The top 25 global private banks experienced better efficiency ratios with a 75.1% cost- income ratio in 2015, which is five points better than the all-industry average of 80%, but their overall AUM levels dropped slightly more than the industry at large, reveals the new annual Global Private Banking Benchmark Report by Scorpio Partnership.
UBS maintained its number one position among the top 25 global private banks that were measured by AUM volumes. UBS, alongside the majority of other private banking institutions, experienced a notable slow down in AUM growth and a squeeze on operating margins.
The top 25 private banks managed USD11.0trn of HNW AUM representing a 56.3% market share, up from 55.9% market share in 2014. The average net new asset growth rate was up 33% from last year’s figures. However, according to Scorpio Partnership's annual benchmark report, volatile markets and clients’ hesitation to onboard business at levels previously experienced are among the factors affecting the results. Some of the AUM slowdown has also been attributed to a number of leading firms undergoing restructures of their divisional reporting lines.
UBS was followed by Bank of America Merrill Lynch and Morgan Stanley on Scorpio Partnership's ranking. Credit Suisse and Royal bank of Canada completed the top five. Amid the challenging financial markets, the leading 25 private banks attempted to weather the storm with many players having benefited from their size and ability to reach out as well as appeal to a wider market, reveals the new benchmark report.
“Ultimately, the market leaders have focused aggressively on improving their cost-effectiveness in their operating models in order to weather the storm as best as possible,” said Sebastian Dovey, managing partner at Scorpio Partnership.
In terms of client sentiment, North America retains its position as the client engagement leader, and the gap with European client engagement standards is widening from 11.9 points in 2013 to 12.5 in 2015, the benchmark report reveals. Asia Pacific clients are also exhibiting growing sentiment.
Scorpio Partnership’s HNW Client Engagement Score (CES) measures the overall rating of the client experience for their wealth manager by HNWs and UHNWs globally. The score is based on an aggregate across the three pillars of a wealth management relationship – Service, Proposition and Relationship.
In spite of the tough times, Dovey says the industry "still has a positive future". “Our HNW client feedback analysis evidences strong client engagement ratings with their provider experience across the same time period. But private banks will now need to become much better informed on what to do next to generate the best outcome s for client experience from a new assets and growth perspective,” he added.
The annual 100 page report by Scorpio Partnership assesses the financial performance information from over 200 private banks and subsidiaries globally. The report was first released in 2001.
Top 25 Private Banks worldwide by Assets Under Management (AUM)