indian private banking unit to Sanctum Wealth Management (interview with Sanctum’s founder, Shiv

Gupta, on Pg 4), highlights yet another foreign bank's departure from the country’s wealth management market. In the last couple of years, the likes of UBS, Morgan Stanley, and Goldman Sachs have also moved out.

India’s wealth and the number of wealthy in the country have been on a steep upswing for the past three years. The change of govern-ment in India in 2014 brought with it a wave of market confidence as well. So what makes India such a difficult private banking market for foreign players?

A number of factors seem to be at play here. Regulation is high up on that list, being a top-of-mind concern for private banks across the globe. The regulatory complexities only get amplified in India, with its high entry barriers and a wing-clipped approach to the product universe.

In 2013, the Reserve Bank of India (RBI) made operations tough for foreign banks by proposing a differentiated licensing regime for domestic and foreign lenders, instead of grant-ing a universal banking licence. There is also the maze of different regulators to navigate in the country, from the Securities and Exchange Board of India and the Insurance Regulatory and Development Authority, as well as the individual stock exchanges, alongside the cen-tral bank.

Another potent factor at play is the nuances around how the wealth management business works in India, which is typically local. The key to success in the market is to have a deep-rooted view of the local sentiments and unique client needs in order to gain the level of trust that local banks have achieved.

Players such as Kotak Mahindra Bank, ICICI, HDFC, Axis Bank, to name a few, are tough competition as they are well-regarded domestic banks, with total understanding and knowledge of the market dynamics. These banks are also quickly catching up with global best practices.

Additionally, despite the growing pros-pects in the country, the wealth management industry in India is still quite nascent, which acts in favour of the local banks. The invest-ment products on offer are still relatively basic. While foreign banks such as Barclays, JP Morgan, Credit Suisse, and Merrill Lynch, to name a few, have used their global experi-ence to develop industry-leading, innovative products targeting the HNWI and UHNWI, the challenge they face in India is around how they can make money from assets due to the product universe being fairly vanilla.

Due to cultural reason, Indian family offices are also extremely well placed when it comes to managing the wealth of rich families over generations and continuing those trusted rela-tionships. They pose as added competition for foreign banks trying to gain wallet-share in the region.

The creation of Sanctum Wealth is a testi-mony, in many ways, to the fact that domes-tic players in India continue to have a strong edge over foreign banks. It will be interesting to note how local banks up their ante with new home-grown players emerging and pre-pare themselves to cater for the increasingly demanding, wealthy, ‘global Indian’ clientele. It will also be useful to keep an eye on how the remaining foreign banks make their pres-ence in the country’s private banking market worthwhile.

Meghna [email protected]

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2 y September 2015 www.privatebankerinternational.com

NEW

SDIGEST Private Banker International

M&AJulius Baer transfers Merrill Lynch's IWM business in India

Swiss private banking group Julius Baer has completed the asset transfer of Merrill Lynch's International Wealth Manage-ment business (IWM) in India.This marks the completion of transfer of the IWM businesses in 18 local businesses across sev-eral regions. The IWM integra-tion began early February 2013.

Julius Baer said that the vol-ume of the asset transfer in India corresponds to more than CHF-6bn. With this latest move, the overall client assets transferred as part of the IWM transaction have reached the target range of CHF57bn to 72bn.

Julius Baer Group CEO Boris Collardi said: "We are pleased that we have now completed the transfer of the IWM busi-nesses in all locations globally and have positioned Julius Baer as the international reference in private banking, also in the global Indian community. "The transaction represents a long-term investment into our future and marks another milestone in the expansion of our successful Asian franchise."

Thomas Meier, region head Asia Pacific of Bank Julius Baer, said: "We believe our clients will be served with the same passion but with a stronger focus on the quality of advice and a more comprehensive range of services, building on our best-in-class open product platform."

PRODUCTS AND SERVICESCitibank launches new banking product for high-income clients in IndiaCitibank India has introduced a new retail banking platform, Citi Priority, for high-income cli-ents below 40 years of age.

The new product is designed for those clients who maintain a relationship value of a minimum INR1.5m with the bank.

The product will offer clients wealth management services

with a unique online Finan-cial Planning Tool and Model Portfolio, as well as a Citi Pri-ority World Debit Card with MasterCard.

Kartik Kaushik, country busi-ness manager, global consumer bank, Citibank India, said:"As this emerging base of

wealth grows, the customer demands better control over their finances and time, in order to achieve their future goals. Global travel and lifestyle are also important to this emerging wealth builder and Citi Priority addresses these demands."

India is the fifth country in Asia to offer Citi Priority.

M&AVontobel to acquire Italmobiliare's Finter Bank Zurich

Swiss private bank Vontobel has agreed to acquire Finter Bank Zurich, which is owned by Italmobiliare, to strengthen its wealth management business with Italian clients.

Vontobel said that the pur-chase price amounts to approxi-mately 1.1% of Finter's assets under management plus its book value.

Finter offers private banking services to clients domiciled in Switzerland and Italy and has offices in Zurich and Ticino. It has assets under manage-ment totalling CHF 1.6bn and employs around 65 staff.

Under the deal, Italmobiliare will receive part of the pur-chase price in Vontobel shares. Also, Italmobiliare will support Vontobel's expansion in the Ital-ian market as part of a long-term commitment.

Georg Schubiger, head of Vontobel Private Banking, com-mented: "Finter is a perfect fit with Vontobel's corporate culture and business model. By combining our competencies, we can offer clients domiciled in the Italian-speaking region a more comprehensive and more inter-national range of services, while maintaining the same high qual-ity of advice."Added to this, with our new

presence in Ticino we will be making a further investment in the Swiss financial centre. We are very much looking forward to working together with our new colleagues, and continuing to develop our business in the Italian market with them."

RESULTSMirabaud registers 12% rise in H1 net income

Mirabaud, a Swiss wealth and asset management group, has posted consolidated net income of CHF19.6m for the first half of 2015, up 12% compared to CHF17.5m in the year ago period.

The group's assets under man-agement as at 30 June 2015 stood at CHF31.4bn, down compared to CHF32.7bn at the end of December 2014.

T h e C H F 3 1 . 4 b n A u M includes 3.7bn of double-count-ed assets, comprising CHF8bn in asset management and CHF23.4bn in wealth manage-ment, including CHF1.9bn in institutional deposits.

This decrease in AuM was due to the sharp appreciation of the Swiss franc.

The group's revenue for the first half of 2015 was CHF154.9m, up 5% com-pared with the year ago period including net interest income of CHF7.7m, commission income of CHF120.5m and dealing income of CHF21.9m.

Operating result after oper-ating expenses was CHF25.2m, an increase of 11% from CHF22.7m a year ago.

Mirabaud said that i ts consolidated balance sheet totalled CHF4044.1m, ver-sus CHF4389m at the end of December 2014.

STRATEGYBofA Merrill Lynch opens new office in Rio de Janeiro, Brazil

Bank of America Merrill Lynch (BofA Merrill Lynch) has expanded its presence in Brazil by opening a new office in Rio

de Janeiro's Botafogo district.The new office will be headed

by BofA Merrill's vice chairman Marco Geovanne. The global transaction services sales activi-ties at the new office will be managed by Mauricio Haidar.

The office will collaborate with clients in the city and sur-rounding area to further provide solutions tailored to their unique needs.

PRODUCTS AND SERVICESRBC rolls out new tool for fund managers

RBC Investor & Treasury Servic-es, part of Royal Bank of Cana-da, has rolled out a new tool to enable fund managers to gain insight into their global UCITS fund distribution trends.

The platform, Fund Sales Intelligence (FSI), will allow fund managers to gain a great-er understanding of how their global UCITS fund distribution performance compares to that of the industry benchmarks.

The multifaceted service will also offer access to market and macro-economic data across 24 major UCITS distribution coun-tries and in-depth analysis of proprietary fund sales.

The service will also provide a range of dashboards tailored to meet user's specific preferences as well as details of key asset management indicators.

These indicators include mac-roeconomic data and outlooks of up to five years, evolution of assets under management by asset type and fund vehicle and development of net sales, distri-bution channels, and key com-petitors in each market.

RBC Investor & Treasury Services managing director for Continental Europe & offshore, Sébastien Danloy, said: "Work-ing as a partner to our clients, we want to support effective business planning in this envi-ronment by providing them with in-depth analysis of investor trends, local market conditions and distribution patterns, all of which are vital to the asset man-ager's ability to generate net new sales." <

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PBI GLOBAL WEALTH SUMMIT & AWARDSPrivate Banker International

Private Banker International (PBI) will be hosting its 25th PBI Global Wealth Summit followed by the 10th PBI Global Wealth Awards 2015, on

16th October 2015 at The Fullerton Hotel, in Singapore.

Now in its silver jubilee year, the PBI Glob-al Wealth Summit is the most highly regarded forum where industry leaders come together to discuss the state of the wealth management market across the globe and assess future trends.

The theme of this year’s PBI Global Wealth Summit is ‘The Race for Private Banking Scale’.

As regulators – locally and globally – become more demanding, private banks have to rethink their core strategies to remain com-pliant, profitable and customer focused. The regulatory environment is changing the cul-ture of private banking in several geographies.

Significant M&A deals are creating dra-matic shifts in private banks’ dynamics, while nifty new players are breaking into the wealth management space, challenging the domi-nance of the traditional big banks. The first panel session of the day – the CEO panel – will address the various changing dynamics of the private banking industry globally.

