Peter Charrington, head of Citigroup’s Private Banking operations in the UK, was told late last year by his bosses in New York that the UK, along with Brazil and India, would be singled out for major growth for the private banking business.

Peter Charrington, head of Citigroup’s Private Banking operations in the UK, was told late last year by his bosses in New York that the UK, along with Brazil and India, would be singled out for major growth for the private banking business.

Obviously happy with the challenge and the big cheque which comes with the expansion initiative Mr Charrington may have not entirely known how much time he would have to spend on hiring the necessary bankers to grow the business.

The private banking business in London is planning to hire at least 20 private bankers in the next two years to grow its onshore business in the UK. Currently the private banking team in London is 15-strong.

Mr Charrington says there is no shortage of interest but the challenge is to identify the very best talent who will be capable of serving an increasingly sophisticated client base.

We’re looking for bankers who can deliver across all our key disciplines, said Mr Charrington. Clients want an ever more sophisticated service. We must have first-class talent to deliver that.

ound:
Joined Citigroup in 1994 and worked in a number of different areas with the private bank including Real Estate Advisory, Middle East Marketing and Credit Workouts before joining the UK Team in 1997 taking over the running of the UK Team in May 2003.

Right Timing
The commitment from Citigroup HQ could not have come soon enough for the UK business, which has had to deal from the fallout associated with wider regulatory difficulties for the private bank and major personnel changes during the last few years.

Citigroup’s entire private banking business was sent spinning in 2004 when the Japanese financial authorities banned the private bank from carrying out business in the country over regulatory improprieties.

The episode was one of the most spectacular in terms of notoriety in the annals of private banking history and one Citigroup would like very much to forget and led to the termination of various senior managers at the bank, including the then head of private banking, Peter Scaturro.

Consequently, much of last year for the private bank and the private client business of Smith Barney involved an internal spring cleaning.

At the end of 2004, former chief financial officer Todd Thomson was appointed head of the global wealth management division, which comprises Citigroup Private Bank and Smith Barney’s private client business (known as Citigroup Wealth Advisors outside of the US), and Citigroup Investment Research.

Last summer, Citigroup appointed Marianne Hay from Morgan Stanley as chief executive of Citigroup’s wealth management business for Europe. This was followed by the appointment of a new global head of private banking, Damian Kozlowski.

By the second half of 2005 all the bloodletting was over and many of the senior jobs replaced. The business was ready to enter an expansion phase.

Citigroup committed several million dollars to support the building of an onshore business in the UK and more funds are expected over the next few years.

Mr Charrington confesses that the fallout from the Japan episode was not something he would like to go through again, but points out that the UK private banking business grew despite the recent difficulties. Our UK operation of the private bank has experienced absolute growth over the last three years of 32 per cent.

Onshore is King

But the future challenge for Citigroup Private Bank is to develop an onshore private banking business in the UK against the myriad of competition from the likes of UBS, Coutts, HSBC Private Bank and so on.

One of the ways of doing this, says Mr Charrington, is to link the private banking business to a much greater extent than previously with Citigroup’s flourishing corporate and investment bank

The bank has built a formal partnership with the investment bank, which enables cross-selling opportunities. Mr Charrington says that the relationship led to 355 referrals to the private bank globally in 2005.

Our acquisition of Schroders' investment bank in 2000 really helped our UK investment banking footprint, said Mr Charrington, At the end of last year, our investment bank ranked number one in completed UK M&A transactions.

The relationship with the investment bank is leading the private bank to move towards a sectorisation approach.

We want to have specialist private bankers who fully understand the key industries such as private equity, consumer, real estate, financial institutions, energy and telecom, to name a few, so that they can better service their clients and understand their needs and market industry implications, said Mr Charrington.

The UK private bank is also placing a lot of importance on improving its product offering to clients. It plans to use its global wealth structuring unit, which provides family tax and estate planning services, to build a family planning offering in the UK.

Recently, the firm appointed Larry Black a Citigroup veteran with over 27 years’ experience head its investment finance unit in Europe. Mr Black, who oversees an investment finance team of almost 60 professionals in London and Geneva, plans to develop the private bank’s expertise in margin lending, residential and commercial real estate loans, and jet aircraft financing.

He also plans expansion in areas such as capital markets funding and hedge fund lending.

Access to investment banking and alternative investment options certainly does not come cheap, and this is partly why Citigroup Private Bank is targeting the very rich those with investable assets of at least $10 million.

And what about the every growing competition for the very rich? Mr Charrington says that Citigroup give clients access to both sides of the balance sheet a rarity in private banking. We are happy to lend as well as offer investment advice. It is this which distinguishes us from the likes of many of our competitors".

But Citigroup is keen to keep the private banking business in the UK at a level which has a quality of intimacy about it.

Mr Charrington sums this up as being an intimate boutique bank set within a huge financial institution.

Whether Citigroup can do this will depend on how the UK’s rich perceive a bank which is very little known locally outside the world of investment banking.

Access to sexy investment banking deals is an obvious area Citigroup can offer its clients, but gaining a name outside of these channels presents Mr Charrington and his colleagues at Citigroup more of a challenge.

Again it comes back to hiring the right people. And it is why Citigroup in London are currently looking to hire a business development manager to foster links with the all-important intermediary market.

Mr Charrington will no doubt be spending many an hour interviewing for the right candidate.