Translated material
New Russian rentiers
PWC calculated how many rich Russians trust banks
The number of wealthy Russians entrusting their funds to financial institutions for management is rapidly increasing. This is evidenced by a study published yesterday by the PricewaterhouseCoopers agency, according to which the domestic private banking sector is expected to grow by at least 30-50% per year. Bankers note that this is due to an increase in the welfare of citizens and increased confidence in financial institutions. In addition, citizens often, with the help of Russian banks, realize the opportunity to invest their funds in foreign assets, which is especially attractive to them.During the study “Private Financial Management in Russia”, conducted by the international agency PricewaterhouseCoopers, 18 market participants were interviewed. Among them are such large foreign companies as Credit Suisse, Deutsche Bank, UBS, and Russian Uralsib, Bank of Moscow, Troika Dialog, Petrocommerce Bank, Impexbank, Gazprombank, International Moscow Bank.
According to the study, the total volume of funds under management in Russia does not exceed 10-12 billion dollars, and the number of clients is 10 thousand. Market participants themselves do not agree with this assessment. According to Natalia Rodionova, director of the department for working with wealthy clients of Rosbank, the market volume is approximately $20 billion. Note that there are no official statistics on this area of financial activity.
According to Troika Dialog, it raised $760 million in 2006. Now the total assets in trust management of the company are $1.3 billion. Petrokommerts has about 5 billion rubles in trust management. Rosbank services more than 1,000 wealthy individuals, and the volume of VIP client funds under management significantly exceeds $1 billion.
“To become our client, in Moscow you need to have about 200 thousand dollars, and in the regions - from 100 thousand dollars,” says Uralsib Marketing Director Valery Chumachenko. Director for work with private clients of the Bank of Moscow Dmitry Breitenbikher told Vremya Novostey that basically his bank’s clients provide $200,000 or more for management. By the way, many survey participants note a general trend towards increasing the minimum amount of funds under management to 250-- 300 thousand dollars.
Most market participants note an increase in funds under management in 2005 from 60 to 100%. Almost all market players predict further significant growth, at least 30-50% per year. In their opinion, almost half of the new money will come from existing clients, about 40% will come from those who have not previously used wealth management services, and only a little more than 10% of the new money may come from competitors.
Many banks expect to increase the number of private banking clients at the expense of their clients who use other services, such as executives of large corporations. Those organizations that help their clients with mergers and acquisitions or entering the capital markets also hope for new clients.
As financiers note, many wealthy citizens are attracted by the opportunity to use the services of large Western banks through domestic banks, as well as the possibility of alternative non-bank use of funds. “Most banks profess “open architecture,” notes Mr. Chumachenko. - That is, they not only provide clients with their services, but also provide the opportunity to create a global portfolio by entrusting funds to large Western credit institutions, and this is a completely different level. A Russian bank can act as a consultant and organizer of portfolio creation and receive a reward for this.”
“Within private banking, we provide not only banking services,” says Mr. Breitenbecher. -- In particular, through our partners within a specially created pool, we help to make one or another investment, for example in real estate, the purchase of jewelry, jewelry, yachts, etc. We do not receive any compensation for this. These services, like consulting, are not charged. In this way, we hope to gain customer loyalty.”
An important factor in the growth of this sector is that there are more wealthy people in Russia. According to Mr. Chumachenko, many Russian entrepreneurs, upon reaching a certain age, sell their businesses, and they have significant sums that need to be stored somewhere and managed wisely.