The way wealthy clients interact with their wealth managers has changed significantly as well. Technology has become a strategic cornerstone at a majority of private banks. Several players have undergone digital over-hauls. The rise of automated advisory services has also brought in a new breed of competi-tors for wealth managers to consider. The second panel session at the Summit will be dedicated to the various facets of digital pri-vate banking.

Alongside shifts in customer behaviour, there have been vast changes, over the last few years, in the demographic of the wealthy clients – as younger, self-made millionaires emerge with their specific products and service requirements from private banks. The third panel session of the day will see esteemed panellists talking about wealth crea-tion and the rise of self-made millionaires.

As changes are coming along in the way clients gain and grow their wealth, the invest-

ment preferences for the whole spectrum of wealthy clients are fast evolving. For private banks, this provides opportunities and chal-lenges around keeping up with the varying cli-ent segments, risk appetites, and needs. The panel session – ‘Preparing a gourmet menu for the sophisticated High Net Worth’ – will look into the current trends.

While wealth creation is crucial, wealth preservation and planning is of utmost importance. The Ultra Wealthy, particu-larly, are an elusive lot, and their needs are becoming increasingly complex with time. Private banks, wealth managers, as well as family offices need to have robust capabili-ties in place to successfully nurture these rela-tionships. The last panel session of the PBI Global Wealth Summit will delve into the details around the diverse aspects of serving the ultra-rich client.

A top lineup of private bankers and mar-ket experts will participate in this year’s PBI Global Wealth Summit. Additionally, the day will be interspersed by ‘FutureVision’ ses-sions where three industry leaders will present their own ideas and opinions around where the private banking and wealth management industry is headed.

The evening will be dedicated to the PBI Global Wealth Awards. These awards rec-ognise the best-in-class institutions in wealth management and those individuals who are making their mark in the global private bank-ing and wealth management business.

In total, 30 award titles across four award categories have been drawn up by PBI’s inde-pendent and experienced judging panel. The winners are based on a rigorous selection process, which starts with nominations from industry professionals, including the reader-ship of PBI. Nominees are then shortlisted and submitted to a panel of judges who decide the finalists in each award category, the highly commended institutions, and the overall winner.

Commenting on the shortlist, Meghna Mukerjee, Editor for Private Banker Interna-tional said: "All in all, 2015 was a bumper year of nominations for the PBI Global Wealth Awards. We received robust nomina-tions from across the world, representing dif-

ferent business models. This illustrates the strategic growth of the wealth management industry at a highly competitive time." <

PBI Global Wealth Summit and Awards 2015: PreviewPrivate Banker International (PBI) has shortlisted finalists for the PBI Global Wealth Awards 2015, held in conjunction with the 25th PBI Global Wealth Summit, on 16th October 2015 at The Fullerton Hotel, Singapore. The all-day summit will see five panel sessions and three FutureVision sessions. Winners will be announced during a Gala Dinner in the evening

Shortlisted Nominees

Some of the shortlisted nominees for the PBI Global Wealth Awards 2015 are as follows:

Outstanding Global Private Bank - EuropeBank Julius Baer & Co LtdBNP Paribas Wealth ManagementCiti Private BankKBL European Private BankersSociete Generale Private BankingUnion Bancaire Privee

Outstanding Philanthropy OfferingBNP Paribas Wealth ManagementCoutts (Coutts Institute)Credit Suisse Private Banking (Philanthropy Advi-sory Services)HSBC Private Bank (Private Wealth Solutions)

Outstanding Wealth Planning and Trust ProviderCoutts TrusteesCredit Suisse TrustHSBC Private Wealth SolutionsRBC Wealth ManagementUnion Bancaire Privee

Outstanding Wealth Management Technology Initiative - Front EndContineoCredit Suisse Private BankingHana BankUBS Wealth Management

Most Innovative Digital OfferingBNP Paribas Wealth ManagementCouttsCredit Suisse Private BankingDBS Private BankHana BankICICI Bank LtdUBS Wealth Management

Best Discretionary & Advisory Service OfferingBank Julius Baer & Co LtdBank of SingaporeBMO Private BankingBNP Paribas Wealth ManagementCiti Private BankCredit Suisse Private BankingCrossinvest (Asia) Pte LtdSociete Generale Private Banking

PBI 324.indd 3 30/09/2015 17:08:19


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M&A: SANCTUM WEALTH MANAGEMENT Private Banker International

Royal Bank of Scotland’s (RBS) recent withdrawal from India marks a con-tinuation of the British lender’s exit from the international private bank-

ing market. Earlier in 2015, RBS sold off its Coutts International business to Swiss bank UBP, although RBS’ Indian private banking operation was not part of this deal.

RBS is not the first international bank to exit the Indian private banking market. UBS, Morgan Stanley and Macquarie Group have withdrawn from the country’s wealth man-agement space in the past two years.

In contrast to many of the recent private banking mergers and acquisitions, the Indi-an private banking arm of RBS was taken over from within.

Shiv Gupta has been the managing direc-tor for RBS’ private banking business for over six years and has previously held posi-tions at Coutts in Singapore, BNP Paribas and Citi Private Bank. Gupta has taken over the business via his new company, Sanctum Wealth Management, with the backing of three venture capitalists.

The company is set to acquire all of RBS’ onshore clients and staff, and will take over the management of all private banking assets. Sanctum Wealth expects the transfer of the

RBS business to be completed by March 2016, pending approval from regulators.

Gupta says there was a strong incentive to take over the business due to a favourable economic climate in India. “When RBS announced its strategic deci-

sion to exit the international private banking business, that threw up an opportunity for us, given that we’d been involved in the lead up to this point. It just so happens that it is also taking place at a time when the macroe-conomic outlook, business outlook, and gen-erally the sentiment in the Indian economy is looking quite positive,” Gupta tells PBI.

He adds that RBS had invested in its pri-vate banking business, particularly during 2009/10, where the business had been “re-shaped” by hiring new staff as well as intro-ducing new products and services, resulting in a “solid trajectory of growth”.

Gupta’s confidence in India’s wealth market is not unfounded. According to Capgemini and RBC’s World Wealth Report 2015, India had a high net worth (HNW) population of 198,000 in 2014 and held US$785bn in wealth. This represents the highest growth rates globally for HNWI population (26.3%) and wealth (28.2%).

Gupta says the exit of some international private banks from the Indian market were due to a global strategy, rather than a spe-cific issue with the Indian market.“It seems to me that it’s not always obvious

what the reasons for exits are, or correctly attributed, and in some cases it’s linked to a larger global strategy rather than something that is specific to India.”

He adds that the private banking market is actually rather competitive in the region and although some banks are exiting, oth-ers are taking the opposite strategy. He cites Julius Baer’s acquisition of Merrill Lynch’s international wealth management business including the Indian private banking unit as an example.

Gupta informs that Sanctum is focussed on servicing the needs of HNWIs and UHN-WIs. The entry criteria for Sanctum’s target demographic is INR5 Crore ($750,000), and Gupta says that the typical client will give Sanctum $1m of liquid assets to man-

age, although he adds that these clients have a typical net-worth that is “four or five times that amount at least”.

According to Gupta, current RBS clients can expect a smooth transition over to Sanc-tum “with the addition of a few elements”.“Clients are currently receiving investment

advisory services across all domestically available asset classes. That’s direct equi-ties, fixed income, mutual funds, structured products and alternative investments. "Clients can expect to receive an enhanced

version of all of those at Sanctum. In addi-tion, clients can expect to see a derivatives platform that will be added around the time of launch. Clients should also see greater coverage on alternative investments.”

He suggests that a differentiator for Sanc-tum amidst India’s competitive wealth man-agement market is it’s independence from a global business. "Being an independent domestic wealth manager may allow us a greater degree of flexibility, which will help us be more competitive than certain inter-national wealth managers because they are bound by their global rules, which can act as constraints in the local market place.”

Gupta also suggests that Sanctum is well placed to meet the demand for domestic investments that Indian HNWIs require.“There is an overwhelming concentration

in domestic investments. The international component of the portfolios that we see is actually quite small, relatively speaking. Their perception of the benefits of diversi-fication internationally is different to some-one who’s sitting in a global location.“So far as the domestic market is con-

cerned, we provide coverage of all asset classes. Diversification does happen through domestic products, instruments and to an extent, through international instruments that we can offer locally that are denomi-nated in rupees.”

Gupta adds that Sanctum is open to future acquisitions as well. “We will be looking at all growth options positively and open-mindedly as we go along, whether they are organic or inorganic. If any suitable value creating acquisition opportunities show up, then we will be interested.” <

Rising up from within: Sanctum Wealth acquires RBS’ Indian private banking unitAs Royal Bank of Scotland (RBS) withdraw its private banking services from yet another international region – India – a new player has risen to take the reins. Shiv Gupta, a senior private banker for RBS India, has won the bid to run the unit within his new company, Sanctum Wealth Management. Gupta shares his plans with John Schaffer

n INDIA HNWI POPULATION (THOUSANDS)

0

50

100

150

200

20092010

20122013

2011

000’s

2014

Source: Capgemini/RBC

PBI 324.indd 4 30/09/2015 17:08:19


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M&A: BTG PACTUALPrivate Banker International

BTG Pactual’s recent acquisition of Swiss private bank BSI marked the Brazilian investment bank’s move towards developing its internation-

al focus for its wealth management and private banking business, shifting its atten-tion away from the Latin American market.

