Jonathan Asquith, the new head of UK private banking at Barclays, has a deceptively simple vision of the task that confronts him: more busin...

Jonathan Asquith, the new head of UK private banking at Barclays, has a deceptively simple vision of the task that confronts him: more business, more clients. The mandate is obvious but Asquith acknowledges there are a number of challenges on the path to achieving it. A relative newcomer to the private banking world, Asquith is not shy about rattling a few cages. “If I had to have one thing that I’d like to see us doing in the UK that I don’t think we’ve done enough of in the past, it would be do demonstrate a little more thought leadership in the area of private banking,” Asquith told Private Client Management in an exclusive interview.

“People are very nervous about doing that because every time you get up on a stand and tell people interesting things about your business, you give away some information to your competitors and you have to balance very carefully the technology losses against the status gains. I think we’ve been too secretive in the past and I would like to raise our profile in that area.”

Barclays reorganised its mass affluent and private banking services into Barclays private clients shortly before Asquith came on board in early July. The reorganisation reflected the bank's aim to boost the number of European wealthy clients by 40 per cent by 2005. Asquith said Barclays needed to build on its strong UK retail banking background as well as attract newcomers. “I don’t think we’ve spent enough time on the 75 per cent of the UK population who don’t bank with us. I’ve never seen the fact that we have a close relationship with the first 25 per cent as meaning that we shouldn’t address the other 75 per cent. More work to market our attractions is definitely on the agenda,” he said. But competitors should not hold their breath waiting for an advertising campaign similar to that launched by Coutts & Co., recently. Asquith said he preferred to grab a greater share of the market via other channels.

“Obviously the Barclays relationships are still the primary channel. The second area is that we work closely with a number of professional intermediaries and we are looking ways in which those relationships work. We want to make sure that they are not merely mutually beneficial but can be worked into packages which are beneficial to prospective clients. We are looking at informal alliances and product offerings there.”

Asquith is one of an increasing number of private bankers entering the industry from other fields. He spent 18 years at Deutsche Morgan Grenfell, working his way up to chief operating officer, before retiring to spend time with his family. After spending a year out of the business world, the 45-year-old decided to re-enter working life in 1999 and made a career switch, joining technology investment company European Digital Partners where he was a managing partner. The latest stage in his career began in July 2001 when he replaced Heather Maizels at Barclays. “I’d sort of done investment and I’d got about as far as anybody could reasonably expect to get and I didn’t think there was much more I wanted to do in investment banking. It had its unattractive aspects in terms of the way in which business is run, levels of aggression. It’s not a cosy environment, shall we say,” he said.

Another deciding factor in choosing his new employment field was the experience he had in his premature retirement. “I had the experience myself of trying to find a private bank to look after my affairs when I retired and a very patchy experience it was and that gave me something of an insight into what was out there. We are sitting in what I hope is still the middle of the greatest period of private wealth creation that we have seen in the western world for 100 years. The need for private client high net-worth services has never been greater.”

A recent survey by IBM Global Services Wealth Management reported that every day in 2001 there are 1,265 new high net-worth individuals created every hour and 3,340 new mass affluent individuals will be created in ten European countries. Globally, an estimated 7.2m people hold more than $1m in financial assets, totalling around $27trn under management. This is expected to grow to $40trn by 2005. The compound annual growth rate for the whole market is pegged at ten per cent worldwide an even faster 12 per cent for the onshore European market.

Barclays wants a greater slice of the UK portion of that market by attracting clients in the higher wealth bracket, people with £50m to £100m in assets. Asquith said very few clients with that level of wealth will entrust it all to one provider, so the bank often finds itself competing for £20-£30m tranches. “We have typically not marketed heavily in the UK to the very highest level of private banking clients. We are working actively on our offering in that area. I don’t specifically target family offices but there are several things that you need if people are to make a real difference,” he said.

Asquith said he also wanted to improve the bank’s absorption of existing clients into private banking. “It’s still not as systematic as I’d like it to be, it’s still not as seamless. There is still for the clients a very strong and discernible transition from this retail and premier operations to coming to us,” he said.

In achieving those aims, Asquith aims to increase his current staff of around 70 to closer to 80 by the end of next year. The staff are divided into three specialist teams of established wealth, family groupings and entrepreneurs, which is an area the bank is focusing heavily on. “We are not in headlong growth but we are in growth which is in this market not a bad situation to be in,” he said. There will also be a change to the ratio of product specialists and support staff to private bankers with Asquith wanting to place more emphasis on those who deal directly with clients. He said the bank would recruit from the bottom when existing staff were moved up the ladder. He cautioned that he would not slash the back office, but rather grow the front office to match. He added that a major programme is underway to improve the level of technology supporting the private banking business.

On the product front, Barclays has historically had nearly all its private client fund management on a segregated discretionary product basis. “We are working much more on producing funding solutions to clients these days, giving them access to mutual funds with model portfolio types to provide benchmark style returns but with the advantage of a tax wrap around it as opposed to a conventional, segregated portfolio and with the advantage also ultimately of a cost structure which makes it easier to manage their assets for less,” Asquith said. In more recent times, Asquith said there had been some changes in terms of asset allocation following the US terrorist attacks with one or two clients putting more money into the market. “By and large I think most of our clients are more disposed to think of the market at the kind of levels we saw after 11 September as a buying opportunity rather than as an occasion to panic. I think our own analysis is supportive of that view as well. We had been underweight in UK equities for some months going before 11 September and I think it’s fair to say we have moved towards a more neutral stance now but I don’t think we’ve yet got to the stage where we are recommending overweight positions.”

Asquith’s response the regulatory repercussions of 11 September sum up his approach to private banking and his goals for Barclays overall. “With all the variety of responses to this, one is that anything we can do to contribute to the effort to stop things like 11 September happening, we will do. Our fundamental guiding principle is know your client and that isn’t just good regulatory sense, isn’t just good security sense, it is good business as well.”