Private bankers see crisis boosting transparency

October 15, 2008 by · Leave a Comment
Filed under: Industry News 

The global financial crisis will boost calls for tougher regulation and greater transparency on banking fees, which could in turn hit some wealth managers’ profit margins, bankers to the world’s rich say.

“Clients have lost trust and something needs to be done to improve the quality of advice,” Sebastian Dovey, managing partner at wealth management consultancy Scorpio Partnership, told the Reuters Wealth Management Summit.

Bernard Coucke, deputy chief executive of ING Private Banking said he expected the industry’s traditionally healthy margins to come under pressure in the longer term.

“There is pressure of transparency and regulations. Customers will see what margins are. Those of the past will not be accepted in the future,” Coucke said.

Patrick du Saint, head of Private Banking Switzerland of French bank BNP Paribas, said there could be a “slight impact” on the profitability of private banking operations as clients would have greater transparency as to a product’s real costs.

Bankers said the profitability of their private banking operations had already fallen due to the turmoil in global markets, which prompted many clients to shift funds to products with lower margins such as cash accounts.  Not all bankers, however, expected new rules to hit margins.

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