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06/05/2013

Interview with Luc Leclere, Director Private Banking at BNP Paribas Fortis (1/2)

Even after the biggest crisis since the 1930s, the population of High Net Worth Individuals reaches a new top each year. But while private banking's customer base grows, regulation and competition present serious challenges to the industry. In this context, Luc Leclere, Director Private Banking at BNP Paribas Fortis, took the time to share his insights with Sia Partners on the Belgian private banking industry.

SIA: Could you briefly introduce yourself and present your curriculum vitae to our readers?
L. Leclere: I'm currently active in the banking sector for about 22 years of which 18 years devoted to the Private Banking sector. After my studies in Applied Economics, I started my professional career in the Retail Bank BACOB, nowadays known as Belfius. After having worked there for about 4 years, I made the switch towards BNP in Luxembourg at the moment BNP merged towards BNP Paribas Luxembourg. Shortly thereafter, I made the shift towards Paribas Switzerland where I experienced for the second time the merger of BNP Paribas, but now on the Swiss side. Eventually, I came back to Luxembourg in 2003 where I became responsible for the Belgian and Dutch clientele, experiencing the first EBA exercise where we assisted our clients in the regularization of their assets. In 2007, I came back to Belgium in order to lead the branch office of BNP Paribas Private Banking. Two years later, at the time when the general assembly approved the take over by BNP Paribas, I became responsible of the Private Banking activity of BNP Paribas Fortis. As you might know, Private Banking as a whole embraces two areas: on the one hand you have the Private Banking segment ranging from € 250.000 up to € 4.000.000, and this is the part that I'm responsible for. On the other hand you have the Wealth Management activity of the bank for the segment larger than € 4.000.000, which is headed by Sandra Wilikens. These two activities are supervised and coordinated by Stéphane Vermeire, who operates as general manager of the Private Bank.

SIA: According to the World Wealth report, the number of millionaires as the total amount of their assets is currently reaching an all-time high. How can it be explained that the number of High Net Worth Individuals has come back at astonishing pace to its pre-crisis level (already in 2009)?
L. Leclere: First, if you look at this from a macro-economic perspective, one can notice that after each crisis the return of wealth usually falls back a bit before rapidly recovering and regaining ground again. Historically we have already witnessed this several times. Secondly, I also believe that people are very cautious and careful when it comes to the management of their capital. As a matter of fact, it is true that numerous people have lost a lot of fortune during the crisis, but it is also likely that a lot of them persisted in a number of positions they were holding which subsequently came back to a fair and correct market level. These kinds of people are all active in a very dynamic and entrepreneurial way and in that sense continue to do good business in times of crisis. In times of crisis, we often tend to forget that there still is an economic activity which is up and running. Suppose that this stopped, then for sure we would not be in the situation as we know it today. So I think that there might be indeed a number of things that are kept out from the public eye due to the crisis, but however continue to create value and contribute to the raise of global wealth. So I think this is a very normal and logical evolution.

SIA: However, in contrary to the above tendency of continued growth in global wealth, do you agree that on global level private banks failed to capture their fair share of assets under management during the last years?
L. Leclere: Then you're obviously situated in the field of market share. However, it is very difficult to determine which assets are taken into consideration for the calculation of it. For example, there are sometimes assets captured in real estate which do not figure in the accounting statements of the bank. Therefore, I always find an evaluation on the basis of market share a tricky issue. Nonetheless, when considering our position in the Belgian market, I believe that we were able to gain our fair share in it. In spite of that, we pay much more attention in our model to customer satisfaction as barometer when evaluating and predicting our growth. Via regular interviews (3 times a year), we gauge the client satisfaction of our entire customer base. Beside of receiving an impression of how our market share could evolve, we receive an accurate image of whether our clients are willing to recommend BNPPF to others as private bank. This consists of an important indicator to measure whether you have gained the trust and confidence of your customers. We attach great importance to this, more than to the actual market share itself. Although the latter could give a certain indication, we do not immediately draw conclusions from it.

SIA: Can this client satisfaction be measured accurately in an unbiased way?
L. Leclere: Of course, within BNP Paribas Fortis this is very objectively measured by TNS Dimarso, one of the leading references in market research. Without going further into the details of the entire process, it offers us a lot of valuable information on what the client is expecting from his banker and consequently on how our offerings can be fine-tuned in order to meet our client needs. We also have surveys in place on group level in order to draw lessons from potential differences that arise alongside the different business units in Belgium, France and Italy. Next to this, it also has an influence on how our complaint handling model evolves and becomes managed. In general, this process is highly valued by our clients.

SIA: Which approach did BNP Paribas Fortis undertake to regain the confidence of their private banking clients after the sub-prime crisis of 2008?
L. Leclere: As it was the case for almost each financial actor, we obviously went through a difficult period in 2008. However, it gave us the opportunity to reconsider our strategy in order to reinforce our market position and to regain and strengthen the trust of our customers. This exercise led to the set-up of a completely new private banking operating model, which was brought to the market in December 2009. The model as such is more "client centric", focused on knowing your customer. This has been translated in our offer through the set-up of a patrimonial balance, aiming at identifying the client's situation (fiscal, legal and financial) today, the client's goals and the solutions the bank can offer in achieving them in the most efficient way. Actually, this is the main guide that we use today when starting up a new client relation. This exercise is also ongoing for all our existing clients through in-depth interviews in order to identify how we can assist in the management and protection of their personal assets in the most efficient and tailored way. As I said in the beginning of this interview, people are very cautious when it comes to the management of their capital, so protection in this matter is a very important topic. Last but not least, many of our clients are asking themselves what will happen with their capital and how it will be transferred to their relatives when they are no more. It are these three issues that need to be discussed with our clients on a regular basis. It's basically like taking a photo at the start of a client's relationship and thereafter evaluating and adjusting it on a constant basis, doing everything in our best effort to meet the needs of our clients as good as possible. This model has been put in place and formulized in a clear commitment towards our clients. We call it the patrimonial agreement, where it are rather the commitments we have to live up as a bank towards our customers. We have deliberately chosen to be very transparent towards our clients, also regarding the pricing, and to appreciate our clients in relation to the total business they are doing with us instead of resting on a unitary-based pricing model, like it was earlier the case in the banking landscape.

Sia Partners

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