Wealth Briefing
Jason Corcoran in Moscow
Michael Kuenzi, the architect of UBS's Russian onshore wealth management business, has left the group to pursue other challenges, WealthBriefing understands.
Mr Kuenzi, a German national who spoke excellent Russian, left UBS two weeks ago having built up the business from scratch since 2006.
A source close to the Swiss bank said Mr Kuenzi had been replaced on an interim measure by Russian Dmitry Fedossov, who has a background in products and services.
"UBS remains committed to this important and developing market and we are continued to build our presence," said the source.
Steven Meehan, recently appointed as chief executive of UBS in Russia, said growing wealth management would be one of his main priorities.
UBS opened a representative office in Moscow in 1996, and entered into a joint venture with local brokerage Brunswick in 1997. In 2004, UBS purchased the remaining stake in the joint venture, and re-branded the business as UBS in 2005.
In 2006, UBS received a banking license from the Central Bank of Russia, allowing it to offer wealth management, asset management, rouble fixed income and foreign exchange services onshore.
UBS declined to comment.
Despite projections of massive growth, the onshore private banking market remains small by international standards with many Russians preferring to keep their money in the Caymans or Cyprus.
Credit Suisse, one of the pioneers in Moscow, estimates the nascent Russian private banking market has about $15 billion in assets, with the potential to grow to $400 billion.
It is this potential which lured many international players such as HSBC and Union Bancaire Privée to set up private banking shops in Moscow last year.
The current credit crisis has put on the squeeze on Russia's billionaires who are facing depressed equity valuations, difficult refinancing activities and an increasing number of margin calls from Western financial institutions.
This environment, however, may ultimately benefit international private banks, according to Alexander Kotchoubey, head of international development for Russia and Eastern Europe at Lombard Odier.
"Family offices in Russia who have built up a staffing of 25 analysts and investment hurdles of 30-40 per cent are no longer sustainable," Mr Kotchubuey told WealthBriefing.
"I think we are going see many of these operations collapse into the arms of the banks," he added.
Showing posts with label private banking. Show all posts
Showing posts with label private banking. Show all posts
Sunday, 22 February 2009
Sunday, 7 September 2008
Renaissance Investment looks to riches of the CIS
Business New Europe
Jason Corcoran in Moscow
September 1, 2008
Andrei Movchan, founding chief executive and co-head of Renaissance Investment Management (RIM), is banking on his bulging Rolodex of rich clients to help his firm emerge from the long shadow cast by its investment banking stable-mate, Renaissance Capital.
RIM, the emerging markets fund arm of the Moscow-based financial group, has racked up $7bn in assets under management since its inception of 2003, with $5bn in assets being generated by its wealth management business, where individual accounts range from $3m-5m.
This significant proportion of high net worth clients is in contrast to the more modest growth in mutual funds, where RIM manages just $200m. Conversely, rival Troika Dialog Asset Management has a total of $10bn in assets under management in retail, institutional and private banking, but just $2bn of their total is generated by high net worth clients.
Having analysed the market and crunched the numbers, RIM's management team have decided to freeze development of retail and institutional funds in Russia and adhere to the dictum: follow the money.
"We now manage about $7bn in total and $5bn from CIS high net worth individuals," says Movchan. "This high net worth market in CIS is represented by just under 90,000 individuals with bankable wealth in excess of $3m. A 20% market share gives us over $50bn which, provided a successful strategy execution, will make us grow 10 times in three to five years." Part of the strategy to grow its Russian and CIS wealth business involves recruiting an additional 120 client advisors over the next two to three years.
Mining wealth
RIM can expect fierce competition in the high net worth bracket. Mid-size Swiss private banks such as Union Bancaire Privée, Julius Baer and Vontobel are beginning to target Russia's rich, while larger rivals Credit Suisse and UBS have been investing in their Russian wealth operations for the past two to three years.
