Banks trawl nation for private clients
Though proceeds from local private banking - generally defined as financial services for high net-worth individuals - are a pittance compared with those from retail and corporate services, foreign and local banks are beginning to make strides into the sector, owing to an expected future windfall.
Arthur Klimczak, manager director of Citibank Handlowy's wealth management division, is contemplating launching a new set of services for Poles with roughly zł.3.9 million ($1 million) in savings. The group, he says, numbers about 100,000.
"If you consider it, that's a large chunk of change," Klimczak says.
Even though, he says, "There are just not that many people with serious money in this country. Compared to other countries, in Poland private banking is a narrow one."
This he chalks up to the fact that most of the nation's well-heeled keep their cash outside the country. "The Kulczyks and the Gudzowatys of the world don't keep their money in Poland," he points out. Unfortunately, that means firms like Citibank, BRE Bank and PKO have to settle for the 'lesser rich.'
Nonetheless, Klimczak is pondering a service package geared more toward higher net-worth clients than it does at present with its CitiGold Wealth Management services, because, he says, "This is definitely a growing market." With the expected rise in GDP and overall improvement in the economy, Citibank's - and competitors' - private banking services will be in demand.
Targeting just below that category, it could be said, is new market entrant Jyske Bank, which opened in Poland on May 1. Radosław Kiełbasiński, president of Jyske Polska, said at a press conference last week that the Denmark-based firm would seek clients with zł.60,000-70,000 in the bank.
Kiełbasiński adds that Jyske would be able to carve out a lucrative niche in the country - something he notes banks have done in several other European countries. It would lure clients, he says, with some 30 investment funds, personal advisers, stocks, bonds and treasuries. And because it will target people with lesser capital than is traditionally the custom in private banking, where big names and big money translate into high returns.
But as banks clamor for new business in this maturing market, analysts are unsure just how important a part of the national banking sector private banking is.
Robert Sobieraj, analyst at BDM PKO, is bearish in the near term on the sector for a variety of factors. Sobieraj notes that Polish banks have been offering private banking services to clients for years, but to little demand. "Of course, the problem is with the clients," he says.
Like others in the banking community, Sobieraj points out that the sophisticated banking services enjoyed by the rich in, for instance, the USA and UK are not needed in this country because of the level of savings or, some say, the level of financial understanding.
"I don't expect this market to develop very quickly," he says. "But it definitely will develop."
In any event, Citibank and others are still seriously homing in on private banking at a time when new strategies in the coveted retail sector grab all the headlines.
Looking at a future multi-million euro client roster, Klimczak described the services he would deem ideal for a successful private bank. "You have only as many as 100 clients per executive, no limitations on business hours - if a client needs you on Sunday, you come into the office - and a more efficient infrastructure," he says.
And the lack of this level of service, he notes, is a problem in this country, adding, "I don't think any bank adequately does this yet."
But banks will do well to begin pitching to clients their investment fund (TFI) services - the sales of which have skyrocketed over the past year. The percentage of capital pouring into investment funds over the past year in Poland is almost more than any other European country. Banking clients have warmed to the idea of TFIs because the central banks have severely cut interest rates over the past few years, pulling savings interest down from 18 percent to just a few percent today. Thus the expected double-digit returns expected from TFIs become more attractive.
Also, potential clients have become more informed of the virtues of equity and bond investing through funds. And, in this light, investment fund companies, which would sell products via private banking units, are becoming more creative. This week BZ WBK AIB TFI will launch the country's first closed-end real estate market fund, offering richer Poles an indirect and potentially lucrative way to invest in their own soil.
It is in this positive light that Klimczak says he has been looking for some new recruits for his private banking team.
Arthur Klimczak, manager director of Citibank Handlowy's wealth management division, is contemplating launching a new set of services for Poles with roughly zł.3.9 million ($1 million) in savings. The group, he says, numbers about 100,000.
"If you consider it, that's a large chunk of change," Klimczak says.
Even though, he says, "There are just not that many people with serious money in this country. Compared to other countries, in Poland private banking is a narrow one."
This he chalks up to the fact that most of the nation's well-heeled keep their cash outside the country. "The Kulczyks and the Gudzowatys of the world don't keep their money in Poland," he points out. Unfortunately, that means firms like Citibank, BRE Bank and PKO have to settle for the 'lesser rich.'
Nonetheless, Klimczak is pondering a service package geared more toward higher net-worth clients than it does at present with its CitiGold Wealth Management services, because, he says, "This is definitely a growing market." With the expected rise in GDP and overall improvement in the economy, Citibank's - and competitors' - private banking services will be in demand.
Targeting just below that category, it could be said, is new market entrant Jyske Bank, which opened in Poland on May 1. Radosław Kiełbasiński, president of Jyske Polska, said at a press conference last week that the Denmark-based firm would seek clients with zł.60,000-70,000 in the bank.
Kiełbasiński adds that Jyske would be able to carve out a lucrative niche in the country - something he notes banks have done in several other European countries. It would lure clients, he says, with some 30 investment funds, personal advisers, stocks, bonds and treasuries. And because it will target people with lesser capital than is traditionally the custom in private banking, where big names and big money translate into high returns.
But as banks clamor for new business in this maturing market, analysts are unsure just how important a part of the national banking sector private banking is.
Robert Sobieraj, analyst at BDM PKO, is bearish in the near term on the sector for a variety of factors. Sobieraj notes that Polish banks have been offering private banking services to clients for years, but to little demand. "Of course, the problem is with the clients," he says.
Like others in the banking community, Sobieraj points out that the sophisticated banking services enjoyed by the rich in, for instance, the USA and UK are not needed in this country because of the level of savings or, some say, the level of financial understanding.
"I don't expect this market to develop very quickly," he says. "But it definitely will develop."
In any event, Citibank and others are still seriously homing in on private banking at a time when new strategies in the coveted retail sector grab all the headlines.
Looking at a future multi-million euro client roster, Klimczak described the services he would deem ideal for a successful private bank. "You have only as many as 100 clients per executive, no limitations on business hours - if a client needs you on Sunday, you come into the office - and a more efficient infrastructure," he says.
And the lack of this level of service, he notes, is a problem in this country, adding, "I don't think any bank adequately does this yet."
But banks will do well to begin pitching to clients their investment fund (TFI) services - the sales of which have skyrocketed over the past year. The percentage of capital pouring into investment funds over the past year in Poland is almost more than any other European country. Banking clients have warmed to the idea of TFIs because the central banks have severely cut interest rates over the past few years, pulling savings interest down from 18 percent to just a few percent today. Thus the expected double-digit returns expected from TFIs become more attractive.
Also, potential clients have become more informed of the virtues of equity and bond investing through funds. And, in this light, investment fund companies, which would sell products via private banking units, are becoming more creative. This week BZ WBK AIB TFI will launch the country's first closed-end real estate market fund, offering richer Poles an indirect and potentially lucrative way to invest in their own soil.
It is in this positive light that Klimczak says he has been looking for some new recruits for his private banking team.
