BANKING SECRECY AND PRIVATE BANKING IN AUSTRIA Michael Blin Senior Vice President Private Banking
Austria – a good environment for Private Banking • Location in the heart of Europe • Political and economic stability • Limited tax liability for non-residents • Austrian Banking Laws and Supervision • Stringent liquidity requirements and deposit protection for Banks
Banking Secrecy in Austria: • Legal Basis: §38 BWG ranking as a constitutional law • Violation: Criminal offence • Release: Order of an Austrian Court in context of Criminal Proceedings • Foreign Inquiry: By way of Mutual Legal Assistance Agreements via Diplomatic channels, Material check, whether legal protection is equivalent. Preliminary check whether findings present material evidence • Taxation: No release of data, EU withholding tax is disbursed in bulk to the Tax Authorities of the resident country of the account holder. The Banking Secrecy in Austria is considered a classic liberal achievement!
Comparison - Banking Secrecy in Germany: • Legal Basis: Contractual Obligation between the Client and the Bank, Legal Regulations refer to Banking Secrecy • Violation: Disciplinary Offense, Violation of contract, Liability for Damages • Release: “Kontenabruf” - Master Data released online via BAFin to various Government Agencies • Foreign Inquiry: By way of Administrative Assistance Agreements on the level of Government Agencies and Tax Authorities • Taxation: Release of Master Data, realised Capital Gains and Interest Income, EU withholding tax is disbursed directly to the Tax Authorities of the resident country of the account holder.
Comparison - Banking Secrecy in Switzerland: • Legal Basis: BankG Article 47 (similar to professional secrecy of doctors), amendable by Referendum only • Violation: Criminal Offense, Liability for Damages • Release: The Bank may release data in case of suspicious activities, Order of a Swiss Court in context of criminal, civil or administrative (incl. tax) proceedings • Foreign Inquiry: By way of Administrative Assistance Agreements for Tax Fraud but not for Tax Evasion (sic!), Tax Authorities may pass on information. • Taxation: Withholding tax is disbursed directly to the Tax Authorities, Foreign nationals are taxed, part of these are disbursed to the resident country of the account holder.
Data Security • Electronic Data Protection: Chinese Walls, Access Protection, System Audits, etc. • Physical Data Protection: No external media, no download, no screenshots • Legal Data Protection: Bankers are bound to banking secrecy for lifetime – see above! The protection of client information is based on trust.
THE PRIVATE BANKING INDUSTRY IN AUSTRIA All Statistics, graphs and charts courtesy of Johannes Kepler Universität Linz, www.jku.at
Types of Private Banks Of the Austrian 55 Private Banks • 50% are independent • 20% are subsidiaries of larger banks • 30% are departments of financial institutions The status of the Private Bank determines the client approach.
Client Funds Management • Over 50% of the Private Banks manage EUR 1- 5 billion in client funds • 25% manage less than EUR 1 billion • 14% manage more than EUR 5 billion • 1 Bank manages over EUR 10 billion (EUR 26 billion in client funds) Private Banks in Austria have grown 18.5% in client funds over the last 3-5 years.
Growth in the past 3-5 years Employees vs. Volume: Number of Banks Employee average growth Volume average growth Managed Wealth has increased faster than the number of employees over the past years.
Banking Structure Managed Assets: 85% of Private Banks manage less than EUR 5 billion in assets. Clients and Employees: 50% of the Private Banks in Austria employ less than 18 client relationship managers and have less than 1700 clients. The Austrian Private Banking industry: many small, few large institutions.
Banking Structure: Clients per CRM Clients per Relationship Manager – the quality criterion! CRMs manage from 20 to 500 clients. There are large differences in the definition of Private Banking between different Banks.
Client Breakdown By Legal Structure: • Private clients 73% • Corporate/Trust clients 21% • Institutional clients 6% By Assets under Management: • Investment < 0.5 Mio. EUR 28% • EUR 0.5 - 10 Mio. EUR 44% • > 10 Mio. EUR 28% • Number of clients varies from 80 to 36,000!!
Client Structure: Client Segmentation Segmentation criteria selected by Banks: Assets under Management Need to delegate Risk profile Client behaviour and needs Client Profitability Geographic factors Demographics % Banks using this criterium Assets Under Management is the most common client segmentation feature
Client Breakdown Country of Origin of Assets: Total AUM Foreign AUM CEE is still not strongly represented but the fastest growing segment.
