Strategy

Brand and Private Banking: A New Era?

Contributing Editor, 20 April 2005

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There is no part of the financial services sector where brand means more than in wealth management. And experts say the concept of brand for...

There is no part of the financial services sector where brand means more than in wealth management. And experts say the concept of brand for private banks and wealth managers is only beginning to develop into a fully-fledged concept. WealthBriefing takes a look at some of the views on the subject.

Brand in wealth management stretches from the downright bland—like NatWest Private Bank—to the sexy—like Lombard Odier Darier Hentsch. But their brands may be more from chance than desire as few wealth managers have had time to consider their brand in any detail, say the experts.

“We are just at the beginning of brand building as a formal discipline in wealth management,” said Michael Maslinski, head of the wealth management consultancy that bears his name and one of the leading experts on branding for the sector.

He added: “We are seeing senior managers wake up to this to a much greater extent than in the past.”

Some private banking businesses are lucky. They can ride on the cache their brand has built in a wider context. One of the best examples of this is Goldman Sachs. The New York-based bank has a sizeable wealth management business but has never separately branded the business.

“Goldman’s can leverage its brand in so many different ways it doesn’t have to create a separate brand for its wealth management operations,” said Mr Maslinski. “The bank gains clients through the larger brand awareness.”

The investment bank might also feel it does not need to advertise its wealth management business when most of its clients come from relationships build up in other parts of the firm.

But what happens to a large retail bank that is keen to build a private banking franchise? There appears to be a few answers to this, depending on where you sit in the branding debate.

A huge bank like HSBC feels that its brand is strong enough to subsume its subsidiaries with little or no affect on its profitability. Well-known wealth management brands have disappeared as a result of this strategy such as Samuel Montague, James Capel and Republic Bank of New York.

“What is important to us is the image of being international, but also local. We believe we can do this well by creating a single brand for our private banking business,” said Ian Ewart, global head of marketing and communications at HSBC Private Bank.

But even using the “Private Bank” after HSBC was seen as a compromise at the London-based financial conglomerate. “The group wanted the phrase private bank to be placed under the HSBC with the familiar hexagon symbol to the right instead,” said Mr Ewart. “We ended up winning that argument, but not without considerable effort.”

Mr Maslinski believes it was important to brand the private banking business outside of a bank known for its retail business such as HSBC. “When you’re starting from a retail base, you need to elevate the wealth management business above that brand, or else you end up being little more than a premium banking service.”

Of course it is easier for banks like UBS and HSBC to establish a global private banking brand as they have deep pockets to finance brand awareness efforts. In a recent interview in the Financial Times, Mark Branson, head of communications at UBS admitted that expenditure at raising the brand awareness of the Swiss bank had run into triple-digit millions.

UBS probably feels the money is well spent. Recent data shows brand awareness of UBS among wealthy Americans has risen to 63 per cent. And the long-term rewards are probably what the likes of HSBC and UBS are looking at when it comes to spending the vast sums on brand awareness efforts.

These banks are among the few operating in a global perspective—most wealth managers are not. Large retail banks attempting to grow their wealth management businesses locally are likely to rely on a multi-brand strategy.

In the UK, the best known bank to pursue this is the Royal Bank of Scotland, which maintains a number of separately branded wealth management groups. These include such great brands as Coutts and Adam & Co, but less inspiring names like NatWest Private Banking and Royal Bank of Scotland International.

It is doubtful, say experts, whether clients would leave in their droves if NatWest Private Banking was re-branded to Royal Bank of Scotland Private Banking, but the same is not true of Coutts.

“Coutts is an ‘above’ brand for RBS—it differentiates its clients away from the humdrum of retail banking,” said Mr Maslinski.

But what about brand in the context of Swiss private banking? UBS might be increasingly recognised as the global brand in wealth management, but it still keeps the brands of a number of its private banking subsidiaries, including Ferrier Lullin and Banco di Lugano.

Credit Suisse does the same, despite its current “one bank” strategy. Subsidiaries like Bank Leu, Clariden Bank and Bank Hofmann are still very much separately branded private banks, and are likely to remain so.

Consolidation might lead to some brands disappearing—but this is so far happening at a snail's pace suggesting that the multitude of Swiss private banking brands will remain for some time.

Brand is more than just the name, as experts like Mr Maslinski point out. Brand is the overall concept of what a company stands for and this is very important in wealth management.

“I don’t think brand really meant anything to private banks until well into the 1990s,” said Warwick Newbury, chief executive of SG Hambros in London and a veteran of the private banking business.

He added: “Private banking didn’t even exist as a really recognizable part of the financial services sector, or at least outside of Switzerland, until the late 1980s—ultimately since the demise of bank managers.”

“Clients have only become clients in the last 15 years, before that they were customers along with all their retail colleagues.”

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