Adding more talent and more offices are only part of chief executive Peter Charrington’s push to grow the fortunes of Citi Private Bank.
The wealth management wunderkind, an Oxford-educated Englishman still in his 30s, believes that despite Citigroups’s well-publicized problems of 2008 and 2009, the bank’s global reach and balance sheet are trump cards that will win over ultra high net worth private banking customers with a net worth of $25 million or more.
The last few years have “clearly been a challenging time for the bank,” Charrington acknowledged. “There’s a lot of hard work still to do to ensure we regain trust and confidence from clients.”
But the difference between the bank now and 18 months ago, he maintained, is “like night and day. Now Citi is one of the best capitalized and strongest banks in the world. The company feels like it has a lot of energy and momentum. There is significantly increased morale and client business is picking up.”
Dislocation in the wealth management marketplace represents an opportunity, Charrington said, “as clients review how they receive financial advice.”
Citi Private Bank, he argued, is well positioned to compete against both large Wall Street rivals and independent boutiques.
Wirehouses who have recently been through mergers will have “significant integration issues for quite some time to come,” he said.
By contrast, Citi Private Bank no longer overlaps with Smith Barney and reports to Citi’s institutional clients group.
As for boutiques, Charrington said he had “great respect” for them and expects they “will continue to do well.”
Boutiques are especially well positioned to provide financial advice and to run money in “specific areas,” he said. But boutique firms also have an Achilles Heel, Charrington maintained.
“They are going to struggle to give you access to global markets and to balance sheets,” he said. “Scale does help clients.”
Lending and credit, Charrington said, “are very important businesses for us, especially in North America. A lot of clients are entrepreneurs and business owners and we assist them with liquidity needs and basic financing such as second or third mortgages, financing an aircraft or obtaining a line of credit against a portfolio.”
Private banking clients also want access to Citi’s global network to help them invest and do business, Charrington said.
“No one has a better emerging markets footprint,” he claimed. “Clients should have exposure to these markets and we’ve been doing business there for a long time and can give it to them.”
Charrington has a case, to a point, said Alois Pirker, research director for the Boston-based Aite Group.
“Citi and HSBC are very similar,” Pirker said. “They have a global retail presence that very few others have. If they play their cards right, they can leverage this exposure with clients and offer them a service that others can’t.”
But losing Smith Barney has brought Citi Private Bank some challenges, he added.
“The feeder system is missing,” Pirker said. “Citi has a strong existing business and will get referrals, but they can no longer leverage the brokerage pipeline internally as those clients become wealthier.”
To view the first part of this interview, published yesterday, please click here.