Client Structure: Minimum Deposit Average minimum wealth for varying specific services: Increasing specialized services Personal wealth management Higher wealth dictates higher levels of sophistication of services.
Client Structure: Minimum Deposit No. of Banks Minimum Deposit • 40% of the Banks require a minimum amount between EUR 150K and 300K • Minimum amount varies from < EUR 100,000 to EUR 5 million • The average minimum amount is EUR 500,000
Investment Preferences in Austrian Private Banks • Bonds/Securities • Alternative investments and structured products • Equities • Cash • Real estate Austria World • Equities • Alternative investments and structured products • Bonds/securities • Real estate • Cash Clients of Austrian Banks are more risk averse than the global average.
Investment Instruments: the HNWI Portfolio Austria – a conservative market: % total investments Equities Bonds Cash Real estate Alternative Investments Investment Instruments Austria Global average Source/Quelle Daten: Capgemini/Merill Lynch: World Wealth Report 2006
Austrian Private Banking Industry: Summary of Characteristics • Small institutions vs. larger groups • Growth industry of 18.5% per year for client funds • 20% of funds come from foreign markets • Central Eastern Europe accounts for 2.1% of the local Private Banking funds • The average entry-level account balance for Private Banking Services is EUR 150-300K • Increasing wealth demands increasing levels of services • 2/3 of the Private Banks offer between 40% to 80% third party products • Austrian Private Banks tend to be risk-averse wealth managers
Anglo Irish is… • the People: A social minority combining the best qualities of two cultures • the Spirit: Recognizing opportunities and persuing them with intelligence, perseverance and skill • the Elite: The Anglo Irish formed the intellectual, political and economic leadership of Irish society for over 200 years (Oscar Wilde, Bernard Shaw, the Duke of Wellington …). Anglo Irish Bank: There is a difference.
Business Activities • Wealth Management • Custody • Advisory • Discretionary Management • Treasury • Fund Creation and Management A straightforward business model and a clear focus create a high degree of specialisation.
Anglo Irish Bank Wealth Management Vienna • Portfolio Management services to Private Clients and Institutions • Emphasis on ‘best of breed’ investment instruments including our in-house funds • Expertise in alternative assets such as hedge funds, commodities and specialized investments • Focus on international Private clients Application of the best available products to the client‘s individual targets.
Private Banking – CEE Markets Marianna Moor Greta Nedjalkova Norbert Nagy Silvia Konopkova Lubomir Zavodny Rafal Michalski
Private Banking – CIS Markets Anzhela Gevorgyan Svetlana Chekhova Vadim Sinelnikov Roberta Haas
Anglo Irish Fund Management • Anglo Irish Bond Funds AI Dollar Active Income Fund; AI Bond 09; AI Dollar Bond 09; AI Vorsorge; AI Active Income Fund • Anglo Irish Equity Funds AI Euroland Equity; AI UK Equity; AI Global Equity; AI Japan Equity; AI Global Assets Protect 3; AI Eastern Europe Assets Protect 3 • Anglo Irish Funds of Funds AI Strategy Income EUR & USD; AI Strategy Balanced EUR & USD • 1 Special Fund All funds are subject to Austrian Fund Legislation
Why ANGLO IRISH BANK? • The Entrepreneur’s Bank facilitating the allocation of capital between the enterprise and the Private sphere of the owner • The Investment Advisor combining the best of discrete European Wealth Management with leading international financial services • The Wealth Manager benchmarking the market‘s best investment products and applying them to the client’s investment goals • The Team covering Private Banking in 15 CEE markets in local language
WINNER OF THE 2008 EUROMONEY AWARD FOR BEST OFFSHORE SERVICES IN AUSTRIA
A-1010 ViennaRathausstraße 20Tel.: 0043/1 406 61 61 – 100 e-mail: email@example.com homepage: http://www.angloirishbank.at Important notice: This document serves as additional information for our investors and is based on the level of knowledge of the person appointed with the preparation at the close of printing. Our analyses and deductions are of a general nature and do not take into account individual requirements regarding yield, tax situation or risk profile. References to past performance of the individual funds do not necessarily guarantee positive developments in the future. Altough we consider our sources of information (OeKB, Tipas, Bloomberg, Reuters resp. own calculations) to be reliable, we take no liability regarding compeleteness or correctness of the herein rendered information. This document is neither an offer, nor an invitation to tender for the purchase or sale of securities.