The deal was initially signed in July 2014 for a cut down price of CHF1.5bn ($1.7bn) after the long running attempt to sell BSI by Italian insurer Generali. The acquisition, which was completed in Sep-tember 2015 after approval from the Swiss Financial Market Supervisory Authority (FINMA) and the Brazilian Central Bank, creates a group with $186.5bn of assets under management (AuM), with 5,400 employees across 29 countries worldwide.

Steve Jacobs, managing partner at BTG Pactual, has been newly appointed to the role of vice chairman at BSI. He tells PBI that the acquisition has allowed BTG to buy into an already established private banking franchise without having to build the business from the ground up.“It took us four to five years to move on

our strategy to be a player in the global wealth management space, because we couldn’t see the opportunity to get the franchise that we needed to then build on.“We couldn’t do it organically. We need-

ed the right business opportunity to lever-age. That came along with BSI.”

The acquisition of BSI will see all of BTG’s wealth management and private banking activities outside of Latin Ameri-ca being covered under the BSI brand.

Jacobs tells PBI that the BSI business will be “ring-fenced separately” and will be supported by BTG.

He adds that BTG’s wealth management and private banking approach in Latin America will not be affected by the BSI acquisition, as it has already had a strong foothold in the region for the past 30 years.

Although the total staff of the BTG group will grow from 3,500 to 5,400 with the BSI acquisition, the integration process will be “fairly minimal” as Jacobs suggests that the bank will be “run as it was before”. However, he adds that BTG will aim to

grow BSI’s talent pool.“What we’re looking to do is to take the

very talented people who are there at the moment, add to that talent pool and grow and develop that business in a way that the previous shareholder hadn’t done because it was non-core.”

Talent differentiatorThe Swiss private banking and wealth management market certainly presents a highly competitive landscape for any financial institution, with some of the largest international players dominating the market.

Jacobs suggests that recruitment of new, experienced talent is one of BSI’s key differentiators in a bid to attract wealthy clients. Jacobs promotes the recent hires of Reto Kunz as chief risk officer (veteran in risk consulting) and Yves Bonzon as CIO (banking veteran from Pictet).

Although BSI is aiming to attract individ-uals from both the high net worth (HNW) and the ultra high net worth (UHNW) wealth demographics, Jacobs tells PBI that there will be a greater focus on UHNWIs:“We’re going to spend more time on dif-

ferentiating our service in the UHNW space, because we see the greatest oppor-tunity there without neglecting the other.“UHNWIs tend to think globally, tend

to be based globally and want an institu-tional style service. If you can provide that, then there’s a lot of business you can do together.”

Jacobs suggests that another factor that is attractive to the UHNW demographic is that the institution invests alongside the clients.“We have a strong alignment of interest

with our clients; we invest with our clients in any key offerings.”

However, BSI have no marketing budget allocated to attract new clients, rather the institution is reliant on word of mouth publicity.

Diversifying against LATAMThe recent poor performance of the Latin American market has been compounded

by the Chinese stock market crash. Jacobs comments on whether the acquisition is a move to diversify against the struggling Latin American market.“The short answer is no. The long answer

is that naturally this is a diversification to the revenue mix. The strategy wasn’t to go out as a management team and say – okay, let’s diversify our revenues and buy a Swiss bank.“It was much more that we think we

know the global wealth management mar-ket very well and we think we can be a meaningful scale player there.“We diversify our revenues in two ways:

One – geographically, and two – in terms of fee income vs. trading income. But we’ve already done that. Before the BSI deal was completed on 14 September, BTG Group had 50% of its revenues outside of Brazil and 50% of its staff outside of Brazil. With BSI, this just takes it one step further.”

Jacobs also responds to the recent claims that BTG had been downsizing its wealth management team in Chile“As part of any natural efficiency that

every company does – I think we lost three or four people (approximately 13% of its wealth management workforce in the region). I’d hardly call that a downsizing.”

M&A strategyIncreasingly, mergers and acquisitions have become a key strategy in the private banking industry as profit margins get squeezed amidst increasing regulations.

Jacobs comments: “When we announced the BSI deal the market viewed it as slightly contrarian. Not many people, if any, were buying Swiss based private banks. Since then there seems to be a flurry of activity and certainly prices have gone up.“Obviously compliance costs have been

going up and so has the burden of running a business, so critical mass has got higher, and I think that is breeding consolidation which will continue and accelerate in the next few years."

According to Jacobs, BTG would like to be a future participant in that consolidation,

“for the right deal at the right price”. <

BTG Pactual: Buying into the Swiss marketBrazilian investment bank BTG Pactual’s acquisition of Swiss private bank BSI highlights the ongoing M&A trend in the private banking and wealth management industry. However, the BSI brand will be kept secure, furnished with growth plans, and “ringfenced” from any Latin American activity. John Schaffer speaks with Steve Jacobs, managing partner at BTG Pactual, to find out more

PBI 324.indd 5 30/09/2015 17:08:19


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MALAYSIA Private Banker International

The Malaysian economy is the third largest in south-east Asia, following the city states of Singapore and Brunei. The region’s GDP per capita value of

$10,538.06 grew by 6% in 2014, prompted by the region’s growth industrialization and strong tourism sector. The favourable per-formance of the country has prompted the growth of its wealthy population.

The population of Malaysian high net worth individuals (HNWIs) stood at 26,621 in 2014 – a rise of 2.4% following an increase of 1.7% in 2013. The total private wealth of these wealthy individuals amounts to $160.4bn.

WealthInsight forecasts that total HNWI numbers will grow by 14.4% to reach 31,663 in 2019, with their wealth growing by 27.8% to reach $210.7bn.

Malaysia also has a modest population of ultra high net worth individuals (UHNWIs). The number stood at 572 in 2014, of which 14 were billionaires. UHNWs in the region had an average per capita wealth of $176.6m in 2014. During the review period of 2010-2014, the population of UHNWIs grew by 10.6% from 517 to 572. WealthInsight fore-casts that this number will grow by 16% to reach 709 in 2019.

However, although there has been a growth in HNWI numbers, the recent slump in global oil prices has adversely affected some of the country’s wealthiest individuals. Mokhzani Mahathir, an investor in SapuraKencana Petroleum - Malaysia’s largest oil and gas

service provider – had his net worth plummet by half a billion dollars, resulting in his billionaire status being revoked.

Private banking landscapeMalaysia’s private banking industry is still in its early stage of development, hav-ing been established for about 10 years. There are only a few domestic pri-vate banks operating in the country, primarily focusing on Islamic private banking. These include Maybank and Alliance Bank Malay-sia. Domestic private banks in Malaysia are currently facing competition from international private banks also offering Islamic prod-ucts as well as portfolio management services, asset management and philanthropy.

The Domestic private banks are also facing pressure from private banks in Singapore and Hong Kong due to a wider range of services offered by them. Hence, Malaysian HNWIs are becoming more exposed to offshore wealth management, putting the country’s private banks at a disadvantage. A lack of experienced and skilled relationship manag-ers within the domestic market is also a key

challenge for the country’s private

banking industry. International private banking players

are developing their presence in Malaysia in response to the increasing demand from wealthy individuals who are looking for more sophisticated provisions than the local banks can offer.

Foreign private banks have increased their focus on investment advice to wealthy indi-viduals, rather than pushing to sell the prod-ucts. Standard Chartered, for example, has

focused on offering cli-ents with tailored invest-ment advice through its network of investment advisors and relationship managers.

The leading foreign private banks in Malay-sia are Citi Private Bank, UBS, JPMorgan Private Bank, Al Rajhi, HSBC, OCBC Malaysia, Stand-ard Chartered, UOB Malaysia, Deutsche Bank and BNP Paribas <

Malaysia: fertile growth market for the wealthy Malaysia’s growing economy is providing a fertile ground for a rising high net worth population and presents a myriad of opportunities for the wealth management and private banking industry. A recent WealthInsight report looks into the trends of wealthy individuals in Malaysia in a review from 2010-14, and provides forecasts for growth in the period up to 2019

n MALAYSIAN ALLOCATIONS OF HNWI ASSETS (%), 2010–2019

Asset Class 2010 2014 2019

Hedge funds and other 2.60% 2.80% 3.40%

Commodities 1.80% 1.80% 1.50%

Collectables 0.70% 0.80% 0.90%

Real Estate 24.30% 27.30% 24.10%

Cash 15.50% 12.70% 12.20%

Fixed-Income 12.30% 11.00% 10.30%

Equities 24.20% 23.70% 25.80%

Business Interests 18.50% 20.00% 21.90%

Source: WealthInsight

n MALAYSIAN HNWIS – INDUSTRY PERFORMANCE (%), 2010–2014

Sector Percentage of HNWIs, 2014

2010–2014 Growth

Basic materials 13.10% 22.90%

Financial services and investments 12.00% 19.30%

Real estate 9.40% 12.70%

Tech and telecommunications 8.50% 16.70%

Manufacturing 7.60% 25.20%

Retail, fashion and luxury goods 7.60% 13.10%

Diversified 7.20% 9.60%

Others 7.20% 6.30%

Construction and engineering 6.90% 27.90%

Transport and logistics 4.60% 15.80%

Energy and utilities 4.40% 20.90%

FMCG 4.40% 12.60%

Healthcare 2.60% 7.90%

Media 2.30% 15.10%

Hotels, restaurants and leisure 2.10% 10.90%


n MALAYSIAN HNWIS – CITIES, 2014

Rank by HNWI Population Number of HNWIs, 2014 (Thousands)

Percentage of HNWIs, 2014

Kuala Lumpur 14.4 54.20%

Petaling Jaya 1.7 6.40%

Shah Alam 1 3.90%

Johor Bahru 0.6 2.10%

Kuching 0.4 1.60%

Ipoh 0.5 1.80%

Klang 0.5 1.90%


PBI 324.indd 6 30/09/2015 17:08:19


FEAT

URE

MASS AFFLUENT IN THE GCCPrivate Banker International

The Gulf Cooperation Council (GCC) is a region that is associated with vast sums of wealth, mainly derived from oil. Qatar, for example, is the richest

country per capita in the world with a GDP per capita value of $105,091.42.

