Wealth Management in Central and Eastern Europe 2005

Table of Contents

• CHAPTER 1 EXECUTIVE SUMMARY
  • Economic factors
    • Hungary
    • Poland
    • The Czech Republic
  • Market context
  • Competitive developments
    • Hungary
    • Poland
    • The Czech Republic
  • Client trends and needs
    • Hungary
    • Poland
    • The Czech Republic
  • Future market developments
    • Hungary
    • Poland
    • The Czech Republic
• CHAPTER 2 INTRODUCTION
  • What is this report about?
  • Who is the target reader?
  • How to use this report
• CHAPTER 3 ECONOMIC FACTORS
  • Introduction
  • Economies in the examined CEE states have witnessed healthy growth following the EU accession
    • Overview of the current economic situation in each of the examined CEE states
      • Hungary - the lack of fiscal discipline may threaten the planned introduction of the Euro in 2010
      • Poland - political differences may delay the introduction of the Euro to 2012
      • The Czech Republic - record low interest rates are boosting credit expansion
    • GDP growth in all three countries has been strong since 2002
    • Stock markets have recovered well following the declines of 2001
  • On average, CEE citizens save more and enjoy more equal distribution of wealth than people in Western European countries
    • National savings ratios are relatively high in all three countries
    • According to the Gini Index, the distribution of wealth in the Czech Republic is more equal than in other CEE states
  • Data tables
• CHAPTER 4 MARKET CONTEXT
  • Introduction
  • Wealthy customers account for a tiny proportion of adult population in the examined Central & Eastern European markets
    • In terms of onshore liquid assets, Poland has the most potential
  • The Polish HNW market may be the most populous, but the Hungarian HNW market is showing the most growth potential
    • The number of HNWs in Hungary and the value of their assets has registered strong and consistent growth since 1999
    • The number of HNW customers in Poland and the value of their assets have experienced a slow down in growth levels in recent years
    • The number of HNWs in the Czech Republic has grown more modestly
  • Mass affluent by country
    • The number of mass affluent customers in Hungary and the value of their assets has grown strongly since 2002
    • Polish mass affluents and their assets suffered during 2001-2002 period but recovered strongly in recent years
    • The recent growth of mass affluent segment in the Czech Republic has been more subdued than in the neighboring CEE countries
  • Polish investors are ahead of their neighbours where the value of their investments is concerned
    • The vast majority of Hungarian investors prefer retail deposits to other investment products
    • Polish retail investors have much more diversified portfolios than their CEE neighbors
    • Retail investors in the Czech Republic remain the most conservative among their neighbors
  • Data tables
    • HNW tables
    • Mass affluent tables
    • Retail savings and investments data tables
• CHAPTER 5 COMPETITIVE DEVELOPMENTS
  • Introduction
  • The CEE banking landscape is dominated by strategic foreign investors
    • HVB/UniCredit merger will drastically transform the CEE banking landscape
      • The biggest effect of the merger will be felt in the Polish banking market
  • Hungary - a recognition of the market's growth potential has resulted in fierce competition for private banking clients
    • A period of further consolidation is likely for the Hungarian banking sector
    • The private banking landscape is dominated by subsidiaries of international banks
      • Raiffeisen Bank is the undisputed private banking leader
      • The Hungarian private banking market is becoming increasingly crowded
  • Poland - already hotly contested wealth management sector faces further consolidation
    • Recent consolidation has led to domination by foreign competitors
    • Relative underdevelopment of the private banking sector offers considerable future potential
      • Private banking pioneer, BRE Bank, is still the strongest competitor in the sector
  • The Czech Republic - private banking client segment is considered to be the most attractive in the CEE
    • Foreign competitors enjoy a position of complete domination in the Czech banking market
    • Established private banking subsidiaries are being challenged by specialized niche players
      • Foreign competitors also dominate the domestic private banking sector
• CHAPTER 6 CLIENT TRENDS AND NEEDS
  • Introduction
  • Hungary - conservative clients and bureaucracy inhibit the development of potential new private banking products
    • Private banks' rather unimaginative offerings reflect conservative mentality of Hungarian investors
      • International investment products are expected to become more popular
      • Offshore services have not yet taken off
    • 'Private banking' services are often misrepresented
      • Few players specifically target higher mass-affluent segment
    • High yields and low costs have attracted foreign competitors to the domestic investment fund sector
      • High fees may inhibit foreign players' success following the introduction of the Euro
    • Customer segmentation - art investors represent a promising private banking client niche in Hungary
      • Other customer niches are also attracting attention....