The interest has been sparked by the commodities boom, which has spawned more mega-rich. The number of Russians with more than $1m to invest, not counting the value of their homes, grew by 14% last year to 136,000, according to Merrill Lynch's 12th annual wealth report launched in Moscow in June. "Russian wealth is not inherited, it is newly created so it requires a different logic and different approach," says Movchan. "When we sell leveraged African shares, people buy; but trying to sell American diversified market would fail."
It's this mentality that has led Movchan to conclude that Russia's noveau riche will be happier to invest their money onshore than stuff it in a Swiss bank account. "Switzerland is a safe harbour for people who do not want high returns, but who want their money to be 100% safe," he says. "In Russia, where we have inflation of 15%, returns of 3-5% are not sufficient. I suppose Swiss banks will lose Russian money unless they work like Pictet [& Cie private bankers] who propose active Russian- and frontier-market allocations."
Movchan hopes to serve Russian and CIS investors who are starting to look beyond cash deposits and real estate investment to more sophisticated products such as hedge funds. Russian mutual funds, or personal investment funds (PIFs), are too restrictive to satisfy the needs of wealthy investors, says Movchan, and while there are hopes the government will eventually introduce hedge funds for qualified investors, RIM isn't banking on it. The firm is gradually converting its equity and balanced products into alpha funds, which generate higher out-peformance. "You can no longer satisfy clients' needs by giving them index-related returns," says Movchan. "You need to do something else and we started the alternative products programme three years ago and we now have about $2bn invested in absolute-return Russian products.
With inflation running at about 15%, Movchan says double-digit returns have become an absolute minimum requirement, not a target. In fixed income, RIM's dynamic fixed income fund is posting a return of 18%. "It's not luck or talent, but bottom-up understanding of credit quality, leveraging and exploiting the opportunity of high inflation in Russia," says Movchan. "Double-digit returns are a given, but the question is whether you can do 25% and with alternative products we can do 25%. Certainty grows once you get off index tracking, while the index goes back and forth according to what Putin says."
Starting out
RIM began life with five employees and $4m in assets, and has grown to about $7bn in assets, with approximately 220 employees. Movchan, 39, has played a key leadership role in establishing RIM, but is keen to push the firm to the next level where it can be recognised as a world beater like its investment banking brother.
A key lieutenant within the Renaissance Group, he added a leadership role at the consumer finance arm for a spell last year. Movchan, who holds an MBA from the University of Chicago Graduate School of Business, joined Renaissance in 1997 from Troika Dialog, where he was an executive director with responsibility for corporate finance and special client operations. Before that, he worked for the commercial bank Rossiysky Credit as department head for financial services and analysis.
Rod Barker joined RIM as Movchan's co-chief executive from the hedge fund RAB Capital earlier this year as part of RIM's expansion into new markets and push for distribution. London-based Barker is responsible for RIM's growing international business in Africa, Central Asia, the Middle East and its distribution hubs in London, New York, Singapore and Geneva.
http://businessneweurope.eu/story1197
Jason Corcoran in Moscow
September 1, 2008
Andrei Movchan, founding chief executive and co-head of Renaissance Investment Management (RIM), is banking on his bulging Rolodex of rich clients to help his firm emerge from the long shadow cast by its investment banking stable-mate, Renaissance Capital.
RIM, the emerging markets fund arm of the Moscow-based financial group, has racked up $7bn in assets under management since its inception of 2003, with $5bn in assets being generated by its wealth management business, where individual accounts range from $3m-5m.
This significant proportion of high net worth clients is in contrast to the more modest growth in mutual funds, where RIM manages just $200m. Conversely, rival Troika Dialog Asset Management has a total of $10bn in assets under management in retail, institutional and private banking, but just $2bn of their total is generated by high net worth clients.
Having analysed the market and crunched the numbers, RIM's management team have decided to freeze development of retail and institutional funds in Russia and adhere to the dictum: follow the money.
"We now manage about $7bn in total and $5bn from CIS high net worth individuals," says Movchan. "This high net worth market in CIS is represented by just under 90,000 individuals with bankable wealth in excess of $3m. A 20% market share gives us over $50bn which, provided a successful strategy execution, will make us grow 10 times in three to five years." Part of the strategy to grow its Russian and CIS wealth business involves recruiting an additional 120 client advisors over the next two to three years.
