Industry news

Citi establishes new single wealth management organisation

14 January | Wealth

Citi has merged its wealth management teams in Global Consumer Banking (GCB) and the Institutional Clients Group (ICG), establishing a single wealth management organisation – Citi Global Wealth.

Led by Jim O’Donnell, Citi Global Wealth is an integrated platform catering to clients across the wealth spectrum, from affluent to ultra-high net worth (UHNW) individuals.

In keeping with the increasingly global nature of client wealth, O’Donnell commented: “We are committed to helping them preserve and build wealth for themselves, their families and for future generations.”

O’Donnell, who joined Citi in 1999, was previously responsible for the distribution of global market products to Citi’s equities, fixed income, currencies, and commodities clients, in his role as global head of investor sales.

Including both Private Bank and Personal Wealth Management, O’Donnell will report to Anand Selva and Paco Ybarra, CEO of GCB and the ICG, respectively.

Explaining the significance of the new unit, O’Donnell continued: “Creating a unified Wealth organisation will help us to deliver the full, global power of Citi to clients while ensuring that we preserve the products, capabilities and expertise of the Private Bank and Consumer Wealth businesses.”

Manging around $550 bn in total client business, Citi Private Bank claims to serve more than 13,000 UHNW clients, including 25% of the world’s billionaires and more than 1,400 family offices across 50 cities.

Citi GCB provides institutional grade, bespoke wealth management service to clients to in Europe, the Middle East, Asia, the US and Mexico. The unit manages $200bn in investment assets under management globally.

In a statement from Citi CEO Michael Corbat and incoming CEO Jane Fraser, the two executives recognised the wealth management division as “a key differentiator and source of enhanced returns” for the firm’s future strategy.

According to Corbat and Fraser: “Putting the full force of our firm behind an offering in this way is indicative of the approach we’re taking to transforming our bank.”

Through its selective business model Citi PB focuses on fewer, albeit wealthier, clients with an average net worth above $100m.

13 January | Market

US fintech Luma expands into Europe

Wealthtech Luma Financial Technologies has opened an office in Switzerland and launched in the Europe market.

Luma is a multi-issuer structured products platform in the US. It has launched in Zurich to provide more firms access to its platform, which streamlines the process of using and creating structured solutions.

The Luma Europe office will be led by David Wood, managing director of Luma Financial Technologies’ international business. He holds 18 years of experience in investment banking and previously served as managing director at both Societe Generale and Barclays.

Wood also was part of the team behind Asian structured product platform Contineo, having served previously as a board member and chairman at the firm.

Furthermore, Wood will build a local team in Switzerland, focused on business development and client services.

“As a leading structured solutions fintech platform, we look forward to bringing our technology to wealth managers and private banks in Europe,” said Tim Bonacci, CEO of Luma Financial Technologies. “Having recently expanded our presence into Latin America and now Europe, we’re excited to help advisers on a global scale deliver a more predictable and transparent investing experience to their clients in the most efficient way possible.”

Wood said: “Luma is a high-quality, scalable platform that can be seamlessly integrated into buy-side infrastructure to deliver market-leading lifecycle services and consistent processes and controls. Luma’s focus on partnering with advisers to deliver better service has been key to its success and I am delighted to be leading its ambitions in Europe as it expands to meet the needs of clients around the world.”

Launched in 2011, Luma has helped advisers in the US and Latin America to learn, source, compare, create, price, and implement structured products. The platform is also fully interactive and customisable to match desired offerings, unique product approval, work flow, and certification requirements.

13 January | Fintech

HSBC further bolsters China presence with new fintech subsidiary

British banking major HSBC has set up a fintech subsidiary in Shanghai to scale up its business in mainland China.

HSBC Fintech Services (Shanghai) Company Limited is said to be the first fintech subsidiary opened by a foreign financial institution in China.

Situated in the Lingang area of the Shanghai Free Trade Zone, the venture will offer centralised technology and data services to HSBC Pinnacle Venture.

HSBC Pinnacle Venture is the banking group’s mobile financial planning service in China.

Through this service, HSBC targets clients outside the branch network, primarily for its private banking business in China.