A captive market for the wealth manage-ment industry, the region has experienced a steady rise in the high net worth (HNW) and ultra high net worth (UHNW) population. According to WealthInsight, Saudi Arabia had a HNW population of 49,168 in 2014 and the UAE had the greatest population of HNWIs in the region at 50,595.

However, the wealth management market is highly competitive in the GCC with 68 pri-vate banks active in the region. As institutions are squeezed to compete for the business of HNWI and UHNWI clients, a segment that is potentially lucrative but has often been under-serviced is the mass affluent clientele.

A report from Strategy& (GCC Private Banking Study 2015) suggests that the mass-affluent segment (individuals with investable assets of over $200,000) has been growing at a faster rate than the HNW and UHNW seg-ments in the GCC, with a compound annual growth rate (CAGR) of 21% in 2014.

The report also suggests that the GCC has been the most consistent emerging market, recording growth of 16% or more each year since 2010 and doubling total private wealth from £1.1tr to $2.2tr for an overall CAGR of 17.5%. The most significant wealth areas are Saudi Arabia and the UAE – together accounting for 74% of the GCC region’s private wealth. Dubai, with its large concen-tration of both international and domestic private banks, has a HNWI population of approximately 30,000, which accounts for 58.4% of the UAE’s HNWI population.

Daniel Diemers, partner at Strategy& and co-author of the recent report, says that one reason for the growth of the mass-affluent population in the GCC has been due to geo-political events, causing an influx of people to the region after the Arab Spring, with the GCC being viewed as a “safe haven”.“If you were a middle manager at a bank or

in an industry corporation in North Africa during Arab Spring – for many, the GCC was

seen as the safe haven where you could move to and continue your career.” he says. The report also suggests that government spend-ing is a driving force in the mass-affluent seg-ment's rise with spending in Oman increasing by 50% from 2010-13, creating 100,000 jobs.

The dominant ‘ultra-wealthy’ focusThe GCC’s private banking landscape is made up of both the large international play-ers, who are primarily focussed on the ultra wealthy segment, and local banks that mainly target the HNWs, the lower-end of the HNW segment, and the mass-affluent section.

The leading GCC domestic banks offer-ing private banking services include Emir-ates NBD Bank, Emirates Investment Bank, Mashreq, Abu Dhabi Commercial Bank, First Gulf Bank and Saudi Arabia’s National Com-mercial Bank, Samba and Riyad Private Bank.

Nigel Sillitoe, CEO at emerging economies-focussed market intelligence business, Insight Discovery, tells PBI that although domestic private banks may wish to target clients with higher wealth levels, they “don’t have nearly as advanced fund platforms or offerings, apart from a few who have a large presence in Switzerland”, and are therefore limited to servicing lower wealth bands.

Foreign banks in the region mostly con-centrate on the ultra wealthy. According to WealthInsight, in 2014 the UHNWI popu-lation in Saudi Arabia was 847, and 658 in the UAE. This results in a highly competitive market for private banks, especially when many UHNWIs spread their assets across multiple lenders.

Switzerland-headquartered Credit Suisse, for instance, has no involvement with servic-ing mass-affluent individuals. Bruno Daher, CEO of Credit Suisse, MENA region, says:“Our clients in the region consist mostly

of UHNW individuals and wealthy families including entrepreneurs, sovereigns, non-resi-dent Indian and Arab expat communities. On the institutional side, we work with leading Family Offices, corporates, financial institu-tions and sovereign wealth funds (SWFs).“UHNW clients are of strategic importance

for Credit Suisse and account for 75% of our business in the Middle East.”

Challenging marketAlthough there has been a significant growth in the mass-affluent segment, international banks’ focus on the upper-end of the wealth segments is unlikely to waiver.

Diemers says that a factor dissuading inter-national players from servicing mass-affluent clients may be customers’ affinity towards branches, as implementing a “bricks and mortar” strategy is expensive. He adds the regulatory environment can be a further chal-lenge as banks have to deal with difficulties of cross-border jurisdictions, with clients includ-ing Arab locals, Indian and western expats.

Diemers suggests that international play-ers could roll-out digital wealth management platforms to strategically target mass-affluent clients, adding, however, that it’s unlikely to happen in the near future unless there’s an invitation from regulators to do so.

“Boutique” entrantThe innate challenges of the GCC region have caused a number of international players to exit the market in recent years, including Pictet, Coutts, Vontobel and Morgan Stanley.

Despite the various exits, London-head-quartered private bank Arbuthnot Latham opened its Dubai office in 2013 and manages the wealth of approximately 120 clients. Paul Millar, MD for international private banking at Arbuthnot Latham, says “the contraction in the market was seen as an opportunity”.

He adds that the exit of British private banks such as Lloyds and Coutts crafted out a niche for Arbuthnot. “The fact that we are still wearing the British flag is a differentiator. There are natural alliances and loyalty in this part of the world towards the UK.”

The boutique British bank’s Dubai client base largely comprises British and European expats, accounting for approximately 60% of it’s clients in the region. However, Millar sug-gests that, more recently, Arbuthnot has been attracting NRI and indigenous local Arab cli-ents within the UHNW wealth band.

Millar adds another differentiator is 'inde-pendence'. “We don’t manufacture our own products. Our investment management team is nimble in its approach. We can go to the best in the market without restrictions.” <

Growing mass-affluent segment, rising opportunities for private banks in the GCCThe mass-affluent segment has been a rising force in the GCC region, increasing at a faster rate than the HNW and UHNW clientele. The number of expats entering the region is a significant driver of this mass-affluent segment. However, are international private banks operating in the region maximising the prospects of servicing this growing segment? John Schaffer finds out

PBI 324.indd 7 30/09/2015 17:08:19


FEAT

URE

COUTTS INDEX Private Banker International

The 2015 edition of the Coutts Index revealed that passion assets have risen by 80% since the beginning of 2005, and have been relatively stable during

the financial crisis experiencing negligible losses between 2007 and 2009.

The 2015 update to the Coutts Index – revealing the performance of 14 of the most popular “passion assets”– however showed only modest results for the index in 2014, with a growth rate of 0.8%. However, the index – now in its second year – encompass-es performances for a diverse range of assets, from fine wine to property for leisure pur-poses, which means that not many assump-tions can be made from the total index figure.

At the top end of performance scale was the growth in classic cars – up 40% in 2014 with a five fold increase in the past nine years. Mohammad Kamal Syed, head of financial advice and investment at Coutts, says passion assets' appeal is that they have

“intrinsic value”. “They are tangible and bring value to their owners that traditional assets cannot. Classic cars are a great exam-

ple of a passion asset that you can get your hands on and experience in a physical way.”

However, the classic car market is the exception rather than the rule for growth in passion investments during 2014. The image has not been quite as rosy when it comes to luxury watches, for instance, where the asset class contracted by 17.6% in 2014. This was not the only loss amongst the 14 passion assets, with fine wine at -9.4%, billionaire residential properties at -2.2%, and tradi-tional Chinese works of art at -13.3%.

Although losses are certainly not favour-able for HNWI investors, this is one area where the wealthy are less motivated by investment performance. Passion assets, in general, are not driven by a speculative approach. Wealthy individuals want to own these assets through desire or for status in an attempt to fully enjoy their wealth.

Syed says that “profit may be the furthest thing from the mind of the investor”, when it comes to passion assets. The fine art mar-ket gained publicity during 2015 with the headline purchase of Picasso’s Les Femmes d’Alger at Christie’s auction house, setting a new record for an art sale at $179.4m. How-ever post-war, contemporary, impressionist and modern art only made modest gains in 2014. Conversely, Old Masters and 19th Century art rose by a healthy 10.7%.

Half of the Coutts Index 2015 has been allocated towards trophy property, which is divided into billionaire residential properties in ten global capitals, and leisure properties in the most desirable leisure destinations.

The properties represent the most sought after homes globally, allowing the wealthy to acquire a “seat at the table”, Stephen Rees, head of real estate advisory at Coutts says.

However, high value property in London – one of the most popular destinations for the world’s wealthy – experienced unremarkable performance in 2014. This was also reflected internationally as “Billionaire” grade prop-erty fell by 2% and “leisure” property grew slightly by 0.1%.