  • Poland - innovative private banking product development is slowly gathering momentum
    • The nature of Polish banking clients mean that private banking is primarily oriented towards the active management of funds
      • The majority of services offered to wealthy Poles do not fall under the remit of 'private banking' services
      • Very few providers offer 'true' private banking services to their wealthy clients
      • The traditional private banking market place is dominated by foreign players
    • Increasing sophistication of clients is benefiting new private banking product and services development
      • Asset management products are gathering momentum
      • A recent new tax legislation has sparked off the development of tax-efficient investment vehicles
      • Hedge funds have also made an appearance
      • Financial advisory services offering is also expanding
    • Customer acquisition - targeting the attractive self-employed segment is proving challenging
  • The Czech Republic - the lack of demand from cautious investors has hindered the development of 'true' private banking services
    • The majority of wealthy Czechs are largely content with traditional banking products
    • Few Czech clients are able to take advantage of 'true' private banking services
      • The threshold levels for various private banking offerings vary from EUR50,000 to EUR0.5m
      • Many competitors supplement their private basic banking offering by additional non-financial services
    • 'True' private banking product innovation developments are somewhat thin on the ground
    • Customer acquisition - regional expansion looks like the way forward
• CHAPTER 7 FUTURE MARKET DEVELOPMENTS
  • Introduction
  • Hungary - strong economic performance will stimulate the growth of mass affluent and high net worth wealth
    • Hungary's macro-economic drivers are forecast to perform solidly over the next five years
    • Hungarian mass affluents in the lowest asset band will continue to dominate the market in terms of the number of individuals
    • The richest high net worths in Hungary will account for the biggest proportion of total onshore liquid wealth by 2009
  • Poland
    • Poland's real GDP will experience slower annual growth but other macro-economic indicators will remain strong
    • Mass affluents with EUR150K-EUR300K in onshore liquid assets represents the customer group with most potential
    • Polish HNWs in the lowest asset band will dominate the market in terms of individuals, but the majority of the wealth will continue to be held by the richest investors
  • The Czech Republic
    • Czech macro-economic indicators will show steady but consistent growth over the next five years.
    • The fastest growing asset group is forecast to be represented by the richest mass affluent individuals in the Czech Republic
    • The richest high net worth individuals will represent the best performing asset band in terms of onshore liquid wealth growth in the Czech Republic
  • Data tables
    • Hungary
    • Poland
    • The Czech Republic
• CHAPTER 8 APPENDIX
  • Methodology
    • Global Wealth Model methodology
      • The UK sub model
      • European sub model
      • Forecasting methodology
      • Continuous refinement to the understanding of liquid wealth distribution
      • Specific changes to data this year
      • Datamonitor's wealth numbers compared with other wealth numbers
  • Definitions
    • CAGR
    • HNW
    • Liquid assets
    • Mass affluent
    • Mass market
  • Further Reading
    • Datamonitor Global Wealth Service SPP: Reports
    • Datamonitor Global Wealth Service SPP: Insight Reports
    • Datamonitor Wealth Management Competitor Tracker
    • Datamonitor Asia Pacific Wealth Management SPP: Reports
    • Datamonitor Savings & Investments SPP: Reports & Briefs
      • Asset Management and Funds
      • Offshore Financial Services
      • Retail Savings and Investments
    • Datamonitor Savings, Investments and Protection SPP: Interactive Models
  • SPP writing team
  • List of Tables
    • Table 1: Income inequality, as measured by Gini index and income distribution, 1999-2003
    • Table 2: Real GDP growth 1999-2004
    • Table 3: Stock exchange performance (as measured by major index), 1999-2004
    • Table 4: Stock exchange performance year-on-year growth (as measured by major index), 2000-2004
    • Table 5: National savings ratio, 2000-2007f
    • Table 6: The number of HNW individuals in Hungary
    • Table 7: The value of HNW onshore liquid assets in Hungary
    • Table 8: The number of HNW individuals in Poland
    • Table 9: The value of HNW onshore liquid assets in Poland
    • Table 10: The number of HNW individuals in the Czech Republic
    • Table 11: The value of HNW onshore liquid assets in the Czech Republic
    • Table 12: The number of mass affluent individuals in Hungary
    • Table 13: The value of mass affluent assets in Hungary
    • Table 14: The number of mass affluent individuals in Poland
    • Table 15: The value of mass affluent onshore liquid assets in Poland
    • Table 16: The number of mass affluent individuals in the Czech Republic
    • Table 17: The value of mass affluent onshore liquid assets in the Czech Republic
    • Table 18: Retail savings & investments balances in Poland
    • Table 19: Retail savings and investments balances in Hungary
    • Table 20: Retail savings & investments balances in the Czech Republic
    • Table 21: Overview of the banking sector indicators in the examined CEE states, 2004
    • Table 22: HVB and UniCredit-controlled institutions in the examined CEE states