HSBC Bank (China) president and CEO Mark Wang commented: “Fintech has been developing quickly in mainland China in the past few years which has enhanced its overall financial services capabilities.

“We believe technology can help provide better customer services, which can spur growth of the real economy.”

“The opening of HSBC Fintech reflects HSBC’s commitment to investing in mainland China and also our support to developing technology and innovation in the financial world,” quoted Wang as saying.

The bank also launched the service’s first solution, which happens to be a corporate employee benefits proposition.

Digital platform will encompass financial planning, employee benefits as well as wellbeing platforms.

“Through this corporate platform, we hope to provide dedicated financial services traditionally available only to high net worth customers to corporate employees on a broader basis, creating positive commercial value for companies, and bringing mutual benefits to both companies and employees,” the publication quoted Trista Sun, vice chair of HSBC Insurance Asia Pacific and execute director of HSBC Fintech Company, as saying.

12 January | Management

Credit Suisse bolsters Saudi business with new Riyadh outpost

Swiss banking group Credit Suisse has launched a branch in the Saudi capital of Riyadh to expand its wealth management operations in the kingdom.

The move follows the receipt of a local banking licence by Credit Suisse in the kingdom in 2019.

The new Riyadh outpost will offer a range of wealth management services to Saudi Arabian clients.

These include foreign exchange and treasury products, account management and deposits, along with lending services.

In addition to these services, the bank already offers local and international trading capabilities and investment banking services, which these clients will continue to access.

Majid Al-Gwaiz will lead the Riyadh location as its CEO and report to Credit Suisse CEO of Middle East and North Africa Bruno Daher.

In the new role, Al-Gwaiz will be tasked with serving HNW and UHNW clients, family owned companies, government and government-related entities and Saudi corporations by developing local solutions and building upon business area initiatives.

Daher welcomed the latest development, calling Saudi Arabia a key growth market.

“Under Majid’s leadership, we look forward to building on and enhancing our current market position while providing an integrated banking experience for our high net worth individuals and institutional clients in Saudi Arabia,” Daher noted.

Credit Suisse entered the kingdom of Saudi Arabia in 2005, with its Middle East presence dating back to 1967.

11 January | Deal

Credit Suisse warns of fourth-quarter loss as it takes $850m legal charge

Credit Suisse has flagged that it may swing to a net loss in the fourth quarter of 2020 (Q4 2020) after putting aside an additional $850m provision for a prolonged legal dispute in the US.

The case concerns municipal-bond insurer MBIA, with whom the bank had been engaged in a tussle since 2009 over a US residential mortgage backed security (RMBS) issued in 2007.

Credit Suisse had already booked a $300m provision over the dispute and last month said that it faces up to $680m in costs over the dispute.

Commenting on the decision, the Zurich-based bank said: “Although Credit Suisse previously set aside USD 300 million in provisions in connection with this case and continues to believe it has strong grounds for appeal, we indicated on December 1, 2020, that we would evaluate the need for additional provisions.

“This review is now concluded, and we expect to increase our provisions for the MBIA case and other RMBS-related cases by a total of USD 850 million.”

However, the bank intends to start its share repurchase programme on 12th of this month.

The bank also gave an update on its trading performance in December 2020.

It said that its wealth management operations reported stronger year-on-year transactional activity, mainly in Asia. This partially offset the adverse FX translational impact from the strengthening of the Swiss Franc and pressure on net interest income.

The bank further said that its investment bank “continued to perform well”, with 4Q20 USD revenues growing by over 15% from the previous year.

The latest provision comes on top of the $450m impairment it booked last November for a stake in alternative investment firm York Capital Management, which intends to wind down its European hedge funds business.

Credit Suisse, which took a stake in the investment firm in 2010, will take the charge in Q4 2020.

The bank is scheduled to post its Q4 20 results on 18 February 2021.

These provisions will affect the performance of Credit Suisse, which has shown resilience last year despite Covid-19 headwinds.

In Q3 2020, Credit Suisse reported a 38% year-on-year slump in net profit, missing analyst expectations, with the exclusion of a one-off gain that lifted prior year’s performance.

The bank’s net income attributable to shareholders was CHF546m in Q3 2020, compared with CHF881m a year earlier.

