|The Bahamas Investor Magazine
July 13, 2014
July 13, 2014
The fundamental nature of financial services is changing. Increased regulation and calls for greater transparency from global organizations, such as the Organisation for Economic Co-operation and Development (OECD), have meant that the offshore banking sector is in a state of flux. As some larger institutions downsize their international footprint, other smaller “boutique” operations are stepping in to fill the void.
“We are in a difficult period in an adverse financial and economic global environment in which the traditional private banking business model will no longer be valid,” says Juan Iglesias, chief executive officer of private bank Andbank (Bahamas) Ltd. “In addition to economic factors, the increase in regulatory requirements is a natural and necessary result of the global financial crisis. Our group complies with today’s standards and adapts its business model proactively to these requirements, which we view as essential to ensure maximum protection and transparency to our clientele.”
Owned by the third generation of two large traditional banking families and established in Andorra in 1930, the Andbank of today is the product of the 2001 merger between Banc Agrícol and Banca Reig. The group has a presence in 11 jurisdictions with further expansion plans. Current locations include Andorra, Geneva, Luxembourg, Mexico City, Miami, Montevideo, Nassau, Panama City, Santiago (Chile) and Hong Kong.
The solid strategy, management and risk profile of the group has been recognized in recent years by the Fitch Ratings agency, which awarded Andbank Long-term and Short-term Issuer Default Ratings (IDR) of A- and F2, respectively. Its solvency ratio (see pg 78) which is above 20 per cent, is among the best in the sector and its liquidity ratio (see pg 78) is almost 68 per cent. The group has consistently grown at approximately 20 per cent per annum over the last five years, despite the woes besetting the banking sector in general.
“The group has responded well to the environment by adhering to a conservative dynamic business strategy; conservative in the sense of strong levels of capitalization and liquidity, yet dynamic in seeking out the best investment solutions for our clients,” continues Iglesias. “The desire to maintain a solvent and flexible balance sheet is not always compatible with achieving short-term returns, but ours is a long-term project. We have always seen opportunities where others saw difficulties. It comes as no surprise that during this difficult economic period we are currently the fastest growing bank in The Bahamas.”
Committed to The Bahamas
The Central Bank of The Bahamas granted Andbank (Bahamas) Ltd a banking license in 2001, and the bank moved quickly to establish its first overseas office in the jurisdiction.
“Andbank group has always been committed to The Bahamas,” says Iglesias. “The Bahamas was its first presence outside of its Andorra headquarters. The jurisdiction has the most developed financial service offering in the Caribbean; a unique offering in today’s fast changing and volatile world. It is a sovereign country with a stable and peaceful democracy, with excellent infrastructure, as well as talented and skilled professionals. It also offers an ideal mix of people coming here for pleasure as well as business. Often people come here first for a holiday and then buy a second-home and take up residency. Direct flights to Europe, the US and Latin America and a low tax regime, make it very attractive for investors.”
The bank relocated to new, larger offices in January of this year in anticipation of continued growth and also implemented an External Asset Manager desk at the Montague Place location in the country’s capital. Pulling on the wealth of homegrown and international talent in the jurisdiction, Andbank Bahamas has increased its staff from five to 15 over the last few months, with the expectation that this number will at least double during the next few years.
Key to Andbank’s continued expansion in The Bahamas is the Latin American market. The bank has had operations in the region for more than a decade and is present in six countries with growth prospects in all of them. It has consolidated its network with the São Paulo-based financial institution LLA and Mexican asset management company Columbus. In January this year, the bank inaugurated a second branch in Uruguay in Punta del Este. It also acquired the asset management business of the Miami-based firm Swiss Asset Advisors in 2013, which took its assets under management (AUM) to more than $17 billion by the end of last year, to specifically target the LatAm region.
In terms of the type of client that the bank has in Latin America, characteristically investors have a portfolio between $7-10 million, more than the average of the bank’s European clients.
“We have high expectations in Latin America. It is our natural expansion market,” says Iglesias, noting that the bank’s Andorran roots are closely aligned with the cultures of Latin American countries. “Our bank understands the peculiarities of customers in this geographical area, which is why our presence as a leading private bank is increasing. Growth in this area is of vital importance to our institution. We have therefore been forming a network of talented partners, who are the ambassadors of our institution in Latin America.”
The bank has in place a number of strategies designed to help capture a segment of that market and products range from the most basic through to the most sophisticated (ETFs, hedge funds, structured products) including 30,000 investment funds and more than 3,000 alternative investment funds. According to Iglesias, the group strives to custom build investment solutions depending on the different degrees of involvement required by clients in the investment process.
“We all know that most private banks offer an open architecture when speaking about investments, but we go one step further,” he says. “Our clients appreciate the fact that we do not limit them to the jurisdiction or to the custodian bank, but ultimately we seek the best solution for them.”
Broadly, the group provides three categories of investment strategies: discretionary management, which is directed at investors who delegate the management of their wealth to the bank; advisory services, for investors who like to actively participate in the management process; and custody services, which are directed at those customers who prefer to directly manage their wealth and make investment decisions.
The more proactive investor can work with asset managers to build their portfolios, with stock transactions in more than 80 markets, unified multi-jurisdictional/multi-custodial statements, as well as utilizing Bloomberg AIM (Asset & Investment Management) technology for portfolio management and risk management and the POMS (Portfolio Order Management System) for order control and transactions.
Ultimately, however, it is the personalization of services that sets Andbank apart, according to Iglesias. “We have clients who have relationships within Andbank group and with other international banks, but have entrusted us with the responsibility to manage all relationships on their behalf. This significantly simplifies their lives, as now they only have one person to deal with when it comes to their financial affairs. We believe that people do business with people and not organizations.”
