Barclays is targeting millionaires in emerging markets and squeezing more revenue from super-rich clients with at least GBP£50m (US$79.3m) of investable assets.
Average revenue per client at the super-rich unit increased 41 percent last year, said Stefanie Drews, European head of key clients and family offices at the London-based bank. Barclays has 1,800 so-called key clients in Europe, the Middle East and Africa, Drews said, declining to give further details on revenue earned or assets under management.
Barclays’s wealth business is in the middle of a five-year GBP£350m investment programme as it tries to close the gap on HSBC and Credit Suisse Group. Barclays, which gets almost a third of its assets from UK customers, said the super-rich in the Middle East, Africa and Russia offer some of the greatest potential.
“The Middle East has probably been the biggest area of growth,” Drews said in an interview at the firm’s London offices, citing oil wealth and political turmoil as key drivers. “Africa is a huge area of opportunity.”
Drews said she returned from a trip to South Africa last week with a list of 50 new client prospects, including entrepreneurs outside the mining and oil industries such as a clothing chain owner and the founder of a water bottle company.
“It’s no longer just someone who owns a commodities-based business,” said Drews, who also plans trips to Nigeria and Kenya. “There are some very impressive startups.”
Barclays, which has a controlling stake in Absa Group Ltd., the South African lender with more than 12 million customers, is targeting Africans joining the middle class, Drews said. Barclays CEO Bob Diamond said February 10 the firm is continuing to invest in its wealth unit and in Africa.
Wealth creation in the Middle East and Africa was 8.6 percent above the global average, Boston Consulting Group said in a report last May.
Key clients, most of whom have more than US$250m, can join Barclays’s so-called investment club, which offers access to hedge funds, private-equity funds and off-market transactions. Examples include clients seeking to sell an information- technology company and land in Brazil, Drews said.
“It’s discreet, it’s cheaper,” said Drews, adding that Barclays charges the seller a fee of 1 percent to 4 percent on transactions arranged through the club. Russians “love doing investment club ideas,” she said.
Pretax profit at Barclays’s wealth unit rose 27 percent to GBP£207m last year, even as client assets were little changed at 164.2 billion pounds. That helped counter a 32 percent drop in pretax profit at its investment bank. The private-banking division is targeting a return on equity of 17 percent to 18 percent by 2013 compared with a return on average equity of 10.9 percent last year.