8 January | Finance

Premier Miton records 13% growth in AuM

Premier Miton registered a 13% increase in assets under management (AuM) following the completion of its merger integration.

According to the group’s Q1 statement for the current financial year, Premier Miton recorded closing AuM of £12bn ($16.3bn) at 31 December 2020, a £1.4bn increase from 30 September 2020.

The growth is attributed to the net inflows of £166m during the quarter, alongside a strong market performance generating £1,213m. Equity funds and multi-assets funds were a large part of this, generating £737m and £355m respectively.

The latest unaudited statement of AuM comes as welcome news to the group, following a fall in profit during its first full-year results.

Commenting on the results, CEO – Mike O’Shea said: “It is pleasing to see a return to net inflows for the Group driven by positive flows into our equity and fixed income strategies. Unfortunately, we continued to see outflows from our multi-asset multi-manager funds although there has been a noticeable improvement in short-term investment performance.”

The merger between Miton Group and Premier Asset Management Group closed in November 2019 and cost the business £4.5m. Administrative expenses were £14.4m greater than anticipated. Consequently, the group’s profit before tax dropped to £9.6m from £13.7m.

Referring to the integration of the two firms, O’Shea continued: “I am also pleased to report that during the quarter, the final operational stages of the integration of the former Premier and Miton businesses were completed. This allows the Group to move forward with a single operating platform across our entire fund range.”

Coinciding with the closure of the Premier Miton’s financial period, the UK successfully managed to establish a trade agreement with the EU, which O’Shea hopes will “end the economic and political uncertainty around Brexit”.

O’Shea added: “This should be positive for UK equities, which have suffered an extended period of relative underperformance. Premier Miton has a range of top performing UK equity funds that are well placed to capture market share as investor interest returns to this area of the market.”

Looking forward to the future, Premier Miton will launch its Global Smaller Companies Fund on the 22 March 2021. Managed by Alan Rowsell, the new fund will further the group’s experience with small businesses across UK, US and European equities. Rowsell previously ran a similar fund at Aberdeen Standard Investments.

28 January | Deal

Johnson & Johnson pauses vaccine trial

J&J has temporarily paused dosing in all its vaccine candidate clinical trials for Covid-19, including its Phase III ENSEMBLE trial after a study participant reported an unexplained illness.

The ENSEMBLE independent Data Safety Monitoring Board and J&J’s internal clinical and safety physicians are analysing the participant’s illness.

A study pause implies that the study sponsor halted enrolment or dosing, which is a standard component of a clinical trial protocol.

28 January | Deal

Johnson & Johnson pauses vaccine trial

J&J has temporarily paused dosing in all its vaccine candidate clinical trials for Covid-19, including its Phase III ENSEMBLE trial after a study participant reported an unexplained illness.

The ENSEMBLE independent Data Safety Monitoring Board and J&J’s internal clinical and safety physicians are analysing the participant’s illness.

A study pause implies that the study sponsor halted enrolment or dosing, which is a standard component of a clinical trial protocol.

7 January | Deal

FCA Financial Resilience Survey: retail investment segment boasts greatest profits

Over four-in-five (85.6%) of wealth management firms, financial advisors and other retail investment firms steered clear of the red during the pandemic.

This is according to data from the Financial Conduct Authority (FCA) that has revealed thousands of financial companies, including wealth management, on the brink of collapse after the COVID-19 pandemic.

Insights from the FCA revealed that by November 2020, 4,000 of the firms surveyed had low financial resilience and faced a greater risk of failure. Despite these figures, the data remained largely positive for the retail investments category, which had one of the highest numbers of profitable firms.

Sheldon Mills, Executive Director of Consumers and Competition commented: “At end of October we’ve identified there are 4,000 financial services firms with low financial resilience and at heightened risk of failure, though many will be able to bolster their resilience as and when economic conditions improve.”

Mills continued: “These are predominantly small and medium sized firms and approximately 30% have the potential to cause harm in failure.”

In response to the pandemic, the FCA has been monitoring the effects of the economic slowdown on firms’ solvency through rapid collection of data. Two surveys were sent out to 23,000 firms split by a 3-month interval, from February to June.

