Stimulus packages and high equity drove the winners’ success this year.
North America stands out as one of the world’s most vibrant private banking markets. It surpassed the Asia-Pacific region recently to become the geographic leader in high-net-worth (HNW) population and wealth, breaking a five-year trend, according to management consultancy Capgemini. North America’s HNW population stood at seven million in 2020, the last full year for which data is available, a 10.7% year-over-year increase. The region’s soaring equity markets and historic, Covid-related government stimulus packages fueled the region’s gain. HNW wealth volume reached $24.3 trillion.
BEST PRIVATE BANK IN NORTH AMERICA
J.P. Morgan Private Bank
Serving HNW clients is mostly a high-margin business, and J.P. Morgan’s private bank is no exception. The Global Private Bank’s pretax margin ratio was a healthy 41% in the first half of 2021, higher than any of the New York–based institution’s other asset and wealth management segments.
In the US, J.P. Morgan Private Bank–like several of its competitors, including Citibank and Bank of America—has been expanding. In Miami, for example, the private bank plans to add 100 additional employees by early 2022, plus an additional 70 financial advisers over the next five years. It recently appointed two executives to spearhead the private bank’s regional expansion to take advantage of all the new wealth from Latin America and Europe that is migrating to the US Southeast, particularly to Miami, a growing international commercial and financial hub.
The private bank provides retirement products and services, brokerage, custody, trusts and estates, loans, mortgages, deposits, investment management and philanthropic services to HNW clients. It generated revenue of $3.8 billion in the first half of 2021, up 14%, largely driven by higher deposit and loan balances, higher asset management fees and the impact of lower funding costs on loans, according to the bank’s second-quarter 10-Q filing.
BEST PRIVATE BANK FOR SUSTAINABLE INVESTING
Goldman Sachs CEO David Solomon was not blowing smoke when he said in a statement in March of this year, “Sustainable finance has already become a core offering from Goldman Sachs.”
In December 2019, the Wall Street powerhouse announced that it would dedicate $750 billion toward sustainable financing, investing and advisory activity focused on two key priorities: climate transition and inclusive growth—all to be achieved by 2030.
In February of 2021, Goldman Sachs issued its first-ever sustainability bond—to fund commercial activity tied to its $750 billion commitment. By March, the firm had reached $156 billion of that total, including $93 billion dedicated to climate transition. Along the way, it also created a Sustainable Finance Group to coordinate sustainability efforts across the firm, as well as dedicated sustainability councils within all its businesses.
On the investment front, the firm’s Horizon Environment and Climate Solutions Fund, launched in March, quickly raised $800 million to invest in companies addressing environmental and climate-transition issues, with the following themes: “waste and materials, sustainable food and agriculture, ecosystem services and water, clean energy, and sustainable transport.”
MOST INNOVATIVE PRIVATE BANK
Bank of America
In 2020, Bank of America’s (BofA’s) private bank generated more than $3.1 billion in revenue on record client balances of $541 billion. Still, the bank realizes it needs to stay innovative if it wants to keep the ball rolling. It is heavily focused now on digital transformation, and a good indication of its commitment was its record-breaking number of patents last year: 444 granted patents, along with 722 applications, some of the highest totals in the financial industry.
On a more granular level, the private bank is increasingly using predictive analytics, including artificial intelligence (AI), to personalize financial advice for its clients; and it has won praises from industry analysts for its innovative work developing AI chatbots. In April, the bank began mobilizing 100 digital champions nationally to help drive deeper digital engagement among its private bank clients.
Overall, BofA spends more than $10 billion annually on technology, including $3.5 billion on new developments—making it a standout in the banking industry. It is getting some results, too. As of July, 80% of the bank’s wealth management clients across Merrill Lynch and Bank of America Private Bank were actively using digital channels for their needs. The bank expects that share to grow to 90% over the next few years.