Mining wealth
RIM can expect fierce competition in the high net worth bracket. Mid-size Swiss private banks such as Union Bancaire Privée, Julius Baer and Vontobel are beginning to target Russia's rich, while larger rivals Credit Suisse and UBS have been investing in their Russian wealth operations for the past two to three years.
The interest has been sparked by the commodities boom, which has spawned more mega-rich. The number of Russians with more than $1m to invest, not counting the value of their homes, grew by 14% last year to 136,000, according to Merrill Lynch's 12th annual wealth report launched in Moscow in June. "Russian wealth is not inherited, it is newly created so it requires a different logic and different approach," says Movchan. "When we sell leveraged African shares, people buy; but trying to sell American diversified market would fail."
It's this mentality that has led Movchan to conclude that Russia's noveau riche will be happier to invest their money onshore than stuff it in a Swiss bank account. "Switzerland is a safe harbour for people who do not want high returns, but who want their money to be 100% safe," he says. "In Russia, where we have inflation of 15%, returns of 3-5% are not sufficient. I suppose Swiss banks will lose Russian money unless they work like Pictet [& Cie private bankers] who propose active Russian- and frontier-market allocations."
Movchan hopes to serve Russian and CIS investors who are starting to look beyond cash deposits and real estate investment to more sophisticated products such as hedge funds. Russian mutual funds, or personal investment funds (PIFs), are too restrictive to satisfy the needs of wealthy investors, says Movchan, and while there are hopes the government will eventually introduce hedge funds for qualified investors, RIM isn't banking on it. The firm is gradually converting its equity and balanced products into alpha funds, which generate higher out-peformance. "You can no longer satisfy clients' needs by giving them index-related returns," says Movchan. "You need to do something else and we started the alternative products programme three years ago and we now have about $2bn invested in absolute-return Russian products.
With inflation running at about 15%, Movchan says double-digit returns have become an absolute minimum requirement, not a target. In fixed income, RIM's dynamic fixed income fund is posting a return of 18%. "It's not luck or talent, but bottom-up understanding of credit quality, leveraging and exploiting the opportunity of high inflation in Russia," says Movchan. "Double-digit returns are a given, but the question is whether you can do 25% and with alternative products we can do 25%. Certainty grows once you get off index tracking, while the index goes back and forth according to what Putin says."
Starting out
RIM began life with five employees and $4m in assets, and has grown to about $7bn in assets, with approximately 220 employees. Movchan, 39, has played a key leadership role in establishing RIM, but is keen to push the firm to the next level where it can be recognised as a world beater like its investment banking brother.
A key lieutenant within the Renaissance Group, he added a leadership role at the consumer finance arm for a spell last year. Movchan, who holds an MBA from the University of Chicago Graduate School of Business, joined Renaissance in 1997 from Troika Dialog, where he was an executive director with responsibility for corporate finance and special client operations. Before that, he worked for the commercial bank Rossiysky Credit as department head for financial services and analysis.
Rod Barker joined RIM as Movchan's co-chief executive from the hedge fund RAB Capital earlier this year as part of RIM's expansion into new markets and push for distribution. London-based Barker is responsible for RIM's growing international business in Africa, Central Asia, the Middle East and its distribution hubs in London, New York, Singapore and Geneva.
http://businessneweurope.eu/story1197
Monday, 11 February 2008
Branson’s space race targets Troika clients
Financial News
Jason Corcoran in Moscow
11 February 2008
The strength of Troika Dialog Asset Management chairman Pavel Teplukhin’s client list has attracted the interest of a string of global entrepreneurs keen to do business with him, including Virgin Group chairman Sir Richard Branson.
The asset manager, the funds arm of the Russian investment bank Troika Dialog, which Teplukhin helped to establish, deals exclusively with Russia’s high net worth clients. Branson approached him at a Russian conference last month, seeking to lure them on to his Virgin Galactic space tourism programme.
