“An extraordinary year of negative returns usually gives rise to a good starting point when you think long-term,” sums up Juan Luis García Alejo, CEO of Andbank Wealth Management. This year it is. The global economic slowdown, the energy crisis, the high inflationary pressures, the tightening of financial conditions, uncertainty and the deterioration of confidence will limit the degree of dynamism of the GDP in the coming quarters. The Bank of Spain says so literally in its 2022-2024 Macroeconomic Projections, published at the beginning of October. According to the director of Economy and Statistics of this institution, Ángel Gavilán, the inflation rate for next year amounts to 5.6% and the recovery of the level of GDP prior to the pandemic would probably be delayed until the first quarter of 2024, two quarters later than projected by the entity in June.
In this context, private banking has managed to weather the storm in a year that was expected to be somewhat calmer. However, with each crisis -or hints of it- a cycle opens and private banking feels slightly optimistic at a time when not many are. The keys? In the words of José de Alarcón, Andbank's general commercial director, "its proven independence when it comes to resolving conflicts of interest and its ability to respond to clients", attributes that have led it to be increasingly valued in times of uncertainty. It already did so in 2021, in a context still limited by the pandemic, a year that closed with a volume of managed assets of 615,000 million euros, 16% more than the previous year, a historical maximum and an evident symptom of its good health. Analysts agree: specialized private banking is gaining ground over universal banking.
Specifically, anticipation and specialization in heritage protection have led it to capture almost more than 26% of the market. "Specialized banks are very clear about their priority and little by little the client is recognizing and rewarding it," Alarcón values. “We are convinced that specialist entities focused on the client will be the winners, at least in the long term. It is already happening in the main European and Anglo-Saxon markets in which specialized entities account for more than 50% of the volume”, adds the manager.
The future is complex, but for that very reason it offers opportunities, especially to those who distance themselves from short-termism. Reinforced by a 2022 that offered more curves than expected, the slogan is repeated: the starting point of a desired bullish scenario is always a period of recession. For private banking, that is the best promise with which the year ends and 2023 begins. A sentiment shared among financial advisers, but also investors themselves: "Everyone waits for us to identify that moment in Negative risks may be reflected in asset prices and return to a mode of greater appetite for risk", observes Juan Luis García Alejo, who summarizes: "The current market context offers the opportunity to continue doing things".
The entity ended October with a turnover of over 18,000 million euros and will close the year at around 18,300 million euros, which would mean being 1,000 million euros above the end of 2021. By 2023 it hopes to have a double-digit growth and exceeding the level of 20,000 million euros without taking into account the market effect or purchase operations, in line with the net deposits of recent years.
In the middle of the storm, specialists have shown greater agility in responding to clients due to their smaller size and unique priority in private banking, although the geopolitical upheavals of the first half have taken their toll. For example, between January and June the turnover of the Swiss bank Julius Baer reached 1,865 million Swiss francs (1,892 million euros), the same figure as a year earlier, but the net profit fell by 27% compared to the record profit recorded in the same period of the previous year. The CEO of the Swiss group, Philipp Rickenbacher, stated that the entity remains focused on achieving its objectives for the strategic cycle that ends in 2022, "duplicating efforts to create value for customers".
2023 inherits the script twists of 2022, just as Andbank advances, in a world that is not exempt from challenges. “Despite seeming obvious, diversification and risk management must always be present in the configuration of any private banking portfolio. The opposite is reckless”, values García Alejo. The recipe: "Flee from short-termism, avoid value traps and have a long-term investment plan according to your vital needs are essential elements of our work."