    • Table 23: Top banks in the Hungarian market, 2004
    • Table 24: Top banks in the Polish market, 2004
    • Table 25: Top banks in the Czech market, 2004
    • Table 26: Selected wealth management offerings in the Hungarian market, 2005
    • Table 27: Selected wealth management offerings in the Polish market, 2005
    • Table 28: Selected wealth management offerings in the Czech market, 2005
    • Table 29: Hungarian macro-economic drivers forecasts, 2004-2009f
    • Table 30: Polish macro-economic forecasts, 2004-2009f
    • Table 31: Macro-economic forecasts for the Czech Republic, 2004-2009f
    • Table 32: Forecasts for the number of Hungarian mass affluent individuals and the value of their onshore liquid assets, 2004-2009f
    • Table 33: Forecasts for Hungarian HNW individuals and the value of their onshore liquid assets, 2004-2009f
    • Table 34: Forecasts for Polish mass affluent individuals and the value of their onshore liquid assets, 2004-2009f
    • Table 35: Forecasts for Polish high net worth individuals and the value of their assets, 2004-2009f
    • Table 36: Forecast for Czech mass affluent individuals and the value of the assets, 2004-2009f
    • Table 37: Forecasts for Czech high net worth individuals and the value of their onshore liquid assets, 2004-2009f
  • List of Figures
    • Figure 1: Poland represented the most promising wealth management market in terms of total retail onshore liquid assets in 2004
    • Figure 2: In terms of retail savings & investments balances, Poland is far ahead of its CEE neighbors
    • Figure 3: GDP growth in Central and Eastern European countries continues to be relatively strong, 1999-2004
    • Figure 4: The Budapest Stock Exchange has fared best in recent years in terms of year-on-year growth levels, 2000-2004
    • Figure 5: National savings ratios are forecasted to increase in all three countries
    • Figure 6: Wealthy customers account for a tiny proportion of the total adult population in the examined CEE markets
    • Figure 7: Poland represented the most promising wealth management market in terms of total retail onshore liquid assets in 2004
    • Figure 8: The number of HNW customers in Hungary has been growing strongly since 1999
    • Figure 9: The value of HNW liquid assets in Hungary has been rising particularly strongly in recent years
    • Figure 10: The number of HNW individuals in Poland has been increasing on average by 12.1% each year since 1999
    • Figure 11: The value of Polish HNW onshore liquid assets has been increasing by an average of 11.5% each year since 1999
    • Figure 12: The number of HNW individuals in the Czech Republic has been increasing on average by 9.4% each year since 1999
    • Figure 13: The value of HNW onshore liquid assets in the Czech Republic has been growing by an average of 8.8% each year since 1999
    • Figure 14: The number of mass affluent customers in Hungary has been increasing on average by 11.1% each year since 1999
    • Figure 15: The value of mass affluent onshore liquid assets in Hungary has been increasing on average by 11.7 per cent each year since 1999
    • Figure 16: The number of mass affluent Poles has been growing on average by 9.1% each year since 1999
    • Figure 17: The value of mass affluent onshore liquid assets in Poland has shown strong recovery since 2002
    • Figure 18: The number of mass affluent individuals in the Czech Republic has registered strong increases since 2002
    • Figure 19: The value of mass affluent liquid assets in the Czech Republic has increased strongly following the downturn of 2002
    • Figure 20: In terms of retail savings & investments balances, Poland is far ahead of its CEE neighbors
    • Figure 21: Retail mutual funds are more popular among Hungarian investors than direct equity investments
    • Figure 22: Retail deposits and direct bond investments have decreased in popularity among Polish investors since 1999
    • Figure 23: Czech investors are fairly conservative, strongly preferring retail deposits ahead of other investment products
    • Figure 24: The number of mass affluent Hungarian is forecast to increase by 7% on average each year to 2009
    • Figure 25: The value of Hungarian mass affluent liquid assets is expected to grow by 7.7% per year on average to 2009
    • Figure 26: The number of Hungarian HNW individuals is forecast to increase on average by 7.8% each year to 2009
    • Figure 27: The value of Hungarian HNW onshore liquid assets will increase strongly, growing by 8.6% on average each year to 2009
    • Figure 28: The number of Polish mass affluent individuals is forecast to increase on average by 7.8 per cent each year to 2009
    • Figure 29: Onshore liquid assets of mass affluent Poles are forecasted to increase on average by 8.5 per cent each year to 2009
    • Figure 30: The number of HNW individuals in Poland is expected to grow on average by 8.7 per cent each year to 2009
    • Figure 31: The value of onshore liquid asset held by Polish HNW customers is forecast to grow on average by 9.5 per cent each year to 2009
    • Figure 32: The number of Czech mass affluent individuals is forecast to increase on average by 6 per cent each year to 2009
    • Figure 33: The value of mass affluent onshore liquid wealth in Poland is forecast to increase by 6.8 per cent on average each year to 2009
    • Figure 34: The number of Czech high net worth individuals is forecast to increase on average by 7 per cent each year to 2009
    • Figure 35: The wealth of Czech high net worth customers will grow by 7.8 per cent on average each year to 2009