Branson said: “I think we should meet and talk business. We have already signed up the first 100 passengers but Russia could be a great market for us.”
Teplukhin, one of the founders of Troika and president of asset management since 1991, can vouch for his clients’ wealth but not their love of space travel.
He said: “If you look at the Forbes rich list, I can tell you that 30% of the names are my clients. We only deal in the seriously rich. My revenues are more than the largest private bank in Monaco.”
The Russian edition of US magazine Forbes runs a special issue every year featuring Russia’s leading millionaires.
Troika’s asset management arm runs a full range of investment products, including sector funds, real estate investment trusts and hedge funds. It markets them to upper middle-class investors, whose portfolios average $25,000 (€17,063) and wealthy clients with average portfolios of $1.5m.
Overall funds under management stand at $5bn, although Teplukhin prefers to measure his business in terms of the fees it brings in. He said: “We earn higher fees than the other banks by focusing on higher margin business. We don’t count money deposits because it’s a low-margin business and we don’t do custody, which is outsourced to UBS at the cost of about three basis points.”
Teplukhin declined to say how much he charges clients, but industry sources suggested it was about three percentage points.
Teplukhin welcomed the arrival of wealth management banks UBS and Credit Suisse to Moscow, but added they would have to build brand awareness from scratch.
Both Swiss banks have set up onshore wealth management operations in Moscow in the past year to compete with Russian banks and Germany’s Deutsche Bank, which has £1bn (€1.3bn) in funds under management.
Teplukhin said investment houses were not willing to pay asset managers enough money. He said: “Talent is not that deep and juniors here with three to four years experience expect a seven-figure salary. There are one million millionaires in Russia and only 3,000 of those use private banking services."
Jason Corcoran in Moscow
11 February 2008
The strength of Troika Dialog Asset Management chairman Pavel Teplukhin’s client list has attracted the interest of a string of global entrepreneurs keen to do business with him, including Virgin Group chairman Sir Richard Branson.
The asset manager, the funds arm of the Russian investment bank Troika Dialog, which Teplukhin helped to establish, deals exclusively with Russia’s high net worth clients. Branson approached him at a Russian conference last month, seeking to lure them on to his Virgin Galactic space tourism programme.
Branson said: “I think we should meet and talk business. We have already signed up the first 100 passengers but Russia could be a great market for us.”
Teplukhin, one of the founders of Troika and president of asset management since 1991, can vouch for his clients’ wealth but not their love of space travel.
He said: “If you look at the Forbes rich list, I can tell you that 30% of the names are my clients. We only deal in the seriously rich. My revenues are more than the largest private bank in Monaco.”
The Russian edition of US magazine Forbes runs a special issue every year featuring Russia’s leading millionaires.
Troika’s asset management arm runs a full range of investment products, including sector funds, real estate investment trusts and hedge funds. It markets them to upper middle-class investors, whose portfolios average $25,000 (€17,063) and wealthy clients with average portfolios of $1.5m.
Overall funds under management stand at $5bn, although Teplukhin prefers to measure his business in terms of the fees it brings in. He said: “We earn higher fees than the other banks by focusing on higher margin business. We don’t count money deposits because it’s a low-margin business and we don’t do custody, which is outsourced to UBS at the cost of about three basis points.”
Teplukhin declined to say how much he charges clients, but industry sources suggested it was about three percentage points.
Teplukhin welcomed the arrival of wealth management banks UBS and Credit Suisse to Moscow, but added they would have to build brand awareness from scratch.
Both Swiss banks have set up onshore wealth management operations in Moscow in the past year to compete with Russian banks and Germany’s Deutsche Bank, which has £1bn (€1.3bn) in funds under management.
Teplukhin said investment houses were not willing to pay asset managers enough money. He said: “Talent is not that deep and juniors here with three to four years experience expect a seven-figure salary. There are one million millionaires in Russia and only 3,000 of those use private banking services."
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