Explaining the significance of the survey, Mills commented: “We are in an unprecedented – and rapidly evolving – situation. This survey is one of the ways we are continuing to monitor the potential impact of coronavirus on firms. A market downturn driven by the pandemic risks significant numbers of firms failing.”

5 January | Firms

JPMorgan in discussions with China bank for wealth management JV

JPMorgan is reportedly in initial talks with China Merchants Bank to set up a Chinese joint venture (JV) in the wealth management space.

The bank is looking to launch an entity, further expanding its strategic partnership with the bank signed in 2019, according to Bloomberg.

While the two parties are yet to decide on the ownership, JPMorgan is not likely to have control, the people familiar with the matter told the publication.

The plan is not yet finalised and could also collapse, the sources added.

JPMorgan Asset Management and China Merchants Bank did not comment on the development.

JPMorgan’s China moves

In November last year, JPMorgan reportedly decided to almost double the number of private bankers in Singapore over the next two years, who serve rich Chinese clients.

The same month, JPMorgan raised its stake in its China securities JV to 71% from 51%.

Last June, the China Securities Regulatory Commission (CSRC), the country’s securities watchdog, cleared the application of JPMorgan to operate the first entirely foreign-owned futures business in the country.

In 2019, the company received the final regulatory approval to open its majority-owned securities JV in China.

China moves by other firms

The opening of China’s $53trn economy has tempted international banks to solidify their presence in the region and capitalise on the evolving financial space.

The Chinese financial market is anticipated to grow by $30trn in the next two years.

Recently, a Chinese unit of German banking group Deutsche Bank reportedly obtained a domestic fund custody licence, in the latest sign of China’s financial services sector liberalisation.

Last month, American investment bank Goldman Sachs signed an agreement to take 100% control of its securities JV in China.

In November 2020, Pictet Asset Management, the asset management arm of Geneva-based Pictet Group, established a unit in Shanghai in a bid to tap the evolving fund market in China.

4 January | Exchange

Credit Suisse completes 2020 share buyback programme

Credit Suisse Group AG has announced the completion of its 2020 share buyback on 30 December 2020 for a total of CHF324,993,871 ($369m). Commencing on 6 January 2020, the firm repurchased 28,446,000 of its shares for an average price per share of CHF11.43.

The registered CSG shares were available for acquisition on a second trading line on the SIX Swiss Exchange, in order to repurchase the shares for the purpose of a capital reduction. Only CSG were able to purchase shares on the second trading line, via the bank mandated to execute the programme.

Sales of CSG shares on the second trading line were subject to Swiss federal withholding tax at a rate of 35 % on half of the difference between the repurchase price of the CSG shares and their nominal value. This was subsequently deducted from the repurchase price.

Ordinary trading in CSG shares remained unaffected by the second trading line. Any shareholder hoping to sell CSG shares was thus able to choose between the ordinary trading line or to CSG for subsequent capital reduction on the trading line.

Initially anticipating a share buyback total of CHF1bn, Credit Suisse suspended the programme in March 2020 due to COVID-19.

The bank shelved its buyback plans following calls from financial regulators to pause dividends and buyback programmes this year. Such efforts helped to preserve capital for use as a buffer from the pandemic-related shocks.

The repurchased shares were approved for cancellation by means of capital reduction at the firm’s AGM in 2020 and cancelled in July 2020. The remaining registered shares are expected to be cancelled at a future AGM of shareholders.

Based on the closing price of the CSG shares on SIX Swiss Exchange on 27 December 2019 of CHF 12.155, Credit Suisse were able to repurchase a maximum of 114m CSG shares. This figure represents up to 4.46% of the current share capital and voting rights of CSG.

As of 26 December 2019 CSG directly and indirectly held 124,632,322 CSG shares, corresponding to 4.88 % of the share capital and voting rights.

In brief

Chumakov Center initiates Covid-19 vaccine candidate trials

Russia’s Chumakov Center has started clinical trials of its potential Covid-19 vaccine in St Petersburg. The 30 participants are healthy volunteers aged 18-45 years who tested negative for Covid-19 and with the absence of antibodies to the virus.