One area where passion investments can cause difficulty for HNW investors is in the hidden costs that are involved. Merely stor-ing assets such as historic pieces of fine art can have high storage and maintenance costs. Coutts has broken them down into transac-tion costs, insurance and depreciation. These can be applied to both luxury property pur-chases and collectables – an issue that is not often apparent with the more conventional asset classes. Although the Coutts Index 2015 indicates that passion assets have per-formed favourably in the long term, added costs need to be taken into consideration if any investment potential is to be realised. <

Coutts Index: Modest growth for “passion” investmentsInvestments in luxury goods and trophy homes are not a new phenomenon for the wealthy. Although the primary incentive for holding these assets is for enjoyment, many industry experts have been assessing their investment potential. Coutts has released the 2015 update to its Index that tracks the performance of 14 such “passion assets”, John Schaffer reports

n PASSION ASSETS PERFORMANCE 2014

Trophy Property

Billionaire properties -2.20%

Leisure properties 0.10%

Fine Art

Impressionist and Modern 1.00%

Old Master and 19th Century 10.70%

Post-War and Contemporary 3.40%

Traditional Chinese works of art -13.30%

Collectibles

Fine Wine -9.40%

Stamps 0.00%

Coins 9.30%

Classic Cars 40.00%

Rugs and Carpets 1.30%

Rare Musical Instruments 5.50%

Precious Items

Jewellery 1.90%

Watches -17.60%

Source: Coutts Index 2015

n INDEX PERFORMANCE 2005 - 2014 (ASSET CLASS VS. $ VALUE)

50

100

150

200

20052006

20072008

20092010

20112012

20132014

Global EquitiesCoutts Index

Global Government Bonds

$

Source: Fathom Consulting

PBI 324.indd 8 30/09/2015 17:08:20


ANAL

YSIS

WEALTHINSIGHTPrivate Banker International

Welcome to the monthly instalment of news and views from PBI’s sister company, WealthInsight – the leading provider of business intelligence for the wealth sector

The rise of luxury brands in emerging-market citiesThe global economy is experiencing an unprecedented shift towards emerging markets, and the luxury industry is no exception.

With significant rise of the middle class, urbanization, women in work and the love of luxury, emerging-market cities have become a key target for luxury brands. Emerging countries alone now account for just over one-third of the global economy, and are forecast to represent 55% of the world’s GDP by 2025, driving more than 75% of global wealth crea-tion, according to McKinsey’s 2014 research. China is expected to be the second-largest market for luxury goods, following the US.

Driven by a strong desire to show off financial stability and success, luxury brands and wealth in the emerging markets have become insepa-rable.

When expanding in emerging cities, luxury brands must take into con-sideration diversity in wealth, culture, types of potential, existing cus-tomers and local regulations in emerging markets. It is therefore impor-tant to design the right to-go market model for each location to protect brand value and experience.

WealthInsight’s study on ‘the Rise of Luxury Goods in Emerging Cities 2019’ looks at the market growth potential of 10 emerging-market cit-ies for luxury brand expansion, as driven by the strong growth of HNWIs and UHNWIs living in cities, urbanization, the emerging middle class, and promising economic outlook. The 10 cities include Shanghai, Mumbai, Mexico City, Istanbul, Bangkok, Tel Aviv, Jakarta, Kuala Lumpur, Ho Chi Minh City and Lagos.

Istanbul, Mumbai and Mexico City are top three emerging-market cities for luxury brands Demand for luxury goods in Istanbul is strongly driven by a number of factors. The city has the highest number of UHNWIs in the 10 selected cities, with 1,110 individuals in 2014, slightly higher than Shanghai with 1,095 in the same year. HNWI population growth in Istanbul is also high, at a forecast-period CAGR of 6.1%, rising from 57,989 individuals in 2015 to 64,804 in 2019.

The city’s urbanisation is one of the highest in Turkey, with 73% of its population living in urban centres, and it being a sought-after location. The city has also experienced strong growth in its female working popula-tion, and tourists from the Middle East who are luxury spenders.

Mumbai, as India’s financial capital, is an attractive location for multi-national enterprise (MNEs) worldwide, and increasingly attracts wealthy expatriates. The city is also home to Bollywood, and has the country’s highest HNWI population, with 97,912 individuals in 2014, which is fore-cast to reach 138,529 in 2019. The city also has a strong growing middle-class population, offering a significant opportunity for luxury brands.

Demand for luxury goods in Mexico City is strongly driven from domes-tic sources such as the emerging middle class and HNWIs living in the city. It had 63,572 HNWIs in 2014, with a strong positive growth prospect at a CAGR of 7.7%, rising from 65,592 individuals in 2015 to 73,301 in 2019.

It is clearly evident that luxury goods are on the rise in the emerging cities, sending a strong message to luxury brands to carefully formulate their expansion strategy, client strategy, and marketing strategy, if to remain competitive.

DrRoselynLekdee,economist,[email protected]

n HNWI POPULATIONS IN EMERGING CITIES, 2010–2019

HNWI Population – Forecast 2015 2016 2017 2018 2019 CAGR 2015–2019

Shanghai 187,512 199,698 213,594 225,858 237,662 9.90%

Mumbai 103,137 110,327 119,638 129,617 138,529 2.80%

Mexico City 65,592 67,128 69,293 71,427 73,301 7.70%

Istanbul 57,989 59,347 61,261 63,148 64,804 6.10%

Bangkok 50,940 52,132 53,814 55,472 56,927 8.00%

Tel Aviv 27,413 27,938 28,626 29,307 29,843 2.80%

Jakarta 22,140 23,695 25,652 27,820 30,070 2.80%

Kuala Lumpur 14,987 15,304 15,786 16,487 17,141 3.40%

Ho Chi Minh City 9,019 9,847 10,871 11,980 13,156 4.70%

Lagos 7,651 8,024 8,455 8,857 9,202 2.10%

Total 546,379 573,440 606,991 639,973 670,635 5.30%

Source: WealthInsight Database

PBI 324.indd 9 30/09/2015 17:08:20


NEW

SREGULATION Private Banker International

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

Swiss private bank Bank La Roche reaches tax evasion deal with US DoJSwitzerland-based Bank La Roche & Co has reached a resolution with the US Department of Justice (DoJ) over the tax evasion cases under the department's Swiss bank programme.

The bank has agreed to pay a penalty of $9.29m to the US to avoid prosecution over allegations that it helped US citizens avoid paying taxes.

Under the terms of the non-prosecution deal, the bank also agreed to cooperate in any related criminal or civil proceedings and demonstrate implementation of controls to prevent misconduct.

The US DoJ in a statement said that La Roche held a total of 201 US related accounts with an aggregate value of $193.9m since 1 August 2008. Among these accounts, 136 were beneficially owned by US clients domiciled in the United States and 36 were held in the names of entities.

The bank provided numbered accounts for 70 US taxpayers, allowed cash and precious metal withdrawals related to the closures of 27 US taxpayers' accounts for $11.6m and also offered travel cash cards to five US taxpayers upon their request.

In February 2015, La Roche has divested its business to Notenstein Privatbank.

As part of the sale, La Roche's employees and clients, except US taxpayers and a few other clients, will move to Notenstein Privatbank. The deal is scheduled to close in October 2015.

Following the sale, La Roche is planning to close its remaining business and relinquish its banking license.

PwC snaps up Ellis Financial SystemsPricewaterhouseCoopers (PwC) has purchased Ellis Financial Systems, a UK-based software company, in a move to support financial services firms so as to meet new tax information reporting rules coming into force.

Following the acquisition, Ellis will be re-named PwC Tax Information Reporting, and will operate from PwC's London office.

The deal will allow PwC clients to meet the new tax information

reporting requirements in the Foreign Account Tax Compliance Act (FATCA) and the OECD's Common Reporting Standard (CRS).

The software company has an established reputation for preparing multi-jurisdictional tax reporting for clients of financial institutions, PwC said.

PwC tax partner Stephen Camm said: "This investment means we can help clients who are looking for accurate and reliable solutions to these significant new tax transparency requirements."We think we can dramatically

reduce the workload for financial institutions. Our software can process huge amounts of customer data in a secure way, for example it can generate up to 10,000 client tax reports per hour, tailored to the rules of different jurisdictions."

Wolters Kluwer rolls out OneSumX AML solution in TaiwanWolters Kluwer Financial Services has rolled out its OneSumX Anti-Money Laundering (AML) solution for the Taiwanese market.

OneSumX is a platform that manages the intersection of governance, finance, risk and compliance, increasing organisational profitability, efficiency and growth.

The fully integrated enterprise-wide AML solution protects a firm against compliance failure, sanctions and fines.

Wolters Kluwer said that the solution also includes all the key areas of AML and terrorist funding risk, automatically generating cash transaction reports and suspicious transaction reports for submission to the regulators.

Additionally, solution provides integration with SWIFT message formats and real-time batch processing integrated with other banking systems. It also delivers advanced due diligence processes with customized rule sets and risk scoring.

OneSumX AML will offer benefits such as end-to-end AML compliance via a single system and improvements in the accuracy of customer acceptance procedures, prioritising high risk customers as well as providing transparency to regulators

and stakeholders on customer activity and risk.

Wolters Kluwer Financial Services market manager Wilson Lai said: "The increasing sophistication of money launderers means that government regulators are demanding a more comprehensive response. OneSumX AML continues to be adopted by leading institutions globally and we are delighted to now also offer this service for Taiwan."

Aberdeen Asset Management wins licence to operate in ChinaBritain's Aberdeen Asset Management has received a business licence from the State Administration of Industry & Commerce in Shanghai to operate in China.

The Wholly Foreign-Owned Enterprise (WFOE) license has been granted to a newly-created Aberdeen subsidiary and will allow the fund manger to establish an office in China under a pilot free-trade scheme.

The company is looking to hire a small team of business development staff and analysts at its office in Shanghai to help foreign investors gain access to Chinese opportunities.

Aberdeen said that it will use the new office to increase its local equities research, which it currently does from Hong Kong.

