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The Wealth Management Super League

Published by: Datamonitor

Published: Aug. 28, 2007 - 36 Pages


Table of Contents


DATAMONITOR VIEW
CATALYST
SUMMARY
Market Background
The wealth management competitive landscape has become diversified and more aggressive in recent years
Alternative investments and technological advances have opened up new opportunities and challenges for the biggest wealth managers
New markets have opened up, driving both geographic diversification and competition for a crucial foothold
Mergers and acquisitions continue to force wealth managers to define themselves either as super league contenders or niche boutiques
Global players have extended their reach and scaled up even further in recent years
European regulation has opened up the possibility of a European single market in the foreseeable future
The battle for a foothold in emerging markets encourages massive investment and rapid growth
Strong market performance continues to drive expansion
UBS remains the clear leader of the wealth management super league
Three wealth managers have pulled away from the pack to form their own ultra super league in terms of AUM
Wealth manager Case Studies
The top five wealth managers are reviewed across a range of criteria
In a financial performance comparison, the larger scale operations generate larger profits, but are not the best performers in terms of pure efficiency
HSBC Private Bank has seen the greatest assets under management compound annual growth since 2003
UBS Wealth Management saw AuM grow most between 2005 and 2006 in absolute terms
An analysis of revenues, costs and profits reveals that the smallest wealth manager in the top five manages the best cost-income ratio
UBS: Still leading the way
UBS appears unstoppable in its plans to dominate wealth management globally
UBS Wealth Management has an aggressive attitude towards growth but also maintains organic expansion
The bank is adept at leveraging the whole banking network to achieve its aims
Although recently the bank's home market has been less of a priority, it refocused on the Swiss market in 2006
The Asian market is key to UBS Wealth Management, and it is a leader and innovator in the region
Credit Suisse: Making little headway in the battle with UBS
Organic growth is the corporate focus although a strong capital base means acquisitions are also possible
Realignment of business focus is moving more of Credit Suisse Private Banking's operations to emerging markets
Integration and leveraging cross business resources is central to Credit Suisse's new strategic direction
Cutting edge product development has remained high on Credit Suisse Private Banking's agenda
Staff retention has been a significant problem for Credit Suisse Private Banking in recent years
Goldman Sachs: The dark horse of wealth management
Goldman Sachs' rise in the wealth management world has been fast but generally well designed
The Goldman Sachs brand has helped to give the private client business a strong head start
Being a new business means the bank has been able to construct a private client service that best fits its needs and those of its target client base
An aggressive approach to global expansion is underlined by large scale investment in emerging markets
A sophisticated product range has been necessary to attract the top tier of wealthy individuals
Smith Barney: Leveraging Citigroup's global strength
Increasingly close ties to Citigroup have helped Smith Barney to prosper
Smith Barney is evolving in line with trends in the wealth management market
Ongoing changes have significantly affected Smith Barney and are likely to affect the bank going forward
In some cases upheaval has been costly for the firm
HSBC: Becoming the world's local private bank
HSBC Private Bank aspires to follow in its parent bank's global footsteps
Joined-up banking offers tangible benefits to HSBC Private Bank through the parent network
The development of market leading products is a key strategy for organic growth
The pursuit of more specific client segments within developed markets ensures ongoing innovation and growth
Data tables
Implications for the industry
Measures of financial progress can indicate which private banks are implementing successful strategies
The top players in the super league are all developing their presence in emerging markets
Major changes can bring large rewards but also present challenges
In future, the super league is likely to continue to pursue market entry opportunities as the key driver of global growth
APPENDIX
Note
Definitions
UBS Wealth Management
Credit Suisse Private Banking
Goldman Sachs Investment Management
Smith Barney Private Client Group
HSBC Private Banking Holdings
Methodology
Further reading
Ask the analyst
Datamonitor consulting
Disclaimer
List of Tables
Table 1: Top 10 global private banks by worldwide assets under managemAssets under management growth
Table 2: Assets under management growth and current size for top ten wealth managers by AuM
Table 3: Operating revenues for the five biggest global wealth managers by AuM, 2002-2006 (EURm)
Table 4: Operating expenses for the five biggest global wealth managers by AuM, 2002-2006 (EURm)
Table 5: Operating profits for the five biggest global wealth managers by AuM, 2002-2006 (EURm)
Table 6: Cost-income ratio comparison 2004 and 2006
List of Figures
Figure 1: Assets under management growth and current size for top ten wealth managers by AuM
Figure 2: Operating revenues for the five biggest global wealth managers by AuM, 2002-2006
Figure 3: Operating expenses for the five biggest global wealth managers by AuM, 2002-2006
Figure 4: Operating profits for the five biggest global wealth managers by AuM, 2002-2006
Figure 5: Cost-income ratio comparison 2004 and 2006

Abstract

Introduction

This Strategic Insight Report assesses the issue of organizational scale in the private wealth management market. It looks at the forces behind the emergence of large scale international private banks and compares and contrasts the strategic development of five of the world's largest players. It profiles the key players and discusses their current strategies and progress.

Scope

Covers the top wealth managers globally, taking into consideration their global assets under management and their strategic initiatives globally Includes key financial data relating to the top wealth managers, such as assets under management, costs and income, and comparing growth over time Discusses major strategic issues relating to the industry in the context of the leading wealth managers at present

Highlights

Political and economic liberalization means that the markets available for entry at present is larger than ever before, forcing the top tier of wealth managers to expand to maintain their global status. Rapid development of the BRIC economies, creating a significant class of wealthy individuals, makes these markets highly attractive. UBS Wealth Management continues to be the clear leader among global wealth managers in terms of assets under management, with over double the AuM of its nearest rival, Credit Suisse Private Banking. With EUR880.8bn under management, UBS WM alone holds 34% of the total value of assets under management for the entire top ten in the super league. Some of the top players in the wealth management super league are undergoing or have recently experienced major changes in their organization, either as part of wider transformations of the parent bank or in the private banking unit. In some ways, significant overhauls that affect the private bank can be beneficial but also present challenges.

Reasons to Purchase

Provides detailed insight into the financial and strategic performance of 5 key competitors Outlines the emerging competitive landscape, allowing wealth managers to identify their place in the increasingly complex competitive picture Offers a future focused view of key lessons to be learnt from the successes and failings of the big players

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