The new old money

In Europe, private banking is a centuries-old tradition, which can trace its roots back to the dawn of modern finance. For example, some private banks in Switzerland – the spiritual home of private banking – have been in existence for more than 200 years.

By contrast, Australia’s private banking system is in its infancy. The country’s oldest private bank was established by Westpac merely 20 years ago.

But according to Jan Swinhoe, Westpac Private Bank general manager, until the late 1980s there wasn’t much incentive to launch such a service in Australia.

Swinhoe told the Australian Private Banking Council (APBC) last year that when Westpac Private Bank was launched in 1988, Australia was hardly a financially sophisticated, or wealthy, country.

“You have to appreciate that the deregulation of the Australian banking system only happened in 1983, so the idea of individuals having access to a whole range of products really wasn’t possible before then,” she told the APBC.

Since Westpac Private Bank first opened its doors two decades ago, though, Australia has come up to speed – in a mega-money sense – very quickly. The growth of Westpac Private Bank’s business coincided nicely with the arrival of the compulsory superannuation system and a bull run in Australian equities that didn’t really hit the skids until last year.

As Swinhoe told the APBC, “the amount of wealth that has been acquired in the last 10 to 20 years has been phenomenal in Australia”.

Swinhoe has witnessed that phenomenon from the inside. After training in pure mathematics and gaining her actuarial qualifications, she spent several years working in superannuation – a topic Swinhoe says she “is passionate about” – as well as in institutional banking and derivatives roles.

At the end of 1994 she joined Westpac institutional bank and filled various positions, ending up as general manager of large corporates before taking on the Westpac Private Bank job in January 2007.

Swinhoe admits that her background leans towards the technical “but over the years the teams that have reported to me were on the relationship and research side”.

She says heading Westpac’s large corporates division (that is, companies worth more than $300 million in the industrial, property, energy or resource sectors) brought her into contact with some of Australia’s wealthiest individuals – some of whom are also Private Bank clients.

“I love the client side, I know a lot of them,” she says.

According to Swinhoe, Westpac Private Bank claims about 7000 client “connections”, which equates to about 26,000 individuals, through family links and the like.

She says that unlike many of her private bank competitors, Westpac is focused on the Australian and New Zealand markets. In the wealth management space, for example, Westpac – through its BT subsidiary – has built up its name in superannuation with investments and the wrap platform.

Those connections give the Westpac Private Bank deep local knowledge, Swinhoe says.

“A number of our competitors are going after the Asian market or the US market but clearly superannuation and wealth creation is the biggest platform of growth for Westpac,” she says.

With the St George merger due any day soon that “local platform” should get another major boost.

“I think it [the merger with St George] would be very complementary,” she says.

However, as David Hewett, head of St George Private Bank, told Professional Planner last month, the two private banking units would almost certainly operate separately in a merged entity.

Swinhoe agrees, but she expects the two private banks could benefit from some shared intellectual capital.

“If anything, we’d like to look at the best of what they have in terms of products and services – certainly we’re familiar with their operating model – and we’d look to adopt some things we think they do better than we do,” she says. “And going back the other way there’s probably some things that we do better than them. We will be looking to adopt the best practices and best structures on both sides.”

Swinhoe also keeps track of private banking trends in the rest of the world and she is keen to bring some of those practices into Westpac – where they make sense in the Australian context.

It might be a decade or so away, but she says Westpac Private Bank has the potential to develop some of the characteristics of its antique Swiss counterparts by managing a client base across generations.

“I like the way some of the European banks really do have very long-term intergenerational relationships with their clients,” she says. “Wealth in Australia is clearly a lot newer for most families – we don’t have the history of hundreds of years. I would be so proud to be able to say that we’ve banked these families for 100 years.”

In Europe, private banking is a centuries-old tradition, which can trace its roots back to the dawn of modern finance. For example, some private banks in Switzerland – the spiritual home of private banking – have been in existence for more than 200 years.

By contrast, Australia’s private banking system is in its infancy. The country’s oldest private bank was established by Westpac merely 20 years ago.

But according to Jan Swinhoe, Westpac Private Bank general manager, until the late 1980s there wasn’t much incentive to launch such a service in Australia.

Swinhoe told the Australian Private Banking Council (APBC) last year that when Westpac Private Bank was launched in 1988, Australia was hardly a financially sophisticated, or wealthy, country.

“You have to appreciate that the deregulation of the Australian banking system only happened in 1983, so the idea of individuals having access to a whole range of products really wasn’t possible before then,” she told the APBC.

Since Westpac Private Bank first opened its doors two decades ago, though, Australia has come up to speed – in a mega-money sense – very quickly. The growth of Westpac Private Bank’s business coincided nicely with the arrival of the compulsory superannuation system and a bull run in Australian equities that didn’t really hit the skids until last year.

As Swinhoe told the APBC, “the amount of wealth that has been acquired in the last 10 to 20 years has been phenomenal in Australia”.

Swinhoe has witnessed that phenomenon from the inside. After training in pure mathematics and gaining her actuarial qualifications, she spent several years working in superannuation – a topic Swinhoe says she “is passionate about” – as well as in institutional banking and derivatives roles.

At the end of 1994 she joined Westpac institutional bank and filled various positions, ending up as general manager of large corporates before taking on the Westpac Private Bank job in January 2007.

Swinhoe admits that her background leans towards the technical “but over the years the teams that have reported to me were on the relationship and research side”.

She says heading Westpac’s large corporates division (that is, companies worth more than $300 million in the industrial, property, energy or resource sectors) brought her into contact with some of Australia’s wealthiest individuals – some of whom are also Private Bank clients.

“I love the client side, I know a lot of them,” she says.

According to Swinhoe, Westpac Private Bank claims about 7000 client “connections”, which equates to about 26,000 individuals, through family links and the like.

She says that unlike many of her private bank competitors, Westpac is focused on the Australian and New Zealand markets. In the wealth management space, for example, Westpac – through its BT subsidiary – has built up its name in superannuation with investments and the wrap platform.

Those connections give the Westpac Private Bank deep local knowledge, Swinhoe says.

“A number of our competitors are going after the Asian market or the US market but clearly superannuation and wealth creation is the biggest platform of growth for Westpac,” she says.

With the St George merger due any day soon that “local platform” should get another major boost.

“I think it [the merger with St George] would be very complementary,” she says.

However, as David Hewett, head of St George Private Bank, told Professional Planner last month, the two private banking units would almost certainly operate separately in a merged entity.

Swinhoe agrees, but she expects the two private banks could benefit from some shared intellectual capital.

“If anything, we’d like to look at the best of what they have in terms of products and services – certainly we’re familiar with their operating model – and we’d look to adopt some things we think they do better than we do,” she says. “And going back the other way there’s probably some things that we do better than them. We will be looking to adopt the best practices and best structures on both sides.”

Swinhoe also keeps track of private banking trends in the rest of the world and she is keen to bring some of those practices into Westpac – where they make sense in the Australian context.

It might be a decade or so away, but she says Westpac Private Bank has the potential to develop some of the characteristics of its antique Swiss counterparts by managing a client base across generations.

“I like the way some of the European banks really do have very long-term intergenerational relationships with their clients,” she says. “Wealth in Australia is clearly a lot newer for most families – we don’t have the history of hundreds of years. I would be so proud to be able to say that we’ve banked these families for 100 years.”