Wil u's NEWS Issue 11 December 1997
private banking
17
STERLING INTEGRITY
•here are other organizarional challenges
ïead. The 'pioneering' early days of IPB -
characterized by an independent-minded staff
- are now giving way to a new phase and a
more cooperative ethos. More joint meetings
to stimulate inter-office connections, and
more 'peer review' sessions, are planned.
There is potentially an inherent tension
between a customers' expectations and the
actual performance levels that a private bank
can actually deliver. These expectations need
Heinz
Zimmer,
Switzerland.
to be managed - and this requires a judicious
selection of the clients we admit to our
portfolios. Similarly, business from certain
regions such as the former Soviet Union must
often be foregone, if only to maintain our
reputation for sterling integrity. The catch
phrase - above all - is 'know your customer.'
KALEIDOSCOPIC MARKET
Personal banking is a kaleidoscopic market.
It is broken down into a wide number of
broadly-defined categories defined by
cultural geography and the source of the
customers' assets. Many American clients,
^fc>r example, tend to have extensive
inherited wealth, to be domestic in their
focus, and to view their private banker as a
'sparring partner' with whom they can
actively engage in the management of their
own assets. Many potential Asian
customers are reluctant to cede control of
their assets to a trust; hence, the operations
in Hong Kong and Singapore have hitherto
acted primarily on an advisory and
brokerage basis. In Europe, meanwhile,
particularly among our existing customers,
there is appreciation for a more 'social'
approach in which the private banker takes
a strong advisory and 'mentoring' role.
IDEAL CLIENTS
Indeed the majority of IPB's current
customers fall into this latter category - and
^^hey are expected to do so for some time to
^Jnme. Their outlooks tend to mesh better
with our own history and culture: they tend
to be entrepreneurs who have built the
businesses they own. Our ideal cliënt
appreciates our solid triple-A status, our
relative conservatism, and the cooperative
nature of our organization as a whole. For
them, strong personal contact with a private
banker - together with the protection and
maximization of their actual assets - are the
essential elements that make up a successful
banking relationship. The word relationship
is key. In order to retain customer loyalty,
IPB is committed to widening the base of
products and services on offer.
VALUE ADDING
The three-fold goal vis a vis individual
customers is to deliver absolute results,
consistent performance, and a demonstrable
level of added value: in short, to mobilize
our knowledge in the customers' service. As
our offerings climb up the scale from pure
banking products to include independent
investment, trust, and estate advice, as well
as insurance and other products and
services, the return both for clients and the
bank will advance as well (see graph). 'This,
of course implies that we can draw on
know-how throughout the international
network,' Van Rijckevorsel remarks.
FEILDING THE TEAM
IPB has meanwhile initiated a phase of
geographic rationalization. Henceforth, for
example, Zurich, which has expanded
rapidly with three acquisitions in recent
years, will take responsibility for IPB in most
of Northern Europe including Germany.
Geneva will look after customers in the
South including Italy and lower France.
Guernsey, now undergoing an important
rationalization, will concentrate on UK and
Anglo-Saxon oriented clients, while
Luxembourg will focus on Dutch, Belgian,
upper French and Cura^ao-based clients. It
has also been designated a centre of
competence for IPB-dedicated information
technology systems; Zurich will assume a
similar role as centre of competence for
investment management coordination.
RECRUITMENT DRIVES
A continuing challenge is that of finding
and keeping skilled staff. 'Our senior
Chris Hayes,
Singapore.
managers have been spending an
inordinate amount of time with
recruitment drives. Looking ahead in
the short-term, we need to adapt our
renumeration structure and introducé
financial incentives for top
performance. Commissions could
become a more important component
of the private bankers' income-mix. But
the limit to the number of candidates
we can recruit and train autonomously
remains.'
CUSTOMER BASE
For this and other reasons, it is evident
that organic growth will be insufficiënt
to fully deliver IPB's medium-term
objective. While the process of targeting
existing customers and further
developing contacts that arise out of our
activities within the RI network as a
whole remains essential, they will not
deliver economies of scale and scope on
their own. 'The answer is clearly a
policy of accelerated acquisitions,' says
van Rijckevorsel. 'We are not talking
about some kind of 'quantum leap'
whereby we spend an inflated sum to
buy a large and well-known player in
our field. Instead, we plan to spend a
modest sum to buy a number of
medium-sized private banks that can not
only augment our holdings but also
bring a customer base that is fully in
keeping with our own.'
Product mix
Return
Banking
Products
Investment
Products
Trust
Estate
Insurance
Others
Private banking
product mix
