Crisis leads to more private banking investments

At Raiffeisen Bank, the value of private banking client portfolios exceeds €500 million. “We are managing assets five times higher than in the first year of operations [Ed. n. 2006] and 25 percent higher than at the end of last year,” said Raiffeisen Bank’s head of private banking, Octavia Cutus. The department operates under the Raiffeisen Exclusive brand.

Major lenders that provide private banking operations - Raiffeisen Bank, Banca Comerciala Romana (BCR), and UniCredit Tiriac Bank, say they registered a 7-10 percent increase in assets since June 30. In October, the value of Raiffeisen Exclusive assets stagnated, “due to uncertainties caused by the international crisis,” Cutus said. November, however, registered a growth rate similar to the other months of the year. “In October, we registered a withdrawal of funds, due to the uncertainty, but clients brought back their funds, because they trust that the bank is solid, and due to the fact that private banking services are more advantageous than other investment options,” Cutus said. Raiffeisen Exclusive offers better interest for deposits, compared to the other departments, even for the minimum €40,000 deposit.

The main impact of the financial crisis is that clients are focusing on longer term investments and state bonds, including Eurobonds. State bonds make up some 10-12 percent of total assets managed by Raiffeisen’s private banking department. The ratio of shares and mutual fund titles dropped to 5 percent, from 10 percent before the crisis broke out. Currently, bank deposits are preferred.

Raiffeisen Exclusive has more than 2,000 clients, with the largest individual portfolios exceeding €10 million.

Representatives of other lenders agree that the private banking segment is registering growth. “Private banking services have taken advantage of the crisis. After hesitations in October, existing clients were joined by new ones, who have business mainly in the real estate field,” according to UniCredit Tiriac Bank’s head

of private banking operations, Monica Ionescu. The department has some 1,300 clients with total assets exceeding €270 million. “Businesspeople would rather wait for new opportunities next spring, when the crisis is expected to peak, and they opt for private banking services,” the Manager of BCR’s private banking department, Alex Titus Dumitrescu, agrees. Assets managed by private banking departments of local lenders exceeded €3 billion at the end of the first half of 2008. The market leader is BCR, with one third of the market. Other significant players in the field are Raiffeisen Bank, UniCredit Tiriac Bank, BRD Groupe Societe Generale, and ING.

‘In October, we registered a withdrawal of funds, due to the uncertainty, but clients brought back their funds, because they trust that the bank is solid, and due to the fact that private banking services are more advantageous than other investment options Octavia Cutus Manager, Raiffeisen Exclusive