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The best of wealth

Butterfield Bank Guernsey managing director Robert Moore talks to Philip Scott about its plans to market itself to the globally defined intermediary market, maintain its client focus and the challenges that the bank faces

Fierce is a perfectly good word that describes the competitive nature of the Guernsey private banking market, says Butterfield Bank (Guernsey) managing director Robert Moore.

This, of course, is great from a client’s perspective, it means more choice, variety, and value for money. As Moore succinctly puts it: “It means we have to compete. The marketplace offers a strong variety of names such as Credit Suisse, Kleinwort Benson and Royal Bank of Canada and I am perfectly happy to name these groups because they are top-class outfits but I would name Butterfield Bank alongside them.”

Butterfield Bank has been established in Guernsey since 1972 and has 220 staff located there. Butterfield’s foundations were, however, grounded back in 1758, when Nathaniel T Butterfield founded a merchant-trading firm which, in 1858, became The Bank of N T Butterfield & Son – Bermuda’s first bank.

In addition to Bermuda and Guernsey, the group has offices in the UK, Cay-man Islands, Barbados and Bahamas.

Moore describes Butterfield as a medium-sized bank and that the firm’s rise has been due to a combin- ation of organic growth and acquisition, with the most recent purchase being Leopold Joseph business in Guernsey last April. The bank has $17bn in client assets under either management or administration.

Moore says: “We are big enough financially and have a track record, from a financial point of view, to be a credible and reliable service provider but we are small enough to be completely client focused.”

Butterfield Bank Guernsey’s primarily focus is private banking, wealth management and institut- ional services, such as third-party fund administration.

“On the wealth management side, the ingredients we can bring in assisting a client directly, or via a professional intermediary, comprise the traditional banking elements: deposit taking, foreign exchange, fiduciary services, investment management and custody and so on.”

When it comes to the level of individual wealth required to do business, Moore explains there is no strict “minimum” and the bank would be happy to start a relationship with, say, 50,000 – not a big amount in the area of wealth management.

However, he says, with such an amount, there would be limited services Butterfield could offer. “You cannot do very much with 50,000 other than provide some fairly simple serviced-based functions which would be around deposits or perhaps a fairly simple fund-based offering but its our way of demonstrating our service proposition.”

There has to be a signifi-cant level of wealth available for a client to receive the full benefit from what a private bank has to offer. Moore says: “A fully managed portfolio for much less than about $1m is probably not going to make sense from the client’s point of view.”

The challenge for intermediaries dealing on the internationally connected side is balancing the commitment of time in getting to really know a client’s situation in depth and then obtaining the proper solutions.

He says: “It is a time-efficiency challenge – in that how can you do it right and still be cost-effective?

“We work very closely with intermediaries in the international arena and the UK. We will work with trust companies which may be based in the UK, Monaco or Channel Islands as well as with law firms as intermediaries, accounting firms and IFAs.”

Intermediary business for Butterfield Bank Guernsey accounts for about 20-25 per cent and Moore asserts that it is not ashamed to admit that the bank is actively seeking to market its presence and capabilities to the globally defined intermediary market: “A significant challenge is being effective in marketing.”

A common situation with clients, directly or via intermediaries, is that they will often be UK resident but non-domiciled. More typically and complex than that, they may be UK resident and non-domiciled but with international family situations. Moore says: “First of all, the tax situation is relatively complex. We are not the tax experts but we work with their tax advisers to ensure solutions are going to be tax compliant for all the different members of the family and this environment often leads us into trust- type solutions and investment management-type requirements.”

From an investment-management service perspective, unsurprisingly, Moore says that at Butter-field it is about having a one-on-one relationship.

“The investment manager will be running money with an eyeball-to-eyeball dialogue with the client and will aim to understand exactly what they mean by risk, long-term objectives, the family situation and construct a portfolio on the basis of this understanding.”

Butterfield only uses external funds where they make sense in the mix. “It is a partially open-architecture structure,” says Moore.

The investment manager will use individual lines of stock and if they are using bonds will definitely be using individual ones because “we do not think that bond funds are often the best solution.”

Moore adds: “If we are looking at alternatives, this will primarily be a fund of hedge fund-type approach although there are other structures which we will have designed to our own criteria by a specialist.

Another challenge Moore faces is the continuing monitoring of products. “It is important when going forward that we are marshalling the full range of sensible product elements to go into this product/service/ advice mix and be aware of what they are and be able to tap into those products we choose not to manufacture ourselves. The challenge is to stay continually in the forefront of that and some of the competitors in the wealth management field are very good at this.”

For Butterfield and the private banking sector in general, the biggest impact on business growth is the state of wealth generation in the developed and the new developing markets – North America, UK, Western Europe and the Far East.

When wealth generation is strong, as it has been for the past two years, then there are a lot of opportunities which need solution-based thinking and business growth, from the point of view of a private bank in Guernsey, tends to be strong. Moore admits this year has been one of robust growth.

Looking back at a period of softer wealth generation, such as 2002 and 2003, that is the biggest challenge because the degree to which the client is looking for solu-tions is reduced, says Moore. “Making one self-efficient in handling the creative aspects of international regulatory requirements is a challenge in order to be user-friendly and ensure our own cost structure does not get thrown out of kilter by that.

“It is a lot of the traditional challenges most businesses face which we also deal with. While it sounds a bit trite, the reality is about getting to know your client individually and understanding what matters to them most and delivering that in a way they are most happy with.

“If you are doing that reasonably successfully, the client is going to know you are trying to meet their expectations and will be somewhat forgiving of the odd issue. It is as simple as that.”

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