Barclays Wealth’s global CEO, Tom Kalaris, has outlined for AsianInvestor five key components in its global infrastructure build-out that he says will be available in Asia by mid-next year.
In the wake of the global financial crisis, Barclays Group prioritised investment into two areas where it saw greatest growth potential – Africa and wealth management.
It committed £350 million to the latter globally, front-loaded for a three-year period – two-thirds on infrastructure, and the remainder on doubling its base of private bankers.
Now the firm has reached the half-way point in the 1,000-day programme, and Kalaris was in Hong Kong last week to provide a progress update.
He says revenues for its Asia wealth management business are growing at over 30%, compared with 15% globally. It is striving to hit 17% return on equity by 2013 (ROE was 10% in 2010).
He notes that Barclays Wealth has over 100 bankers in Hong Kong and Singapore, with one investment adviser to five bankers. This is a lower ratio than it runs globally and is a function of the client base in Asia, which is focused on the higher end of the market place, combined with the type of advice and transactions required in this region.
In terms of resources, Barclays Wealth is prioritising Greater China, India and Indonesia. It has 38 bankers in India, while AsianInvestor understands it has around 30 for Greater China. Kalaris did not reveal the figure for Indonesia.
It also has a joint venture in Japan with shareholder Sumitomo Mitsui Banking Corp, which Kalaris says is exceeding targets in terms of growth in revenues and assets. However, he stresses that the firm is looking to build on what it has and is not targeting new markets or acquisitions.
“Wealth management businesses are expensive, and there is not much on offer,” Kalaris notes. “We have laid out quite ambitious growth targets, which do not need an acquisition to be met.”
Asked privately about its present platform build-out, Kalaris stressed its importance. "It is fundamental in marketing to the new entrepreneur, who is technologically sophisticated. Secondly it is how you get scale and make economies work.”
While the programme is scheduled to be completed globally by February 2013, he says Asia is ahead of the curve and should have the pieces in place by the middle of next year. He outlined the five key components of the build-out as follows:
1. Reducing the time it takes to onboard a client from a matter of weeks to days, which requires improvement in technology and process. “We want to do it in a way where the client signs a limited number of documents that are vertically integrated with everything he is going to do with us. Getting onboarding and client knowledge right to begin with is critical,” Kalaris says.
2. Installing a client relationship management system that is global, linked to the investment and corporate banks, and integrated in all aspects. Essentially this is the platform's spine.
3. Making sure its portfolio management system is operational globally, meaning investment managers and private bankers work from the same information on a real-time basis.
4. Putting a consistent global booking platform in place, providing efficiency and economies of scale. This means clients and client advisers operate in the same way globally.
5. Delivering as much of this as possible digitally, and linking that to Barclays Capital’s execution systems with the aim of providing access to institutional quality research and execution.
Kalaris is adamant that getting this platform up and running will be crucial in attracting high-net-worth ($3 million and above with the bank) and ultra-high-net worth ($100 million and above) clients as well as senior bankers.
“We have broadened the product base and are doing a better job of delivering in-depth solutions to clients,” says Kalaris, estimating that 75% of Barclays Wealth’s investment products are externally sourced. “To the extent that we were solving a portion of clients’ problems, now we are solving a significantly greater proportion.”
In defining what he is looking for in a senior banker, he says it is a combination of client understanding, sound relationships and what he calls bandwidth – or an understanding of and ability to deliver complex products.
Asked if he expects to see more investment bankers gravitate towards wealth management, he replies: “We welcome lateral moves, both internal and externally recruited.”
Kalaris argues that this will become more of a trend globally, and so by definition in Asia. “It is a function of the fact that wealth management businesses are growing at a more consistent rate than commercial or investment banking businesses. There is a shallow pool of talent on the wealth management side, so this will be a natural shift of the water level from one to the other.”