Ageing population drives boom in elite private banking, says BNZ
Donna Nicolof, BNZ’s head of wealth and private banking, says BNZ’s private bank had doubled its funds under management in the past three years.
With $3 billion of funds under management, the private bank had a growing importance to BNZ, Nicolof said. It had 50 private bankers around the country, each looking after 20-60 clients.
Private banking is banking for the “one per cent,” the wealthiest people in society. All the big banks have private banks, and becoming a customer of one usually follows a tap on the shoulder.
People often get the invitation after selling a business, and with the greying of the population, an increasing number of business sales are taking place.
Recent research suggests some 5000 middle sized businesses earning between $2 million and $25m are predicted to be put up for sale in the next five years, and just over 190,000 smaller businesses are expected to put on the block
Private banking is high-touch banking, with a heavy focus on wealth management.
“These people have been comfortable with debt,” Nicolof said.
“They have taken on debt to build and run their businesses. They have got to a point where they sell those businesses, and they have got all that money to invest, but they have never really thought about how to do it.”
He said former business owners often had had all their wealth tied up in a small number of businesses, and had little experience of investing more widely.
BNZ’s use of the term “family office” on its private banker business cards points to the growing need for help in managing more than their customers’ banking and investments.
The presence of a private banker at a recent Philanthropy New Zealand charity event was because the very wealthy often turn their minds to philanthropy later in life.
Nicolof said private bank clients two key preoccupations were their children, and giving something back to the society in which they prospered. “Philanthropy is high on their agenda,” she said.
“They typically have two big things they think about; What their legacy will be… and how do they treat their children.”
The term family office is of European origin, and refers to wealth management offices set up by the ultra rich to manage their own wealth. A number of what could be described as discrete family offices have been set up by wealthy families in New Zealand, said Nicolof.
Not only do family offices manage investing for the family, but they also help the family do a lot more, such as managing their philanthropic efforts, and helping them with things like trusts to protect and pass on their wealth for future generations. BNZ’s adoption of the term family office recognised the opportunity in providing those services within its private bank, contracting in experts where necessary.
There are no public figures showing how big private banking is in New Zealand, Nicolof said, but added: “We are not the largest private bank in New Zealand, but we are the best.”
BNZ’s private bank was named New Zealand private bank of the year in the global private banking awards.