Additionally, Aberdeen is now planning to apply to be registered with the Asset Management Association of China.

Aberdeen Asset Management CEO Martin Gilbert said: "The work undertaken to obtain a WFOE licence is part of our overall strategy to ensure Aberdeen Asset Management is well placed for the next 10 to 20 years."

Noah forms strategic partnership with UKTINoah Holdings, a wealth management services provider for HNWIs and enterprises in China, has entered into a strategic partnership with UK Trade & Investment (UKTI) to open up opportunities for Chinese HNWIs in investment, philanthropy, cultural exchanges, and education in the UK.

Under the agreement, UKTI will design programs for Noah's clients and ensure that they have wide access to the most suitable opportunities across these areas.

Noah group president Kenny Lam

said: "Globalization for both our client bases is a key trend at UKTI and Noah. At Noah, we wish to ensure that we have the best and most comprehensive service platform for our clients."This partnership is another step towards that goal. The United Kingdom is the number one destination for Chinese investment in Europe."

HM Government MP and secretary of state for business, innovation, and skills Rt Hon Sajid Javid said:

"We very much look forward to this new partnership with Noah as a way of strengthening the links between the UK and China's dynamic entrepreneurs and of introducing more Chinese businesses to the wide range of investment opportunities the UK offers."

Gibraltar FSC inks MoU with British Virgin Islands FSCThe Gibraltar Financial Services Commission (GFSC) has signed a memorandum of understanding (MoU) with the British Virgin Islands Financial Services Commission (BVI FSC) for the supervision of managers of alternative investment funds (AIFMs) on 13 July 2015.

Through this MoU, the two commissions have expressed their willingness to work together in the interest of achieving their aims as regulators.

In addition, the regulators have agreed to support each other to ensure stakeholder and public protection and to bolster market and financial integrity.

The AIFMs will allow BVI regulated funds and Gibraltar regulated funds to do business in both jurisdictions.

The agreement also allows for the exchange of information between the two jurisdictions on issues related to the supervision and oversight of AIFMs, their delegates and depositaries that operate in both jurisdictions.

BVI FSC said that the deal outlines the scope of cooperation and how data will be exchanged between the regulators and details how requests for assistance will be executed, how the information can be used, confidentiality, further sharing of information and provisions for cross-border on-site visits.

PBI 324.indd 10 30/09/2015 17:08:20


AXIOMSLPrivate Banker International FEAT

URE

Regulation has become an integral part of the core issues that banks have to deal with, especially over the past few years as regulators impose

more stringent reporting requirements, fol-lowing the financial crisis.

Ed Royan, COO for EMEA at AxiomSL, says that regulation has been a "huge bur-den", specifically for private banks, over the last five years.

Royan has worked for AxiomSL for the past six years. Also a qualified accountant, Royan previously worked at Royal Bank of Scotland, Allied Irish Bank and Barclays, where he focussed on Basel calculation and financial operating model projects.

AxiomSL is a provider of regulatory reporting and risk management solutions. The company is headquartered in New York and was founded 20 years ago; however the software provider has experienced its most significant growth in the past few years in response to increased demand for regula-tory services. The firm services banks such as Morgan Stanley, Deutshe Bank and ABN AMRO to name a few.

In March 2015, Swiss private bank Julius Baer chose Axiom to automate its group-level and Swiss entity Basel III calculations and reporting, as well as its group-level and Swiss entity statistical reporting. This was an extension of Julius Baer's use of Axi-omSL for financial reporting in Hong Kong and Singapore.

Royan tells PBI how the complexity of banking regulation has developed and how this has lead to AxiomSL's growth:"When I got involved with regulation,

which was over 10 years ago now, Basel II had just come along and everyone was thinking - this is a new challenge, but things will quieten down."But it hasn't quietened down. It's actually

got busier and busier and worse and worse in terms of the burden of new regulations."

Royan adds that the rapidly evolving reg-ulatory environment is not only difficult for banks but the regulators themselves, as they struggle to keep up with the avalanches of changes that they publish.

Private banks often have to satisfy many

regulatory processes as they provide a multitude of services to their demanding wealthy client base, who often hold assets in multiple jurisdictions. This in turn can cause greater challenges in comparison to financial service providers which specialise in one area. Royan tells PBI that the regu-latory environment for private banks is

"slightly unfavourable in some ways"."The challenge for private banks is pretty

much the same as the investment banks. They've still got to do their capital report-ing, credit risk, market risk, statistical reporting, liquidity reporting and liquidity calculations."With private banks, even though they

have lower transaction volumes, their prod-uct sets are still quite large."So they end up falling into all the differ-

ent regulatory requirements anyway. Then if you look at tax, the Common Reporting Standards (CRS) and FATCA - they've got a lot of those individuals on their books who are within the scope of the reporting requirements."

Regulatory requirements are not stand-ardised across jurisdictions which throws another set of challenges into the mix for banks. However, Royan suggests that there is a move towards global "harmonisation":"Countries where demanding regulations

have been in place for some time (such as countries in Europe) are better prepared than other countries and regions that have been catching up fast, such as the Middle East and China."There has been a general move towards

harmonisation across countries and, with more regulatory bodies like the FSB, EIOPA and EBA, rules have become more stand-ardized across regions and the globe."

Technology differentiatorAccording to Royan, AxiomSL's main dif-ferentiator is that the software solution is based upon one core platform, with regu-latory applications being bolted-on to meet the requirements of each financial institu-tion across different jurisdictions."We use the same platform across the

globe. So the same platform that we use

in Europe is the same platform that we use with our American clients and our APAC clients."The platform has been built up in a very

strategic way and can do a lot of things such as ops reporting, tax reporting, financial reporting, regulatory reporting - so its quite dynamic in what it can offer."

Royan adds that AxiomSL's strength comes from a foundation in data manage-ment where the company is used to dealing with large volumes of data."If you look at regulatory reporting, a lot

of it has to do with data."If you haven't got your data right, then

whatever you're calculating and whatever you're reporting isn't going to be right either."

As regulators increase their demands for data, Royan feels that AxiomSL's system will allow banks to be in a "good position" with regulators. However, he adds that if banks have not invested in AxiomSL or an equivalent system, it could cause difficulty:"Some banks are probably using a multi-

tude of systems, querying different source systems and shoehorning their data into reporting templates."

A niche industryAlthough regulation is one of the key topics for banks in the current climate, Royan tells PBI that there is a distinct lack of profes-sional regulation training available, caus-ing experienced individuals in the field to be highly sought after."If you come out of college as a graduate

wanting to go into regulation, there aren't many training courses covering it."Even if you did an accounting degree,

you'll find that no elective exists."You find the amount of people working

in regulation is really narrow and it's the same people at all the different banks ."They become very sought after as there's

obviously a demand for it and its keeping salaries higher around regulation in gen-eral because you can't go off and become a qualified regulator. You don't find some-one who's done a qualified Bank of England course." <

Appeasing the regulatorsIncreasing transparency has been a hot topic across the financial services industry. Private Banks' increased requirements to meet regulatory and reporting standards, since the financial crisis, has put an added burden on the industry. John Schaffer speaks with Ed Royan, COO EMEA at AxiomSL - a regulatory reporting and risk management company - to find out more

PBI 324.indd 11 30/09/2015 17:08:21


FEAT

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TEMENOS Private Banker International

The Asia-Pacific (APAC) region has seen a prolific rise in wealth and the wealthy within the last dec-ade. According to Capgemini and

RBC Wealth Management’s World Wealth Report 2015, APAC has overtaken North America to become the region with the highest population of high-net-worth indi-viduals (HNWIs) in the world.

With a total of 4.69 million HNWIs in APAC, private banks in Hong Kong and Singapore are particularly well-positioned to tap into the opportunities arising out of the emerging markets as well as the grow-ing wealth in APAC. However, there is a lot of room for progress when it comes to how these banks can increase their market share and profitability.

The use of technology plays a crucial role in a private bank’s success in these increas-

ingly demanding times. Managing direc-tor of APAC at banking software vendor Temenos, Martin Frick – who has overseen implementations of IT systems for private banks in both Switzerland and Singapore

– notes that private banks in Singapore are still a little behind those in Switzerland when it comes to leveraging on technology.

“From a client experience perspective, they have no edge as compared to private banks in Europe,” he says – before qualifying that private banks in Singapore are still ahead when measured against those in other mar-kets within APAC.

Frick points out that there are a handful of local banks that offer private banking services in Singapore, the rest being inter-national players. “Naturally, international private banks would address problems in their own country first – with one or two

exceptions,” he says.Another aspect he highlights, regarding

the private banking landscape in APAC, is the tendency for these private banks to be divisions of bigger banks.“It’s a different ball game altogether.

These private banks need to integrate new solutions with the existing system and they also need to leverage on the infrastructure of the retail side,” he adds.

However, Frick observes that there is increasing investment in the fintech space and that the government in Asian markets such as Hong Kong and Singapore are also encouraging the growth of fintech compa-nies. “I think Asia is catching up,” he says.

Frick believes there are five major issues beleaguering private banks in APAC, which can be addressed with the help of technology:

The five stumbling blocks to private banking growth in the Asia-Pacific regionWhile the fast-paced growth of the wealth management industry in the Asia-Pacific region is continuing unabated, there are still significant challenges for private banks to overcome. Martin Frick, Managing Director of APAC at Temenos, talks to Xiou Ann Lim about how private banks in the region can overcome these obstacles with the right partnerships and technology solutions

Escalating client requirementsTechnologically savvy private banking clients are now comparing the digital offer-ings they receive from popular retailers to those of their private banks.

