In the last of our series of ‘the largest private banks in…’, Oliver Williams looks at one of the wealth management world’s largest and most fragmented markets: the largest private banks in the UK.
Over the past two years, Private Banker International has joined forces with GlobalData (both part of the same parent company) to produce an annual ranking of global private banks by their assets under management (AuM).
In the past month, we have revealed the largest private banks in Switzerland, the largest private banks in the US and the largest private banks in Asia based on this data. This week we take a look at the largest private banks in the UK ranked by their AuM:
Largest private banks in the UK: Ranking the top five
1. HSBC: $258 billion
The UK’s largest private bank towers above its rivals with over double the assets under its management than St. James’s Place, its nearest rival. That gap between them is narrowing however, as HSBC lost 6.5% of its AuM between 2017 and 2018.
Behind HSBC’s dominance on the UK’s list is its global presence. The British bank has recently announced a major expansion in Asia, with plans to hire 300 in its retail wealth management unit and approximately 1,000 in its technology development centres in China.
2. St. James’s Place: $122 billion
While HSBC is focused on banking assets abroad, St. James’s Place owes the vast majority of the assets under its management to the UK domestic market. The wealth manager operates a pure-play wealth management model, which allows it to tap the fortunes of the lesser wealthy HNWIs.
Though this has proved fruitful for the firm, there are others piling into its market. The recently announced Schroders/Lloyds venture is likely to tread on the toes of St. James’s Place and potentially take market share as well as assets.
3. Standard Chartered: $59 billion
Standard Chartered is a British private bank, but the vast majority of its private banking AuM comes from foreign shores. The ‘StanChart’ group owes around 90% of its profits to Africa, Asia and the Middle East, and things at the private bank are not much different.
That model has not worked so well in the past year. StanChart posted a statutory loss before tax of $38m for the year ended 31 December 2018, versus a loss of $16m for the year before.
4. Barclays: $63 billion
Unlike HSBC or Standard Chartered, Barclays has drawn back on its foreign exposure and instead focused more core markets. Sales of its Africa and Asia arms account for a fall of AuM over the last four years. Then, just days ago, Barclays said it would cut 20% of its workforce in Dubai.
A decision to limit its private bank to clients with at least £500,000 in 2014 mean that Barclays is no competitor to St James’s Place either. Despite this AuM has grown, but only slightly, from £61 billion in 2017.
5. RBS (Coutts) $25 billion
The Royal Bank of Scotland (RBS) owns two wealth management brands: Adam & Company and the much larger Coutts.
But since RBS was bailed out by the British Government in 2008 the private banking arms have been downsized. Coutts sold its international arm to UBP in 2015 and has since focused solely on the domestic market, with operations in the Crown Dependencies.
AuM has fallen as a result and shows little sign of recovering. Coutts’ assets under management fell 7% between 2017 and 2018. In its last annual report, RBS said this fall reflected “negative market movements”.
And the others
Added together, the assets managed by the banks listed here do not even come close to matching the $2.2 trillion managed by UBS, or the other American banks that make up the top 3 global banks.
But that is not due to a lack of wealth in the UK. According to the World Wealth Report published by Capgemini last week, the UK has the sixth largest population of HNWIs in the world, with 556,000 based in the country. According to GlobalData, there is $4,025 billion in liquid wealth to be managed
Those billions not managed by banks on this list are looked after by a host of other smaller players: boutique wealth managers, multi-family offices and centuries-old family banks.
The UK is a fragmented market, more so than the others PBI has studied in these rankings. A large amount of wealth is spread very thin.
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