Peter Flavel, Head of Private Bank, Standard Chartered Private Bank

Date: 03 Nov 2009

Citywealth

Standard Chartered’s offices in Moorgate are a corporate box of plate glass with obligatory gaggle of silver lifts and immaculate receptionists.There is the usual coffee and tea in meeting rooms and neatly lined up bottles of sparkly and still water. The only difference from any other private
bank is the display of wooden Asian/African art and furniture which dominate space and attention on each floor you visit. Somehow the artefacts sit oddly in the futuristic corporate surrounding. It feels like the building should be culturally somewhere other than London which I suspect is their point: The “Chartered” part of Standard Chartered started life in India and China in 1853 the “Standard” part in Port Elizabeth, South Africa.They merged in 1969.

Peter Flavel, the big chief of the private bank exudes energy, even though I suspect he has been talking relentlessly about their new launch, a specific division to cater for Australasian and African “mobile” sports stars. Born in Adelaide, the fifth largest city in Australia, which excels in the defence and technology industries,Peter studied construction law and accounting in Adelaide and Melbourne.

He started his career in litigation but some of the deals which made his counterparts whoop just made his toes curl. He headed out of construction and into Accenture where he worked with big name client Axa, who he later joined. After a seven year stint at Axa, his career then moved to National Australia Bank where he and a counterpart developed the private banking division from its retail offering into “a number one wealth manager.”

Joining Standard Chartered in 2003, Peter was chosen to lead the launch of the private bank in 2007,
working for Mervyn Davies, who was Chairman. Mervyn who was often spotted at FF&P gatherings (Standard Chartered bought a 20% stake in FF&P) but left in January and is now busy being a government minister, life peer and was awarded a CBE for services to the financial sector. The two prove a dynamic duo indeed. The Standard Chartered private banking growth, which has been phenomenal and went from three to thirteen hundred staff, has come from a mix of hiring and acquisitions
with roughly half the staff coming from their February 2008 purchase of American Express private
Bank. Reviewing their website, the stakes and acquisition trail has resulted in two or three major purchases from global banking operations each year for the last few years.

“People ask how we’ve built the business so fast, says Peter, but we live inside the consumer bank with divisions for mass affluent and high net worth clients and have used all the infrastructure of Standard Chartered – expanding offices and product ranges they already had, so growth was more add-on than start line.” They devised fourteen new products which include discretionary portfolio management and derivatives to the existing client offerings and developed a global operating system rather than have offices working separately.

Flavel has a knack of making things sound easy which they are undoubtedly not particularly in finance.The private banking industry is full of tales of mergers that ended in cultural conflict and exodus.They are historically big bang tales of success that dissolve into tears and litigation. I tentatively stick my compass into his American Express Private Banking arm to see if there is any blood in the scar.

“American Express needed investment for sure – we are spending $50million on it to get it back on
track.” Having not seen Standard Chartered as a private bank on my radar before now, I ask for some numbers to get context. Where do they fit into the wealth management space? My guess was somewhere above retail despite hearing industry rumours of big ticket Middle Eastern families on their books, but I was way off the mark: their client book would make most of the established private banks in London cough and splutter.

They have two client segments one at $1-10million with clients having an average of $3million booked.Segment two is “key clients” each with $25million above. The private bank has 15,000 clients with 1,500 clients ranking as key. This gives them around $35bn AUM with additional $7bn credit assets. 50% of their clients are Asian, 30% European and the rest Latin American and Middle Eastern. New clients come from within Standard Chartered bank and Peter says “we use every internal opportunity to bring in clients and essentially live inside the consumer bank.” The expertise at Standard Chartered can be packaged as such. “Seventy percent of our assets are in cash and we are doing well at foreign exchange and commodities. We are a market maker and lender to interbank market.”

Australian sport stars and high flying executives overseas Although there are many private
wealth operations with divisions focusing on sports people, Peter says he hasn’t seen one working
on the demands of the “mobile” sports stars who are having to manage their affairs across many
countries as they move where their career takes them. The sporting theme started to take shape as Peter, who came across sports stars day to day, spoke to more and more cricketers across India and South Africa about their needs then spoke with rugby and soccer stars. “We came to the conclusion
that stars that are predominantly one country based are well served but those constantly on the move, struggle to keep up with their finances and investments.

“There are also 150,000 Australian and 350,000 Asian expats in UK and Europe, says Peter, “whilst previous generations returned home after two or three years there is a new trend to stay for seven to ten years which means these people will need longer term banking help.” Their expat clients tend to be senior ex-ecutives in corporate with between $5-10million a piece. The plan is to woo clients with a full service offshore offering which will specialise in executives and sports.

Generally

With banks and products getting a pounding from their clients and the media following the losses in the down turn, I ask how they are getting around general distrust and apathy of investors to make their profits. “Clients come to us for safety – the bank has been around in one form or another for 150 years. We have a tradition of dealing with business men over several generations so clients in India and China have seen who we are and how we operate.” The benefit of this is the upswing in the younger Asian generation who are now wealthy in their own right and who have seen their whole family bank with Standard Chartered and also want to join us.

Peter says clients are coming back to structured products and the proof that they are talking the talk and walking the walk is their profits, which were up 26% last year. “We are a strong and stable partner in difficult times. We’ve seen ups and downs over many cycles and are now benefiting from having our homes in growth markets such as India and China. We want to connect Europe with these markets and have the investment expertise to help make this happen.

And his one word to sum up the operation?

Resilient.

www.privatebank.standardchartered.com

Editorial note:

“There are also 150,000 Australian and 350,000 Asian expats in UK and Europe, says Peter, “whilst previous generations returned home after two or three years there is a new trend to stay for seven to ten years which means these people will need
longer term banking help.”