The Wealth Management Super League

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 management
    • 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