Bloomberg Línea — The Latin American wealth management market has become increasingly competitive in recent years, driven by a surge in investment volumes, particularly from local companies. Global banks, for their part, are taking note of the opportunities the lie ahead, and Citigroup (C) is a case in point, as it plans to double its presence in the region.
“We must set ambitious goals: I believe it is realistic to expect that we can double our business in Latin America within the medium to long term,” stated Antonio Gonzales, head of Citi Private Bank for Latin America, in an interview with Bloomberg Línea during a visit to São Paulo from New York.
Citi’s growth focus will be on ultra-high-net-worth clients or families with assets of at least US$25 million, who can allocate US$10 million or more with the bank.
The bank’s focus is on ultra-high-net-worth clients or families with assets of at least $25 million, who can allocate $10 million or more with the bank for the management of their resources.
“Given our observations of wealth generation in the region, our current assessment of our presence and the extent to which we can leverage other business lines, it is reasonable to discuss such goals,” Gonzales said, noting that the bank does not provide specific guidance or figures for the area.
In his view, the main competitive advantage over other companies, including local ones, is that Citi is a bank with global reach. “We are able to serve the Latin American client from the Miami office, the region, or other parts of the world. We have reservation hubs in Europe and Asia, allowing us to serve clients wherever they prefer.”
Such international reach, he says, is becoming increasingly valuable at a time when “families are becoming more global”.
“There are clients whose children decide to study abroad and never come back,” he said.
Gonzales noted that Brazilian, Mexican and Argentine banks have been seeking to expand their presence abroad, in countries such as the United States and regions such as Europe.
The client as a “whole”
Citi’s corporate client business in Latin America will be a core component of the strategy to expand the wealth management business in the region, the executive emphasised.
Brazil is the fifth most important country in Citi’s global strategy, with institutional clients playing a dominant role, he noted.
“When we look at Latin America, Brazil is very important. Citi is number one in FX and international custody in the country. If we look at corporate banking, it is the third most important country for Citi. In commercial banking, it’s fifth,” he pointed out.
All of this reflects the potential for wealth creation not only in South America’s largest economy, but across the region.
“The feedback I get from clients, and I knew this when I was part of the competition, is that Citi does a very good job from an investment perspective. Our platform has an open architecture and direct access to most of the world’s assets,” he said.
Gonzales joined Citi from JPMorgan (JPM), where he spent 17 years in various private banking roles, most recently as head of Private Bank Brazil, also in New York.
Citi’s main challenge will be to serve the client more holistically, not only the client and his family, but also his business, leveraging a brand that is already well positioned from an institutional perspective.
“There are businesses that go hand in hand. The same client who has a business served by corporate banking can also be served by Citi’s wealth arm,” he said. “Serving the client as a whole is our great challenge, but also our great opportunity.”
To do so more efficiently, he said, the different units of the US bank in the region need to work more closely together, with better communication and integration.
While some countries, such as Mexico, are betting on greater wealth creation through the nearshoring phenomenon, bringing supply chains closer to the US consumer market, other markets are looking to boost their access to international investments, Gonzales added.
Citi’s presence in Miami
Citi’s plans include boosting its presence in Miami, one of the favourite destinations of wealthy Latin American families and, more recently, tech and Wall Street billionaires such as Amazon’s Jeff Bezos and Citadel’s Ken Griffin.
It’s a different a very scenario from 10-15 years ago, when servicing Latin American clients in the United States was concentrated in New York, Gonzales said. This change is reflects the way banks have reorganized to better serve this segment.
Gonzales pointed out that there has been a migration of professionals, not only from the asset management industry, but also from private equity firms, who are leaving the northern states of the United States and moving to Miami. Private banking has been no different.
Currently, 80% of Citi’s Latin America team is based in Miami. The rest is split between New York and Houston, Texas, a nerve centre for wealthy Mexican families.
Regarding new hires, the executive said the LatAm team should expand following a global efficiency drive in the division led by Andy Sieg, Citi’s global wealth chief - and that the operation is already “steps ahead” in that direction.