Global wealth managers face Euro challenge

By Andrew Hurst, European Banking Correspondent

GENEVA (Reuters) - Wealth managers with global ambitions face a challenge cracking the dominance of national banking champions serving rich clients on their own turf in countries like Italy, France, Spain and Ireland.

Private bankers attending a Reuters wealth summit in Geneva said global players in wealth management such as Credit Suisse (CSGN.VX: Quote, Profile, Research, Stock Buzz), UBS (UBSN.VX: Quote, Profile, Research, Stock Buzz), Deutsche Bank (DBKGn.DE: Quote, Profile, Research, Stock Buzz) and Citigroup (C.N: Quote, Profile, Research, Stock Buzz) can expand rapidly in Asia and eastern Europe, where there is less of a tradition of looking after richer clients.

But competing with retail giants like Societe Generale (SOGN.PA: Quote, Profile, Research, Stock Buzz) or BNP Paribas (BNPP.PA: Quote, Profile, Research, Stock Buzz) in France, UniCredit (CRDI.MI: Quote, Profile, Research, Stock Buzz) or Intesa SanPaolo SPI.MI in Italy and BBVA (BBVA.MC: Quote, Profile, Research, Stock Buzz) or Santander (SAN.MC: Quote, Profile, Research, Stock Buzz) in Spain is proving a tougher proposition.

"It's very difficult to take market share in countries where you are not a national institution," said Ray Soudah, founder of Millennium Associates, which advises the wealth management industry.

Global wealth management specialists like UBS can call on massive resources to devise highly sophisticated financial products and provide advice on matters from setting up a charitable foundation to amassing a fine art collection.

But European retail banks believe they can capitalize on business relationships going back years to steer local clients towards private banking services as their wealth grows and they seek increasingly sophisticated financial investments.

"Our clients find that a global model does not suit them," said Nicolas Cagi Nicolau, global head of structured products at Societe Generale.

He said many well-heeled French clients like the technical know-how that a large bank with an international network such as Societe Generale can call on but also crave the detailed local knowledge that, as a big local player, it can provide.

"They want a combination of the bank's strike force but they also want it to take into account the specificity of local markets," said Cagi Nicolau.

The head of private banking at Italy's Intesa Sanpaolo, with 73 billion euros in assets under management, said he felt he had little to fear from foreign competitors such as UBS whose Italian unit has attracted 16 billion euros in assets from Italian clients.

"I'm not particularly afraid of UBS," said Intesa's Sanpaolo Molesini, whose open architecture model of doing business allows it to offer 1,500 financial products developed by other banks to its own clients.

Other countries, such as Spain and Ireland, where fast growth over the past decade has led to rapid accumulation of wealth and created a class of newly rich families, pose a different kind of challenge to global wealth managers.

"There are problems for banks coming in to Ireland," said Mark Cunningham, managing director of private banking at Bank of Ireland.

"They need to try and understand the market which is different to an established private banking market," he said, adding that there was a huge shortage of qualified staff. "It's very difficult to come in if they can't find people to head up their operations."

Ireland has seen family wealth more than quadruple in a decade to 687 billion euros.  Continued...