As a result of this, client expectations are running high. Although Frick believes in a hybrid model that incorporates both digital and face-to-face interactions with clients in private banking, he notes that “recent surveys show that the new generation of affluent customers are more digitally inclined and less keen to talk to people – they interact completely differently from the generations before”.

Supporting this is McKinsey & Company’s Digital Banking in Asia: Winning approaches in a new generation of financial services report, which indicates that “about 40 per cent of Asian mass affluent customers now prefer online or mobile banking”. The report also states that about half of Asian mass affluent cus-tomers under 40 years of age prefer digital banking and that the number of digital-banking consumers in Asia, which currently stands at 670 million, is expected to hit 1.7 billion by 2020.

According to Frick, private banks should make it their priority to offer a seamless customer experience across different channels.

“Whether clients are on their mobile phone, computer or tablet – anywhere in the world – they should have a consistent experience.”

In a 2014 survey by Capgemini and RBC Wealth Management, 83 per cent of HNWIs in APAC said that they are far more likely to leave wealth management firms that cannot offer an integrated digital and direct channel experience. To avoid this, Frick believes that client retention can be improved by including interactive capabilities such as online games and tie-ins with social media platforms within the client-facing portal.

Emerging and existing risksApart from growing their piece of the pie, private banks are also concerned about keeping pace with the scale, speed and costs of current and planned regulatory changes. With compliance emerging as an immediate cause for concern, private banks are struggling to keep risk and regulatory reporting ful-filment costs low.

Inevitably, private banks require a technological system that not only meets compliance requirements but also enhances client data security and protection.

Frick believes that having the right system in place will go a long way in enabling private banks to improve efficiency and efficacy in this area. “It can be very tedious to perform compl iance checks manual ly or even semi-manual ly. Systems can automate this – the more auto-mated the process is, the less human intervention is required and this is good because I think human intervention still poses the highest risk to achieving accuracy.”

12

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FEAT

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TEMENOSPrivate Banker International

Differing front- and back-end requirementsIT systems that serve the front- and back-ends have dif-ferent innovation cycles.

Frick explains: “You want to be very agile in bringing fresh and up-to-date elements to your front-end chan-nels, but you also want to be robust and stable on your back-end.”

He notes that with some technology solutions, private banks have to implement the entire suite of solutions – from front- to back-end. However, Frick highlights the

need for a solution that allows for “progressive ren-ovation”, which enables the private bank to maintain its existing IT system in some parts of the business while upgrading the other areas in stages.

Empathising with the fact that most banks have complicated legacy systems

– hence the reluctance to go for “a harsh approach, where they tear out an entire sys-tem and replace it with a new core all at once” – Frick believes that private banks should standardise at the back-end but individualise at the front-end, “which is where they are able to differentiate themselves from their competitors”.

This progressive approach also allows the system to be upgraded based on the individual needs of the business, which can range from regular automatic updates every two months on the front-end to every two years on the back-end.“Our WealthSuite solution has clear differentiation

between channels – front, middle and back. So, you can implement them independently or in a fully integrated manner,” he adds.

Citing client Julius Baer as an example, Frick illustrates how the private bank began implementation of Temenos’ middle-office solution in Switzerland while its back-office solution was first rolled out in Singapore.“Julius Baer had two different needs in two different

locations, so they started at different points. But once they complete the implementation of the back-end soft-ware in Singapore, they plan to bring that to Switzerland and vice versa,” he explains.

The perils of outsourcingEven though some private banks are warming up to the idea of business process outsourcing (BPO), Frick believes it to be a business that is still local in nature. He attributes this to the fact that regulators don’t allow all types of information within banks – client data, for instance – to be processed across borders.

He also feels that bigger banks may not be too interested to outsource because they have the advantage of scale internally. “As long as regulators do not allow for the free processing of information within banks across geographies, I have my doubts that the model will really take off,” he says.

Additionally, Frick cautions that banks may be “held hostage” in some sense – even though there are long-term contracts in place to protect their interests. “After the contract expires, prices will go up for renewals and private banks will have to review if it still makes sense in terms of cost to outsource these processes,” he elaborates.

Frick further points out that if a private bank is unhappy with the service provided by their existing vendor, moving on to a new one will mean having to integrate a whole new system and this will take up a lot of resources.

Hence, it is important that private banks carefully consider their options before deciding if BPO is a worthwhile investment for them. According to Frick, the alternative is for private banks to keep these processes in-house, which allows for better control in the long-term, but may be tedious to manage – making it an option that is best supplemented with the right technology systems in place.

Investment postureFrick observes a couple of trends pertaining to the way private banks in Asia approach IT investment. Firstly, he says, lenders in emerging markets such as Indonesia and the Philippines usually opt to solve an IT problem with the lowest-cost solution. Secondly, private banks across APAC generally address technology issues in isolation – rather than holistically.“It’s even more apparent in Hong Kong. They address each problem separately, which creates a

very inefficient and scattered IT system,” he says, adding that although the system may look nice on the front-end, everything is scattered at the back-end – which can do more harm than good.“This makes it difficult for a banker to get the full view of a client’s portfolio and profile,” he points

out. This also affects the quality of the service as the banker serving the client is unable to understand the full relationship between the client and the bank, Frick adds.

In order to remedy this, Frick recommends a more long-term view in terms of IT investment.“This is one of the differences between Asia and Europe, in terms of IT investment patterns. In

Europe, the IT architecture is driven by the business,” he says. However, he believes that private banks in Asia are largely moving in the right direction because they are mobilising resources – although he reiterates that there is always room for improvement.

3 4

5

“Whether clients are on their mobile phone, computer or tablet – anywhere in the world

– they should have a consistent experience.”Martin Frick, Managing Director of APAC,Temenos

PBI 324.indd 13 30/09/2015 17:08:21


ANAL

YSIS

LIQUIDITY PROFILES: HARFORD / O’SULLIVAN Private Banker International

Liquidity profilesPBI has teamed up with sister company WealthInsight to provide monthly liquidity events that have piqued the interest of its analysts. This month, CEO and Director of Orbitz Worldwide, Barney Harford, and founder and president of Paloma Resources LLC, Christopher N. O’Sullivan

Barney HarfordExpedia, Inc., an online travel company, has acquired Orbitz Worldwide, Inc., an online travel company, for an enterprise value of approximately $1.6 bn. Both com-panies involved in the transaction are based in the US.

Under the terms of the agreement, Expedia paid $12 in cash for each common shares of Orbitz, representing a premium of 29% over the volume weighted average share price for the five trading days up to and including February 11, 2015.

Following the transaction, Orbitz Worldwide stock would not be traded on the New York Stock Exchange (NYSE).

Barney Harford is the chief executive officer of Orbitz

Profile:Barney Harford has served as CEO and Director of Orbitz Worldwide since 2009.

He previously served in a variety of roles at Expedia, Inc. from 1999 to 2006 including as President of Expedia Asia Pacific from 2004 to 2006, leading the company’s entry into China, Japan and Australia. Prior to Expedia, Barney worked in the United Kingdom as a strategy consultant with The Kalchas Group.

Barney serves as a board member of LiquidPlanner, an on-demand project management service that is transforming the way organizations manage complex projects.

Barney is also an active angel investor. His private company investments include Avvo, Glassdoor, LiquidPlanner, Orange Hotel Group (China), PlayFab, RealSelf, Trover, Turnkey and Ycharts.

Barney holds an MBA from INSEAD and a Master of Arts in Natural Sciences from Clare College, Cambridge University.

Barney is originally from the United Kingdom and has spent time living in France and China

Full Name: Mr. Barney Harford

Known As: Barney Harford

Gender: Male

Citizenship: United States of America

Languages: English

Liquidity Event: 17-Sep-2015 (completed date), Expedia Inc has acquired Orbitz Worldwide Inc. for an enterprise value of approximately $1.6 bn.

Profile:Christopher N. O’Sullivan is the founder and president of Paloma Resources LLC, an oil and gas company. In April 2015, Gulfport Energy Corporation agreed to acquire Paloma Partners III LLC, a subsidiary of Paloma Resources. Born in 1960, Mr O’Sullivan completed high school education from St. John's School in 1978, and received a Bachelor of Science degree in Petroleum Engineering from The University of Texas, Austin in 1983.

Mr O’Sullivan served as the managing partner of San Juan Partners, L.L.C. He also served as the president, chairman, director and chief financial officer of ICO Inc.

Mr O’Sullivan is the founder and chairman of Network International, Inc (formerly known as Network Oil Inc), manager of Travis Street Partners LLC, and president of O'Sullivan Oil

& Gas Co Inc. He serves as the chairman of the Holy Rosary Church Capital Campaign.

Full Name: Mr. Christopher N. O’Sullivan

Known As: Christopher O’Sullivan

Citizenship: United States of America

Languages: English

Liquidity Event: 31-Aug-2015 Gulfport Energy Corporation completed the acquisition of Paloma Partners III, LLCfor a purchase consideration of approximately $301.9m

Christopher N. O’SullivanGulfport Energy Corporation, an oil and gas com-pany, completed the acquisition of Paloma Partners III, LLC, also an oil and gas company, for a purchase consideration of approximately US$301.9 million (MM). The company funded the consideration using the proceeds from its equity and debt financing.

