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Chappuis Halder & Cie

Private Banking-Customer Loyalty

January 2010

Private Banking activities demonstrate clear geographical discrepancies

9,1

+7,0%

5,8

+6,8%

8,3

+6,5%7,4

+12,8%

2,2

+5,1%

Estimated wealth ofHNWI in 2008in K billion $

Growth forecastAnnual Growth Rate 2008 – 2013 Forecast

• Highest wealth concentration of HNWI (one quarter of world HNWI)

• HNWI seek investments closed to home (74% investments onshore)

• Disparate situation between countries (-26% in UK while -3% in Germany)

• Russia has lost 28% of is HNWI population

• Pressure on offshore market• Strong political and

regulatory pressure

• High concentration in Japan (half of HNWI in the region)

• China is becoming the 4th market in the world

• India is an emerging market, with wealth creation “up and down” (2007 / 20008)

• Conservative investments (cash, real estate, etc.)

Source: World Wealth Report 2009

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With $1 700 bn of AuM, Switzerland is not only the leading marketplace, but has the longest history and highest reputation

Source: companies web sites

• Wealth management

• Trust and family offices

• Asset management, Financial product

• Open architecture

• Advices Services for independent asset managers

• Funds management

• Global Custody +

Innovative products

Sustanaibility and trust

Offer Competition landscape

Universal Banks (extract)

Pure players (extract)

know-how, innovation and tradition

Communication and presence (proximity with local customers)

all bank services with large footprint

The Swiss market is interesting to look at for best practices / trends

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Swiss market Pure Players analysis demonstrates different positioning and strategies

Source: companies web sites

AuM : $ 360 bn

• Footprint expansion : new retail office in Honk-Kong (Feb 08), new office in Basel (June 08)

• Innovation on new products based on real assets (gold, timber, water, etc.)

• Development of sustainable business (awarded best provider in 2009)

• Banks : Geneva, Luxembourg, Nassau, Singapore

• Branches : Zurich, Frankfurt, Madrid, Paris

• Offices : Barcelona, Basel, Dubai, Florence, Hong Kong, Lausanne, London, Milan, Montreal, Rome, Turin, Tokyo

• Expanding investment platform with alternative investments

• Expanding client target group in the institutional and private segments with new products

• Increasing onshore business without neglecting position in Switzerland (new office in Fribourg)

• Switzerland : Geneva, Fribourg, Lausanne, Lugano, Vevey, Zurich

• Europe : Amsterdam, Barcelona, Brussels, Düsseldorf, Gibraltar, Jersey, London, Madrid, Paris, Prague

• World : Montreal, Bermuda, Nassau, Singapore, Hong Kong, Tokyo, Dubai

• E-services is highly promoted and used as a differentiator mean

• Expanding footprint : new offices in Nuremberg, Bern and Austria in 2009

• Sarasin entered the Indian market and established Sarasin-Alpen Ltd mid 2009

• Switzerland : Basel, (HO), Berne, Geneva, Lugano, Zurich

• Europe : Dublin, Frankfurt, Guernsey, La Coruña, Nuremberg

• London, Madrid, Munich, Warsaw, Vienne

• World : Delhi, Mumbai (India), Doha, Dubai, Muscat, Hong-Kong, Singapore

Development axis

Footprint

• Several newsletters sent to customers on Economy analysis

• New products : physical gold fund in Switzerland in (oct 09), PF(LUX)-Agriculture fund (May 09), First fund on Latin America Local Currency Debt (March 08), MENA fund in May 08

• Transparency : AuM and Rating on web site

• Numerous interviews of Patrick Odier in press

• Group news focus on LODH proximity and strong involvement in business (market analysis and trends), sponsoring (“hydrocoptère”), events (Private Banking fair in Geneva), awards (family Merck)

• Many press releases on sustainable business (green economy, car manufacturers, real estate, etc.)

• Innovation on sustainable products: Sarasin has issued in July 09 the world’s first fund to specialized in the shares of sustainable property companies, the Sarasin Sustainable Equity – Real Estate Global Fund

Major communica-tions during 2008 - 2009

AuM : $ 75 bn

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With a decrease in asset under management and higher costs of acquisition, Customer Loyalty Management is now a key issue

Decrease of AuM

Higher costs of acquisition

Value proposition must be anti-attrition oriented• Fame and reputation damages

• Lost of confidence and trusts

• Transfer of assets from Universal Banks to Pure Player Private Banks (in 2008 / 2009, not sure in 2010)

• Understanding customers’ expectations : products, services, relationship management, etc.

• Reviewing advisory processes to bring more value

• Integrating Risk Management (e.g. fully understandable risk reporting, risk training, risk profiling) in Customer Relationship Management

• Improve reporting and access to information

• Higher interest rates are now common to attract customers

• Customers are now more interested in simple, transparent and low risks products (cash, fixed income) with low margin for the bank

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From customers’ point of view, reporting and on-line access are major issues to stay with a private bank

Source : Word Wealth Report, 2009

Strategic levers of Client Retention

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Improve distribution channel efficiency

Manage distribution costs

Use the full scope of possible communication tool

Adapt to the client’s changing expectations

• Use indirect distribution to target the right kind of customers

• Make sure targeted customers for the bank are well addressed by indirect distributors

• Distribution costs gather acquisition costs, upselling costs and loyalty costs

• These costs have to be monitored closely to match the customer value (

• Multi-channels is now a reality, and have to be integrated in the distribution strategy

• Most on HNWI are technophiles and are keen to use internet, mobile, etc.

• Clients are now expecting both direct access to their wealth adviser and access to specific information and services through online channels

• They won’t use always the same channel to get in touch with their bank, it is necessary to leave them the choice

Distribution is therefore a key asset to develop customer intimacy if matching customers’ expectations

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