Private bankers chasing uber-rich in surprise wealth hotspot

Bloomberg

Its economy is contracting and the nation’s largest lenders are a mess. And yet, banks from BNP Paribas SA to JPMorgan Chase & Co are scrambling to win business from Germany’s ultra-wealthy.
Deutsche Bank AG, Goldman Sachs Group Inc and Rothschild & Co are also among those planning to beef up in Europe’s largest economy. Several tout the country’s industrial backbone, known as the Mittelstand, and the expectation that aging owners will want to sell their businesses. Others are betting that armies of advisers will be needed to move cash from negative yielding accounts.
The efforts are taking place amid a global battle to manage the ballooning money and affairs of the top 1% and 0.1%. Other wealth hotspots include Brazil, China, Dubai, California and Singapore, but a focus on Germany surprises some industry experts, and not just because of its slumping growth.
Private banking is fiercely competitive in Germany with about 1,500 firms. What’s more, foreign institutions have tried and failed to crack the market.
“Too many banks are investing in German private banking,” said Hans-Juergen Walter, head of financial services at Deloitte Germany. “Some wealth managers will disappear.”
Bankers acknowledge the competition, but want a bigger piece of a country with 6,800 people worth at least $50 million, the third-highest figure in the world after the US and China, according to Credit Suisse Group AG’s latest wealth report.
BNP Paribas added 90 people to the team over the past year, according to Vincent Lecomte, the lender’s co-head of global wealth management. A key element is to attract company owners by tapping relationships built through its investment bank and real estate arm.
Deutsche Bank and Goldman Sachs declined to disclose staff levels for Germany, but Goldman said its local team servicing ultra-high-net-worth individuals — those with at least
$30 million — has grown by a quarter over the past three years and will expand another 50% over next two years. Deutsche Bank is on track to hire 100 front-office staff for wealth management across Europe, it said.
JPMorgan increased headcount at its local unit last year and plans to continue hiring, as does Rothschild, which added nine people for its private wealth division in 2018. UniCredit SpA’s German unit announced two new private banking locations in the northern part of the country.
For some firms including Deutsche Bank and Goldman, the move is part of a broader plan to pivot their business towards more stable and predictable sources of revenue.