Citigroup Global Wealth Management's CEO says it plans to substantially increase its share in the fragmented European market in the next three to five years as it expands its platform overseas.
"I'd like for us to be a leader in specific segments in this market," said Todd S. Thomson, the head of the Citigroup unit. "I want us to be a leader on the ultra-high-net-worth end, with global wealthy families that need solutions, and I'd like us to be a leader in selected markets."
Citigroup would need to manufacture more products in Europe and incrementally improve its product menu and overall platform, he said. To develop share his unit will begin by building out its capabilities in existing markets and look selectively at acquisitions.
Mr. Thomson said only the two large Swiss banks, Credit Suisse Group and UBS AG, have gathered significant wealth management assets in Europe, but their models, based on the tax advantages of keeping one's money in Switzerland, are antiquated, he said.
"The Swiss banks serve the old model of European money, and we are seeing that wealthy individuals want a private bank with more of an onshore presence," he said. "A lot of the tax reform that is going on in European countries has eliminated the benefit of keeping money in Switzerland. Now wealthy individuals in Europe want a more modern approach built on service and performance."
The Swiss Banking Association, meanwhile, welcomed comments from the Finance Ministry Tuesday indicating that Switzerland would probably "slim down" its version of international money-laundering laws.
"A break to reassess this issue is certainly right," Urs Roth, the association's chief executive, told Dow Jones Newswires at an anti-money laundering conference in Bern. "I think it's a result of a lot of criticism toward a proposed law that wasn't all that well thought-out in terms of its effect in reality." Switzerland is in the midst of adopting 40 anti-money laundering regulations into Swiss law.
Mr. Thomson said he thinks Citigroup can compete for share overseas, specifically in the United Kingdom, Spain, Portugal, and Greece. Markets in Northern Europe, Italy, and Germany also are attractive, he said, and Citigroup would also like to develop a presence in Eastern Europe and Israel.
"There are only a handful of significant players in Europe," Mr. Thomson said. "This is the direction that the business is heading. I expect for us to be among the few leaders in the market."
Developing market share in Europe has been among the top priorities of Citigroup's global wealth management business for years, he said. The wealth management group was established this year to encompass Citigroup Private Bank, Smith Barney, and SB Equity Research. Outside the United States, Smith Barney has been rebranded Citigroup Wealth Advisors.
Mr. Thomson said the new unit has worked on the right investment approaches, analytics, and asset allocation strategies to expand its platform in Europe. It has also tried to assemble the correct alternative and traditional investment products to put on the shelf for wealthy investors.
"Europe is the largest wealth market in the world, and I think we have been really punching below our weight in Europe over the last few years," he said. "Our strategy was to develop a first-class platform and select first-class leaders."
On Tuesday, Citigroup announced the hiring of Marianne Hay, a London executive with Morgan Stanley, to run its wealth management division in Europe as chief executive officer. She has been the chief investment officer of Morgan Stanley's private wealth management group in Europe and the Middle East since 2001.
Ms. Hay, who will join Citigroup at an unspecified date this summer, is to oversee the European businesses of Citigroup Private Bank and Citigroup Wealth Advisors. She will succeed Henry Fischel-Bock who - since Citigroup decided to create the post and conduct a search for a permanent incumbent - has been the wealth management division's interim chief executive officer. He will remain so until Ms. Hay formally takes up her new job. Mr. Fischel-Bock is then to resume his post as head of sales and client solutions for Citigroup Private Bank Europe.
Citigroup had been eyeing Ms. Hay for some time, Mr. Thomson said. Her hiring widened the stream of top executives leaving Morgan Stanley in the wake of turmoil at the top of the company.
"We want to grow with a modern approach, market-to-market in Europe," he said. "We want to provide real solutions and be the provider of choice as the marketplace and the needs in the marketplace change."