Paloma owns approximately 24,000 net non-pro-ducing acres in the dry gas window in the core area, targeting the Utica Shale, located in Belmont and Jefferson counties, Ohio, the US.

Following the transaction, Gulfport's holdings in the Utica Shale leasehold are increased to approxi-mately 212,000 gross (208,000 net) acres.

Scotia Capital (USA) Inc. and Credit Suisse Securi-ties (USA) LLC acted as financial advisors to Gulf-port, while Jefferies LLC acted as financial advisor to Paloma in the transaction. The transaction ena-bles Gulfport to expand its oil and gas asset base in the Utica Shale, Ohio.

PBI 324.indd 14 30/09/2015 17:08:22


PEOPLE MOVESPrivate Banker International NEW

S

People moves

n PEOPLE MOVES

Name Moved from Moved to Old position New position

UK Peter Hobbs deVere Group deVere Group non-executive role/board of directors chairman

UK Julie Barnsley Metro Bank Metro Bank commercial banking director head of private banking

UK James Bashford Morgan Stanley Citi Private BankUK UHNW clients, family offices, investment boutiques

private banker

UK Nick Morris Barclays Citi Private BankUK resident, domiciled, non-domiciled clients

private banker

UK Jonathan Peake Standard Bank Standard Bank head of risk CFO

UKGeorgina Philippou

FCA FCAacting director of enforcement and market oversight

COO

UK Rupert Robinson Schroders Private BankGresham House Asset Management

CEO managing director

UK Daniel LeeAllianz Global Investors

Edmond de Rothschild

sales director (UK discretionary) director and head of UK wholesale

UK Nicola Hortin JP Morgan AxiomSL regulatory reporting Head of EMEA Regulatory Analysis Team

UK Bernard Kalfon UBP Stanhope Capital senior managing director partner

UK Arne Hassel Coutts Barclays head of investment strategyCIO, global investments and solutions (GI&S)

USA John Houlihan Barclays UBS branch manager, Smithtown manager, Long Island, N.Y. complex

USA Brian Green Glenmede Glenmede senior relationship manager director of family wealth

USA Pierre Ramadier BNP Paribas Bank of the Westhead of wealth management for international retail markets

head of wealth management group

USA John Bahnken Bank of the West Citizens Bank Senior Executive Vice President president for wealth management

Hong Kong John WoodsCiti Investment Management

Credit Suisse head of fixed income, Asia Pacific CIO, Asia Pacific

Hong Kong Anita Wong Coutts & Co. Ltd HKRBC Wealth Management

executive director and private banker executive director

Hong Kong Tony Lai EFG Bank Vontobel senior relationship manager senior relationship manager

Singapore Febby AviantoRBC Wealth Management

Falcon Private Bank market head South East Asia head of private banking Asia

Hong Kong/ Singapore.

Alan Harden BNY Mellon IM N/A Asia-Pacific CEO N/A

Singapore Lee Chee PinIsland Asset Management

Nomura CEO wealth management, Asia ex- Japan

Switzerland Larry Hatheway UBS Investment Bank GAM Holding managing director and chief economist group chief economist

Switzerland Pascal Landrove Lombard Odier DeAWMmanaging director and relationship manager

managing director and senior relationship manager for Mexico

New Zealand George Carter AMP CapitalNikko Asset Management

head of distribution managing director

This month, Bernard Kalfon, senior managing director at UBP, moved to Stanhope Capital as partner, and Pierre Ramadier, head of wealth management for international retail markets at BNP Paribas, moved to the Bank of the West as the head of wealth management group. Here are all the people moves that recently made news

PBI 324.indd 15 30/09/2015 17:08:23


COM

MEN

TKEN MCCRACKEN, WITHERS CONSULTING GROUP Private Banker International

Editor: Meghna Mukerjee Email: [email protected]

Tel: +44 (0)20 7406 6713

Correspondent: John SchafferEmail: [email protected]

Tel: +44 (0)20 7406 6703

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Group Publisher: Ameet Phadnis Tel: +44 (0)207 406 6561 Email: [email protected]

Sub-editors: Kev Walsh, Nick Midgley Subscription Enquiries: Sharon HowleyTel: +44 (0) 20 3096 2636Email: [email protected]

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PRIVATE BANKER

WealthInsight provides detailed data and insightful analysis on the world’s High Net Worth Individuals (HNWIs) and wealth sector. With decades of experience providing business information, WealthInsight helps organisations make informed decisions and win new business.

AAt WealthInsight’s core is our proprietary HNWI Database of the world’s wealthiest individuals. Around this database we have built a number of valuable research based products and services that make WealthInsight much more than just a rich contact list.

We work with and provide solutions for: Wealth Managers Private Banks Family Offices Technology Providers Professional Services – Consultants, Accountants, Lawyers, Real Estate Professionals Fund Managers, Asset Managers, Venture Capitalists Non-profits and Educational Institutions

For more information contact us at [email protected]: +44 (0)207 406 6553

Connect to Wealth Through Intelligence

About WealthInsight

IAB 545v2.indd 25 20/02/2015 16:55:07

Family businesses are prolific in tradi-tional sectors like construction and the car industry, but many later diversify into high-tech businesses outside of

their core activities. The reasons for doing this, and the way in which they do this, are often different from other types of investors, like venture capitalists and business angels.

Sometimes families are just pursuing an opportunity to make money and diversify their financial portfolio in the same way as these other investors, but there are often other motivations that are unique to family enterprises.

Some will decide to diversify their enter-prise and change direction to match the skills or interests of their successors. If the next generation has made it clear that they do not want to take over the business started by their ancestors, but the family still wants to remain in business together, they need to diversify.

The catalyst might also be the desire to give the next generation an opportunity to pursue their own business ideas and to learn what it is like to establish and grow a business. These families believe that the best way to learn about business is to run your own.

No doubt financially astute families will consider the financial risks of such a deci-sion, but the family’s investment will be partly because they feel easier about invest-ing in the high-tech ambitions of a relative compared to backing strangers. This atti-tude has potential advantages and disad-vantages.

The main benefit is that the family often invests on favourable terms and are pre-pared to wait longer for the return on invest-ment because they are investing in one of their own. But the downside is that this may inadvertently reduce the drive to generate a return and the family’s patient capital is exploited unfairly.

Then what happens if the investment does not work out as planned? Will the family be forgiving because they had accepted the commercial risk of failure, and because they are less likely to criticise a relative? Or will failure lead to strained family relation-

ships and put more than money at risk if the investment flounders?

The family’s reaction to failure depends on their innate attitude to risk. They may be naturally conservative and concerned about preserving, or not losing, wealth, which is an attitude common among those who have inherited a fortune. For them, high-tech investment in support of a relative’s entre-preneurial ambitions is fraught with the risk that failure may lead to feelings of shame and then to broken relationships.

One family’s approach to high-tech invest-ing was to raise a fund that would support ventures into new technologies that either might be useful to the family’s core business or could benefit from the core business’s other resources, such as access to distribu-tion channels and international trade con-nections.

The fund was the idea of two family mem-bers who wanted independence to do some-thing on their own while remaining useful to the core business. They needed to do this in order to pursue their own aspirations while dealing with their feelings of loyalty and duty to their family of origin.

Family members were invited as individu-als to invest in the fund but always on the same terms as external investors, and it was agreed that the family business itself would not be an investor.

The growth of technology, and the level of competition faced by any ambitious business in our era, makes diversification into alternative businesses a viable option for those who wish to raise their game and remain successful.

As with any business decision, the poten-tial commercial benefits – and risks – of diversification must be weighed up by all stakeholders, and the repercussions consid-ered. What can start as a financially-moti-vated decision can soon morph into one which impacts on far broader relationships and individuals, so needs the full research and planning expected of any start-up busi-ness.

Ken McCracken is the co-founder and con-sultant at Withers Consulting Group

The up-tech movement: Family business diversification

PBI 324.indd 16 30/09/2015 17:08:29

WealthInsight provides detailed data and insightful analysis on the world’s High Net Worth Individuals (HNWIs) and wealth sector. With decades of experience providing business information, WealthInsight helps organisations make informed decisions and win new business.

AAt WealthInsight’s core is our proprietary HNWI Database of the world’s wealthiest individuals. Around this database we have built a number of valuable research based products and services that make WealthInsight much more than just a rich contact list.

We work with and provide solutions for: Wealth Managers Private Banks Family Offices Technology Providers Professional Services – Consultants, Accountants, Lawyers, Real Estate Professionals Fund Managers, Asset Managers, Venture Capitalists Non-profits and Educational Institutions

For more information contact us at [email protected]: +44 (0)207 406 6553

Connect to Wealth Through Intelligence

About WealthInsight

IAB 545v2.indd 25 20/02/2015 16:55:07PBI 324.indd 29 30/09/2015 17:08:31

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To nd out more about us please visit:

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Intelligent Environments is an international provider of innovative mobile and online solutions for nancial services providers. Our mission is to enable our clients to always stay close to their own customers.

We do this through Interact®, our single software platform, which enables secure customer acquisition, engagement, transactions and servicing across any mobile and online channel and device. Today these are predominantly focused on smartphones, PCs and tablets. However Interact® will support other devices, if and when they become mainstream.

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IE RBI final design.indd 1 10/09/2015 10:01:14PBI 324.indd 30 30/09/2015 17:08:32

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PRIVATE BANKER - Verdict · Search for ‘Private Banker International . Search for @BankerNews – Timetric Financial Services’ R. oyal Bank of Scotland’s (RBS) deci-sion to