Keeping in tune with Private Banking 16 private banking What's NfwS Issue 11 December 1997 International Private Banking (IPB) is a very special kind of business with a unique and exceptionally privileged cliënt base. By definition, it is a low-profile operation, which may partly explain why it is often piaced in a category of its own. However, IPB's overall orientation is very much in tune with that of the bank as a whole. According to the management team, consisting of Thomas van Rijckevorsel, Hanno Riediin (managing board), Chris Hayes, Heinz Zimmer and [ean-Pierre van Keymeulen, IPB is dedicated to the goal of delivering tailored, discrete, and knowledge- driven solutions to a discriminating global cliënt base: perfectly in keeping with the Rabobank International Customer Focus Strategy. Over the past several years, it has developed a dedicated team of cross-border private banking specialists trained to provide highly individualized service to those who are sometimes euphemistically described as "high net worth individuals" - (rich people, that is). Under the leadership Thomas van Rijckevorsel, Utrecht. of Thomas van Rijckevorsel, IPB has reinforced its international office network, hired new private bankers and private banking teams, and pushed through a number of small but important acquisitions on strategie markets such as Switzerland. DOUBLING HOLDINGS Operating in a fast-changing climate, IPB has successfully developed its own, low-key brand of customer intimacy. As a result, it has enjoyed an unusually rapid rate of expansion in recent years - one that is not only well ahead of its own budget targets but also substantially above the rate of market growth as a whole. In 1995 - as part of our overall international private banking strategy - IPB was committed to doubling its holdings from NLG 4.43 billion to 9.96 billion - and also to achieving an average annual return on (customers') assets under management (AuM) of 1 percent - by 1999. In the event, it met both of these goals in half the allotted time, and AuM presently stands at NLG 11 billion. BABY BOOMERS IPB has recently revised its strategy. Its aim is to stay abreast of developments and become still more meaningful within the context of the Rabobank International network as a whole. Private banking has long been an attractive, fee-generating business, and one that requires a relatively low capital allocation, but the market is evolving fast. The climate is more competitive. It is marked by the entry of new, globally- orientated players like non-financial institutions, full-service brokers, investment groups, portfolio managers and even large accounting and law firms. In the meantime, demographic developments are giving rise to a sizable pool of newly-wealthy baby boomers. Regulatory liberalization and the phenomenal performance delivered by the equity market in recent years, have combined to produce a demand for multi- currency, multi-market investments. There is a new willingness among clients to assume somewhat greater levels of risk. Above all, customers are demanding ever-higher levels of performance and service. DECIDING FACTORS According to the 1996/97 European private banking study recently released by Price Waterhouse, service quality and a personal relationship are expected to remain the two most decisive factors in whether a customer chooses (and remains) with any given private bank. However, investment performance will become dramatically more important in years to come. To respond to these changes and stay competitive, the bank needs economies of scale and scope. The IPB unit has thus adopted a new set of medium-term benchmarks, as well as a somewhat modified set of priorities that are consistent with our Customer Focus Strategy, aimed at achieving this goal. BEST INTENTIONS IPB has committed itself to once again doubling its holdings to NLG 21 billion over the coming four years. It will also sustain or exceed existing rates of average annual return on AuM, deliver a return on equity of at least 15 percent, maintain a minimum income/expense ratio of 1,25, and (finally) contribute between NLG 60- 70 million to Rabobank Nederland's annual pre-tax profit. 'We've clearly expressed our intent to become a top private bank that is devoted to working with customers to achieve mutually profitable relationships,' says Van Rijckevorsel. 'What this means in practice is that, although we've done reasonably well so far, we need to further expand if we want to compete on a global scale in the kind of cross-border, offshore IPB business that we've targeted. We're entering a new phase that will involve both building our business as well as buying new customers, and all the time maintaining our "first class" standing on the market.' CREDIBLE NETWORK As far as building the business is concerned, it is clear that our Corporate and Investment Banking network can assist in augmenting the IPB customer base. Many a grain merchant and shipper in such growing markets as Asia and Latin America can also be an ideal cliënt for Rabo IPB. To this end, IPB is anxious to systematize the process whereby prospects are introduced by our account managers to private bankers. A referral fee - 20 percent of the annual gross income made by IPB f on such customers - will be transferred to the budget of the office and/or account managers concerned. But Van Rijckevorsel is adamant about having a credible global network in place. There is no point in capturing new global customers unless you can also serve them in a superlative way. 'You only get one chance these days. You have to offer an impressive demonstration of your capabilities right from the start. We still have work to do in this respect - as far as our global expansion is concerned.' Jean-Pierre van Keymeulen, Luxemburg.

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blad 'What's news' (EN) | 1997 | | pagina 16