Edesa Biotech gets FDA approval to trial EB05 for Covid-19 treatment

Edesa Biotech has received FDA approval to initiate Phase II clinical trial of its investigational drug EB05 to treat hospitalised patients with Covid-19. EB05 treatment aims to suppress fluid accumulation, lung injury and inflammation.

Initiating Covid-19 vaccine candidate trials

Russia’s Chumakov Center has started clinical trials of its potential Covid-19 vaccine in St Petersburg. The 30 participants are healthy volunteers aged 18-45 years who tested negative for Covid-19 and with the absence of antibodies to the virus.

Initiating Covid-19 vaccine candidate trials

Russia’s Chumakov Center has started clinical trials of its potential Covid-19 vaccine in St Petersburg. The 30 participants are healthy volunteers aged 18-45 years who tested negative for Covid-19 and with the absence of antibodies to the virus.

Initiating Covid-19 vaccine candidate trials

Russia’s Chumakov Center has started clinical trials of its potential Covid-19 vaccine in St Petersburg. The 30 participants are healthy volunteers aged 18-45 years who tested negative for Covid-19 and with the absence of antibodies to the virus.

13 January | Deal

UBS to shrink Swiss branch network in digital push

Swiss investment bank UBS is reportedly planning to shutter 44 of its 239 branches in Switzerland over the next few months in a bid to focus on digital channels.

The move will not lead to redundancies ‘at the moment’, UBS Switzerland director Axel Lehmann said in a memo to employees seen by Reuters.

Nearly 150 employees, who will be affected by the closures, will be redeployed across the bank.

UBS is also launching a pilot programme in March to train advisers for more remote advisory and digital sales as part of its shift towards digitalisation.

UBS, which previously had around 300 branches across the country, closed 28 of them last year.

According to Lehmann, the over-the-counter transactions in the bank’s branches plummeted by 10%, and two-thirds of clients currently use digital services for their banking needs.

Previously, the bank said that as much as one-third of its employees may permanently work from home in a post Covid-19 environment.

Meanwhile, UBS is planning to charge negative rates on clients holding more than CHF250,000 ($280,646) or euros in cash, effective July this year.

The bank previously held a threshold of over CHF2m.

“It’s becoming increasingly clear that we’ll have to contend with negative interest rates for years to come. That’s why we decided to lower the threshold for deposit fees,” Lehmann told employees in a memo seen by Reuters.

Last August, a report said that UBS will lower the threshold for charging affluent customers as negative interest rates continue in Europe.

In December 2020, the company appointed Sabine Keller-Busse as the new president of UBS Switzerland, replacing Lehmann.

12 January | Market

Saudi moves by other firms

Recently, various firms have tapped the Saudi market. In October last year, BNY Mellon collaborated with NCB Capital to offer custody and associated asset servicing activities in Saudi Arabia.

Through the partnership, BNY Mellon looks to serve institutional as well as large asset owners in the country.

Meanwhile, earlier in 2020, French investment bank Natixis launched a Corporate & Investment Banking office in Riyadh, Saudi Arabia, after obtaining a licence from the country’s Capital Markets Authority (CMA).

8 January | Deal

Wells Fargo to pull the plug on international wealth management operations

Wells Fargo is withdrawing from international wealth management business in order to focus its efforts on serving wealthy investors in the US.

The move will impact Wells Fargo Advisors, Wells Fargo Private Bank, as well as Abbot Downing from 19th of this month.

However, it will not impact active duty US military and US government employees residing overseas.
Confirming the move, Wells Fargo Advisors spokeswoman Shea Leordeanu stated: “Wells Fargo is focused on meeting our regulatory requirements, managing risk, and simplifying operations across the company.

“For Wells Fargo Advisors, Wells Fargo Private Bank, and Abbot Downing, our core business focus is serving clients who primarily reside in the U.S. As such, we have decided to exit the international segment of our business.”

Leordeanu further said that the process to withdraw from its international business is expected to take at least nine months.

She noted: “Because this segment requires different processes, approaches and infrastructure maintenance, we have determined we will simplify the business.”

Leordeanu added that Wells Fargo will go forward with the move in a way consistent with regulatory expectations.

With this move, the bank follows the footsteps of financial firms including RBC and Merill Lynch that have largely scaled backed their overseas presence.

