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Hunger For Wider Onshore Presence, UHNW Clients Drives Vontobel-ANZ Pact

Tom Burroughes Group Editor London 28 November 2012

Hunger For Wider Onshore Presence, UHNW Clients Drives Vontobel-ANZ Pact

This week's Vontobel-ANZ alliance to provide each others' clients with services shows how a Swiss bank wants to expand onshore out of its home market while ANZ is keen to tap an investment banking capability to reach UHNW clients.

The move by Switzerland’s Vontobel to ally itself with Asia-Pacific bank ANZ to serve each others’ clients highlights a Swiss firm’s desire to build an international onshore business and shows how ANZ wants to provide investment banking to ultra high net worth clients in the region.

Also, from ANZ’s standpoint, its memorandum of understanding, as announced yesterday, with the Swiss bank is probably the first big strategic move taken by Joyce Phillips, chief executive for private wealth management at the Australia-New Zealand firm, since she took up her post in February this year, say industry watchers.

The agreement may also be a sign of how ANZ has been keen to boost its local private banking muscle since Singapore’s OCBC beat the likes of ANZ to win the race to buy ING’s Asia private bank more than three years ago. (That private bank is now Bank of Singapore.)

Zurich-based Vontobel will expand its activities in Asia-Pacific – primarily in the growth markets of Australia, New Zealand, Hong Kong and Singapore. Vontobel will provide expertise in global investments, structured products and tools, client advisory and client processes to the private banking business of ANZ. ANZ, which aims to grow its own private banking business in Asia-Pacific, wants to use Vontobel's expertise in the areas of investment management and structured products, as well as its advisory services for wealthy ANZ private clients.

The MoU gives ANZ the ability to tap into Vontobel’s investment banking expertise, a key selling point to its clients such as those in the ultra-high net worth bracket, argued Christopher Wheeler, analyst at Italy’s Mediobanca in London.  

“With Asia as the only market showing major growth over the next 10 years, cross-border business in Switzerland is falling. They [Vontobel] haven’t got any onshore business outside of Switzerland,” Wheeler said. “They want to move up Asia’s pecking order.”

“Banks without investment banking, and doing business in Asia, is difficult if you are going after big entrepreneurs: these guys want a holistic service,” Wheeler said.

As Wheeler pointed out, the Vontobel-ANZ agreement is not unique. Julius Baer, a bank that already regards Asia as its second “home market”, has forged a similar pact with Australia-listed Macquarie, as well as making an agreement earlier this year with Bank of China for certain services. Asia is, of course, well-used to the joint venture business model as this is the typical route for Western firms to penetrate China.

One question that arises, according to one industry analyst who spoke to this publication, is who can be said to "own the client" under the alliance: Vontobel, or ANZ?

Developments

Among recent developments, Vontobel is combining its cross-border and onshore activities in its private banking business with German clients. The firm is to also close its onshore private banking business in Austria as it looks instead to serve Austrian clients via its cross-border business based in Zurich.

Some of Vontobel’s recent figures have been encouraging. In late July, it logged new money inflows of SFr5.3 billion ($5.4 billion) in the first half of the financial year for 2012, an annualised growth rate of 12.9 per cent.

ANZ has also been active. At the end of October, it said it was merging its Asia and Pacific businesses. Asia chief executive Gilles Planté became Asia-Pacific CEO, while Vishnu Mohan, formerly chief executive of Fiji, was appointed as CEO for the Pacific, reporting to Planté.

The bank reported flat profit performance year-on-year in its global wealth and private banking division, although radical cutbacks and a strategic shift during the year led to better performance in the second half.

The ANZ-Vontobel and Julius Baer-Macquarie deals have happened at a time when there has been speculation - not always well-founded - of a large transfer of wealth from Switzerland to rival financial centres such as Singapore. Agreeing business tie-ups such as this may be one way in which Switzerland's embattled banking sector can adjust to any shifts.

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