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No Chance Of Looking Tired As RBS's Wealth Business Has A Makeover

Tom Burroughes

11 August 2011

Just as even the smartest home needs a makeover every so often, Coutts, the blue-blooded UK bank that is owned by Royal Bank of Scotland, needs to refresh its brand at least once a decade to resist the effects of Old Father Time, a top executive argues.

In a re-branding strategy announced at the end of March, RBS said all its private banking arms – apart from Edinburgh-based Adam & Co – would adopt the Coutts brand. The change is among moves that have been made since Rory Tapner took the helm of RBS’s wealth business in August 2010. Coutts, part of RBS since 2000, will devote less time to pursuing lower-margin clients with less than £1 million (around $1.64 million) or more than £75 million.

“All great brands need refreshing, probably once a decade …and this is not the first time Coutts has evolved,” Tapner, who joined RBS from UBS, told this publication at the Coutts head office in The Strand, central London.

Tapner was in ebullient mood when he discussed his hopes and plans for Coutts, a firm dating back to 1692 with the priceless cachet of having the Queen as a client, and the benefits of a broad regional footprint throughout the UK and an international reach in regions such as Asia. Coutts is the UK's largest wealth manager by private banking assets. No firm, however, can rest on its laurels. The ex-UBS man – Tapner had been chairman and chief executive of the Swiss bank’s Asia-Pacific operations before joining RBS –says he appreciates how fast the world is changing. (It also says something that although this publication was allotted an hour to speak to Tapner on a busy workday, he was happy to let the meeting last further to explain his plans).

“It was a bit of a tired brand and has not been invested in for some time,” he said.

The refreshment of the Coutts brand touches on three broad themes: “human” (technology, however, must not get in the way of personal contact and understanding); “connected” (the importance of links and networks with other clients and advisors at the bank); and “cosmopolitan” (stressing the international nature of many clients and their interests, assets).

There is more work being done on thought leadership at the bank, focusing on the issues of wealth protection and growing wealth at a time of inflation, tax and regulatory challenges, he continued.

Tapner said Coutts own in-house research on the value of extending the Coutts brand and the importance of such branding has been “very positive”.

In Asia, there is more awareness of the Coutts brand in Singapore than in Hong Kong, he said. (In Hong Kong, RBS is better known as a name than Coutts)

The Royal Bank of Scotland name

“I’m not interested in dropping the RBS name because of the RBS issues but we want to emphasise the Coutts one,” Tapner said, stressing the benefits to Coutts from the RBS balance sheet, a fact that is “highly valued” by clients in regions such as Asia. (RBS is currently part-owned by the UK government after the bank was bailed out amid the 2008 financial market meltdown. Despite some speculation, RBS has consistently quashed suggestions that it might sell its private bank).

The RBS name will not be airbrushed out. Under its new branding, Coutts will be referred to as “The wealth division of RBS”, so the link to the Scottish-based bank will remain very much in view, Tapner said. The need for a brand refresher is driven by how fast financial services change, often at a much quicker pace than is the case in other industries. 

The sweet spot

Tapner expanded on the bank’s market positioning, referring to the previously mentioned aim of focusing on clients in a range of at least £1 million of investable assets to £75 million. “If you look at margins in this industry, when you get to about £65 to £70 million, the margin declines steeply. These clients are, rightly, very demanding of differentiated services more akin to institutional services,” he said, drawing a graph on a sheet of paper to illustrate the idea. He said Coutts is building a “machine” that can, however, comfortably serve those with very large holdings of wealth.

This point touches on what has been a sensitive issue at times; ultra high net worth clients, it is sometimes reportedly said, are a very demanding, even vexatious customer base. Some wealth managers such as the private bank of Citi and Credit Suisse say this segment can be profitably served, however, particularly as part of a “one-bank model” with close links to an investment banking engine. The debate on whether UHNW clients are “too rich” for a bank to serve looks to run and run.

However, despite the client focus shift, Tapner stressed Coutts is not going to lose clients who do not make the cut in terms of investable wealth, and he certainly is not going to turn away clients with considerably more than £75 million.

One issue of very current concern is the low interest rate environment. Taking in deposits carries cost: “We need the funding but it can be expensive funding. There’s probably not enough cash to go around for the deposit plans of all banks as we look into the future.”

Regional plans

At present, RBS’s wealth business books clients from 170 countries – this needs to be shrunk significantly, Tapner said. “There is a need to rationalise the geographic coverage of the bank to allow scarce resources to be applied to core markets. You only need something to go wrong in a non-core country and the amount of time and money spent to get it fixed can be debilitating,” he said.

“We want to apply resources to the markets where they will get the greatest commercial impact,” he said.

In the US, the RBS wealth business does not have any presence in the country although Coutts does have some resident non-domiciliary business.

RBS’s wealth business, meanwhile, is present in five Latin America countries, but notably, is not yet in Brazil. The development of other businesses is more of a priority for RBS’s wealth arm at the moment, such as Asia and the Middle East, he said.

“All of these markets I can see us grow aggressively,” he said.

Coutts is not yet present in Australia or Canada but Tapner said he would like to develop a presence in both these countries at some stage.

Among other developments, Tapner briefly referred to technology – an issue that continues to stir interest in this world of tablets, iPhones and cloud computing.

He said the bank now is implementing Avaloq IT systems across all its divisions.

The iCoutts initiative, meanwhile, is designed to help bankers have a “smarter, more intelligent relationship” with clients.

In the end, of course, any talk of technology only reminds Tapner that private banking rests on the quality of its people.

“Attracting, retaining and developing the very best people are key to success. The Coutts brand and its business ethos will continue to be synonymous with the discretion and integrity that has won respect throughout the world,” he added.