Itaú Private Bank attracted a great deal of net new money in 2023, CEO Stefan Jenni reveals in an interview with finews.com and Switzerland is the preferred destination for Brazilian clients looking to diversify.
Stefan Jenni, Itaú will celebrate its 100th birthday in Brazil next year. Madonna and Ronaldo already feature as stars in the advertising campaign for your new logo. How would you sum up this year for the private banking business in Switzerland (Itaú Private Bank)?
The centennial celebration will be a big event. For a Latin American company, 100 years is a long time. We have been here in Zurich as a private bank since 2010. That means that we have been in the market for 13 years now and this was our best year ever.
Itaú advertisement with Madonna (Image: screenshot youtube.com)
By all measures, 2023 was a record year for us. What was most important, at least to me, was the growth in net new assets. That’s what will work for us in the future and drive our business.
All the important KPIs are at record highs. We had managed to get close to a billion dollars in new assets, which is an incredible number for the size of our bank in Switzerland.
What was responsible for that?
Naturally, the high Fed fund levels and other investment rates helped us, as they did every other bank. But still, we achieved the largest pace of growth in 13 years.
It shows promise for the future, excellent momentum, and high demand for our services by clients. Our strategy to look at clients globally and holistically is paying off.
Where does the demand come from?
Our home market of Brazil still makes up the biggest portion given it is about 95 percent of our business. But we are increasingly looking at other countries in Latin America as well, or the Hispanic markets as we call them.
«The investment universe offshore is much bigger than onshore in Brazil»
We also saw strong inflows from those markets for the first time, mainly Colombia and Chile. These are the two key markets for us outside Brazil.
Brazil saw a big political shift this year. How did your clients react?
Itaú is a nonpartisan company and our clients appreciate that we are a partner that can support them on their journey while understanding their entire situation, whatever period we face, and regardless of government.
There is a great deal of value in that. We are well-positioned to support our clients in their decision-making. In Brazil, we are optimistic about what 2024 can bring.
Why do Brazil customers bank with Itaú in Zurich?
The number one reason is diversification. Our clients have realized the importance and the positive impact of spreading their assets over different currencies, classes, and jurisdictions. And the investment universe offshore is much bigger than onshore in Brazil. If you really want a diversified portfolio, you need international allocation.
«I have been working with Brazil for 25 years»
We have the advantage of being a trusted partner at home – we operate in their time zone, speak their language, and our products are tailored to Brazilian clients. We see their needs holistically and when it comes to pricing, we are competitive and take all assets into account.
Have you noticed a change in investment habits over time?
In the past, our clients had a strong home bias. I have been working with Brazil for 25 years and I would say 90 percent of the client portfolios back then were copy paste of what they used to have in their home countries.
We have tried to change that and have made a great deal of progress. It is not a real diversification if you bring your money to us in Switzerland and then invest in the same assets as you would in Brazil.
What impact does the strong Swiss franc have on your business?
The strong Swiss franc is a challenge. We book our costs, personnel, and operations, in francs and report to our head office in dollars and Brazilian réais. We have outsourced some of our operations to Portugal or to Brazil to reduce the dependency on the exchange rate, among other reasons.
«I’m very positive that we will be able to increase the market share in Switzerland»
We did that with some back office and middle office functions. As a bank, we export services. And like for any other exporting company, the strong franc is a problem.
Another important banking destination for Itaú clients is Miami in the US. Have you seen changes in the collaboration between Switzerland and your sister in the US?
One of the big changes was the new core banking system we introduced not so long ago. That made it possible to have a more seamless experience for both units. We are trying to align that as much as possible. Not only for internal stakeholders but for external stakeholders and clients.
The new core is a multi-entity single instance system. We are running both core systems, in the US and Switzerland, on one single platform based here in Switzerland. And of course, this brings synergies, and we are still in the process of adding more functions and services.
You are set for more digital offerings?
Yes, and we have to. The Brazilian clients are very demanding. Our client base in terms of high net-worth individuals is much younger than the average in established markets. So, they are more digitally native and have higher standards.
We intend to further improve our platform, add new services, and reap the return on our investments. I’m very positive that we will be able to grow further and increase the market share that we already have in Switzerland.
The CS takeover by UBS was the main event of the year here in Switzerland. What impact did it have on your business?
Credit Suisse was and is a very strong player in Brazil and one of our main competitors. We always had a very conservative approach towards what was happening. We did not proactively try to benefit from it, ask clients to move, or hire their personnel.
«A merger on that scale is a very challenging task»
Of course, some clients decided that they wanted to de-risk and withdraw assets. I think in the end the takeover was the best solution for Credit Suisse and the stability of the Swiss financial center.
How do you think will the «new UBS» fare in Latin America?
Credit Suisse's strong position in Brazil combined with UBS's strength in Latin America as a whole will make the bank a possible powerhouse. There was hardly any overlap, and in my view, the two banks complement each other. Needless to say, a merger on that scale is a very challenging task.
Stefan Jenni took over as CEO of Itaú Private Bank in July 2021. Before that, he was Chief Operating Officer and Member of the Board. He joined the Brazilian bank in 2008, with his first stints spent in Miami and Santiago. Previously, he was employed at UBS for more than a decade, working in Basel, Zurich, and New York.