In October last year, a report revealed that Wells Fargo is looking to sell its asset management business.

The move is part of Wells Fargo CEO Charles Scharf’s strategy to revive the group, which was embroiled in a major sales practices scandal.

Recently, a report said that Ameriprise Financial, CI Financial as well as private equity firms GTCR and Reverence Capital Partners are contemplating second-round bids for Wells Fargo’s asset management business.

8 January | Deal

Safety in numbers

According to the data, retail investments saw an 8% increase in liquidity between the two surveys, from median firm liquidity of £91,670 ($124,418) to £107,108. Concerning estimated cash needs and expected cash flows, retail investments registered a 13% excess, with estimated inflows representing £2.7bn and outflows of £2.4bn.

The retail investment segment was largely profitable across both surveys, with the proportion of profitable firms increasing from 85.6% to 86.7%. The segment also represented one of the most positive, with 58% of respondents disagreeing that COVID had a negative impact on business model.

However, of the 59% of firms anticipating a negative impact on their net income, retail investments had the highest proportion of respondents expecting net income losses of 66%. Regarding government support, 37% of retail investment firms furloughed staff and 15% received a government-backed loan.

In addition to survey data, the FCA has been using existing regulatory reporting data enhanced data purchased from a third-party provider and in-depth analysis of liquidity for several of the most significant firms.

7 January | Development

DBS launches in-house training institute to upskill technology workforce

Singaporean lender DBS has launched an in-house digital training institute in a bid to empower its technology team of nearly 5,000 people for the future.

Dubbed DBS Future Tech Academy, the institute aims to develop a learning ecosystem that will leverage external experts as well as content and certifications developed within the bank.

DBS Group chief information officer Jimmy Ng said: “Having our own DBS Future Tech Academy gives us the agility to adapt our training curricula according to the bank’s needs and enables us to stay ahead of the massive changes around us.”

The institute will initially focus on three technology disciplines, namely Site Reliability Engineering or SRE, Data Processing and Analytics, and Application Security.

DBS said it will identify more programmes to cover other major technology domains during this year.

Additionally, the bank said that it will collaborate with technology-focused digital learning libraries such as O’Reilly and Pluralsight to help its technologists to obtain salient skills in a “just-in-time manner”.

The initiative is expected to allow DBS employees to attain the latest technology skillsets and apply it in the relevant technology projects being launched by the bank.

Besides, DBS Future Tech Academy will offer skills certification programmes to 200 trainees as part of its commitment to grow the technology talent pool in Singapore. They will also be given free access to digital learning libraries.

Ng said: “With digital trends and adoption set to accelerate in the next normal, technology will continue to be a core driver of change in the way we live, work, and play. Growing the pool of technology talent in Singapore will place the country in good stead as we respond to the disruptions ahead.”

In September last year, DBS unveiled that it is leveraging artificial intelligence (AI) and information analytics in an effort to bolster its intelligent banking capabilities across digital banking services.

6 January | Offshore

Mashreq may move jobs to cheaper locations to save costs

Dubai’s third-biggest private sector lender Mashreqbank is reportedly planning to move half of its employees to cheaper hubs in a bid to slash operational costs.

Mashreqbank will also allow some of its staff to work from home as part of the dramatic shakeup, Bloomberg reported citing people familiar with the matter.

The oldest Emirati private bank has already notified its employees regarding its plan this week.

Mashreqbank may shift jobs to India, Egypt, or Pakistan, the report added.

The lender, including its subsidiaries, employed nearly 5,000 people as of September 2019.

As part of its latest overhaul, Mashreq will axe several existing roles and replace them with new positions for staffs moving to its “centres of excellence”.

The salaries offered in the cheaper hubs are said to be a fraction of what employees earn in the UAE.

However, the scale of the planned shift of back-office operations by Mashreq is sizeable, according to Bloomberg.

Additionally, in offshore centres, few employees can work from home permanently.

Mashreq is also planning to turn more jobs into remote working positions and lowering salaries for an additional 7% of its employees in the Kingdom.

The relocation of its staff will take place in three phases, and it is expected to be completed by October 2021.

The latest plan excludes Mashreq’s Emirati employees, the Bloomberg report added.