Credit Suisse has no retail platform in Australia, yet was confident enough in the market to roll out its private banking offering in the country back in 2007. It has no cause to regret its move.

Credit Suisse has no retail platform in Australia, yet was confident enough in the market to roll out its private banking offering in the country back in 2007.

That decision, says Ray McGregor – managing director and head of the private bank in Australia – was because Credit Suisse saw Australia as a “big opportunity.”

“The private banking market in Australia is quite under-developed compared with international markets,” McGregor told this publication in a recent interview.

“When you ask an Australian customer what they think of private banking they respond with a description of what would be called priority banking anywhere else in the world.

“They are talking about having a personalized banker to help them with their retail banking needs, red carpet retail to use another phrase,” he says.

The Credit Suisse model, imported from Europe and the bank’s success elsewhere in the world, is somewhat unique in the Australian market. Credit Suisse does not do credit cards, cheque books or transaction banking. Its model, says McGregor, is “focused on guidance and execution for people on how to invest their money.”

“Our specialisation is if someone has got A$10 million ($9.2 million) or A$100 million they want to invest in the financial markets we are better at doing it than anyone,” he says.

“When it comes to people who have got money and want to invest it and help to do it, well we are much better at doing that than anyone else, he says.

McGregor says most of Credit Suisse’s Australian clients have investible assets of between A$5 and A$15 million.

“We have a higher proportion than our competitors in the ultra high net worth space,” he says.

“Because the key thing we are offering is much more sophisticated. There are a lot of people in this market with a good offering around Australian equities, but we can help with international execution, direct bonds internationally, equities internationally, structured products and more, and all of them in same shop,” he continues.

“So when a client says ‘I have this money and this is what I am trying to achieve’ then that is much more powerful,” he says.

Wealthy families

Credit Suisse, says McGregor, has already had “a lot of success” with wealthy families in Australia, where family wealth is different to that in Europe.

“In Australia the old money really isn’t that old, most of it is first or second generation wealth, but we have banked a lot of wealthy families internationally, and our advisors are in a situation where they are sitting down with a family member who has a lot of money and is managing that, and the reality is that not many people get that opportunity,” he says.

Credit Suisse has also had success among high net worth Chinese Australians. The bank has a team of people with Asian language capabilities to work with these clients.

Overall though, McGregor says it is very difficult in Australia to hire the right people for the private bank.

“Hiring is certainly challenging in this market,” he says.

“Finding people familiar with our model is difficult, because there are probably only a handful of people in this market who are familiar with the international style private banking model. It’s very hard to find an advisor in this market who can think and talk and execute intelligently outside of Australian equities,” he says.

McGregor also sees this as one reason why the Australian private banking industry is not so well developed: private banking skills are not as portable as other skills in the financial industry because private banking is all about maintaining a client book.

“It can take five to 10 years to build a private client book, and if you move somewhere then you have to give that up,” he says.

Credit Suisse currently has around 50 client-facing employees in its Australian private bank and is still looking to hire, but selectively. McGregor says the optimum ratio for the bank is to have 20 to 30 clients for each relationship manager

“Some of the people we have hired have been expats moving back to Australia, they tend to be among the best qualified,” he says.

“We’ve also cherry picked some people out of local institutions, and we do some lateral hires, such as bringing a very senior person from our investment bank across. The private bank is also very well regarded within the Credit Suisse group, it’s not an add-on. The private bank makes as much money globally as any other section of the bank, so it is certainly not considered a step down to work in private banking.”