Building a team of professionals
To that end, Andbank Bahamas has been building a team of professionals that understand the needs and wants of its clients and can develop lasting relationships. For Iglesias, these elements of the job have been the driving factors for his involvement in the sector. “I find people and their lives very interesting. The bank offers me the possibility to mix financial services and relationships. Over the years, I can say that relationships that have started out on a professional level have developed into wonderful friendships. It is very important to gain the trust of a client over time, so that a purely professional relationship can turn into a friendship for life.”
Iglesias started out in financial services as an apprentice with Credit Suisse at the age of 16. From making coffee for his boss, he rose through the ranks of prestigious banks such as UBS, AIG, Lloyds Bank and Julius Baer to executive level. A polyglot of some note, the Swiss-born CEO is proficient in six languages–German, French, Italian, English, Spanish, and Portuguese–and his career has taken him from Geneva to Zurich, to Frankfurt, to Barcelona, to London, and, since 2010, to Nassau. He completed his AZEK/CFPI post graduate investment management qualification while in Switzerland. “I count myself as very fortunate in that at the age of 16, I discovered my true passion in business: being part of the financial services sector. More than 25 years later that passion still drives me and I have never deviated from it.”
That dedication is something that Iglesias also looks for in his staff at the Nassau offices and is in the process of cherry picking the most talented individuals, local and foreign, who are devoted to the sector and to the jurisdiction. “As manager, my most important task is to hire the best professionals. More than ever, I am convinced of the importance of each individual and their contribution to our success,” he says. “Effort, tenacity and perseverance–these are values with which Andbank identifies. Our motto is ‘Only talent performs.’”
Continued international expansion
International expansion was one of the keys to Andbank’s growth last year and is one of the features that enables it to offer our clients a healthy diversification in terms of the jurisdictions and custodians available to them. It also provides the group with a diversified source of AUM. In 2013, the international area accounted for 60 per cent of the total volume of the group.
Continued expansion is very much the future vision of the financial services provider. In addition to LatAm, Asia and Africa are on its radar as potential markets. Andbank Bahamas has made several excursions to Africa, where it has seen an increasing demand for sophisticated private banking solutions.
“Through our global platform we are on a quest to become one of the world’s leading family owned private banks,” says the bank CEO. “In five years from now, I would like to stand with my team on our beautiful balcony, overlooking the crystal clear blue water of Montagu Beach here in Nassau, and celebrate together the realization of our vision of becoming the first choice for private banking in The Bahamas. My role is to ensure that everybody in my team has everything they need to achieve this vision.” However, the bank head is quick to point out that it is a big task for a newly formed team and many challenges lie ahead. “We have to remind ourselves that we are not running a sprint, but a marathon. The journey is just as important as the finish line and part of the marathon will be like crossing the Kalahari Desert to get to the oasis, but the rewards when we get there will be great.”
Starlight Global Foundation
One of Andbank’s founding principles was to establish social and economic success by driving endeavours in business, culture and sports. This mandate has taken many forms over the organization’s 80-year history, but most recently it has become manifest through the bank’s sponsorship of the Starlight Global Foundation.
Founded two years ago by Werner Gruner, a director at Andbank, the charitable foundation is built on a basic ambition to empower people through culture, economic support and education. “The whole strategy behind the foundation is to empower people to help themselves,” says Werner. “Money is not always the solution. You also need inspiration.”
A Night of Inspiration
Gruner was born and bred in South Africa and, as a child, he attended many outside cultural events and music concerts. This inspired him to create similar sponsored events to support local musicians, artists and cultural organizations in The Bahamas. The first event was at 2012’s International Cultural Festival at the Botanical Gardens in Nassau in October. That was followed by a Bahamas National Remembrance Day Concert in November and a black tie open-air Christmas concert the following month.
The biggest event to date was in January of this year to mark the launch of the new Andbank offices at One Montague Place. Along with Atlantis Paradise Island and BMW, Andbank sponsored an exclusive event called A Night of Inspiration, which was held at the Old Fort Bay Club. The event celebrated the life of Nelson Mandela, former President of South Africa, and was endorsed by the Nelson Mandela Foundation. “The event to celebrate Mandela’s achievements had been almost a year in the planning,” says Gruner. “So, when Mandela died in December, the event gained added poignancy.”
The open air concert featured musical performances and was attended by a number of local and international dignitaries and guests, including Canadian singer-songwriter Shania Twain, who hosted a fundraising raffle for Shania Kids Can–a charity started by Twain–and the Starlight Global Foundation.
“The idea is that the Night of Inspiration concerts become an annual event that inspires people to think big,” says Gruner.
Although the Starlight Global Foundation is still in its early stages, Gruner is in the process of extending the reach and scope of the foundation to build on its founding principles. At the start of this year, he introduced a pilot scheme to provide micro-financing for individuals looking to set up their own businesses. The monetary support is in the form of a gift rather than a loan.
“Economic empowerment is one of the most effective ways to help people. One of the biggest problems we have in The Bahamas, and in the world in general, is unemployment. We need to educate people and encourage them to be entrepreneurs and provide for themselves,” says Gruner. This is why he plans to introduce a mentoring mechanism that becomes self-supporting, as well as an “angel” programme through which investors can provide seed capital for start-ups. “This gives investors the chance to not only get a return on their investment, but also feel good about helping someone. That way, people can be more responsible about their investments. We can all play an active role in bringing change and making a difference.”