Dmitry Breitenbikher, Senior Vice President, Head of the Private Banking Department of VTB, told RIA Novosti how the Private Banking segment is developing in Russia during the coronavirus pandemic, new sales models, and where investors prefer to invest today.
– Results of the year: what were the main changes in VTB Private Banking during the pandemic?
– Investment products have become one of the main drivers of growth in funds managed by VTB Private Banking. Regular online conferences with the participation of VTB Capital Investments experts and our new sales model contributed to the active offer of relevant investment strategies in 2020. An additional factor of VIP clients' interest in the stock market was the reduction in deposit rates. As a result, the investment portfolio of VTB Private Banking in 2020 grew by 70% and now exceeds 1.2 trillion rubles. Another achievement was the increase in the client base – we crossed the threshold of 25,000 people – due to the recommendations of existing clients, synergies with the corporate block, consolidation of family capital and the outflow of clients from smaller banks.
– What assets for investment or speculation are currently of interest to clients? What trends do you see: where do wealthy clients prefer to keep their money?
– If 2020 was the year of growth stocks, then this year our focus is shifting more towards stocks of cyclical industries – they are more often represented by stocks of value. Here we can highlight: the oil and gas sector (oil historically reacts most strongly to the cyclical growth of raw materials; and gas benefits from the trend towards “green energy”), metals and mining (the current prices of individual companies have not yet fully reflected the rally in steel prices ). Finally, the transport sector (as restrictions are lifted, the growth of passenger and freight traffic).
In the fixed income class, first of all, we see opportunities in the emerging markets bond segment. In the current conditions of tight spreads, initial bond offerings look interesting, which imply premiums in coupon rates to the market. As a matter of fact, the new currency perpetual subordinated bonds of VTB in dollars and euros confirm this. The bonds have a higher coupon rate than benchmarks of 5% in dollars and 3.75% in euros, and therefore we see a high interest of wealthy clients from the first days of issue. In less than two weeks from the beginning of the placement, their sales exceeded 30 billion rubles. About 97% of the sold bonds are concentrated in the hands of individual investors, with about 24 billion rubles accounted for by VTB's Private Banking clients.
– Tell us more about this tool. How can you generally protect yourself from currency risks in the market now?
– Sales of new VTB subordinated bonds among qualified investors started on the Moscow Exchange on February 8, 2021.
Four issues of securities with a fixed and floating coupon rate in US dollars and euros and a coupon period of 182 days were offered for purchase at once. We issued floaters with a floating rate: SOFR + 4.5% per annum for the dollar. And EURIBOR + 4.15% per annum for the euro. This will increase the client's profitability in the event of a change in the situation and an increase in base rates. The placement will last until March 24. But this is an absolutely liquid product, and will continue to be available on the Moscow Exchange in the secondary market.
– Nowadays there is a lot of discussion about the advisory market against the background of events in the United States, where forums of private investors have become an independent force, outplaying large funds. There are indeed more and more advisers on the market every day, who should you follow, whose advice should you follow?
– I agree that in an era of economic instability and expectations of change, a large number of pseudo-experts appear who are ready to predict any future from the apocalypse to general prosperity. You should rely only on proven professionals who are recognized by the authoritative community and have an obvious result of their work. At the moment, our portfolio exceeds 2.7 trillion rubles. But not only the absolute figure is important, but also the growth dynamics – over the past 3 years, the amount of funds under management has more than doubled. And this is an indicator of the professionalism of the management of large private capital and the trust of our clients, who delegate more and more serious tasks to us. It is for the professional expertise for the quality of service that Forbes recognized us as the first in the private banking market, and SPEAR'S as a legendary team. Our Family Office regularly confirms its leading position according to the Moscow Family Office Forum. As a rule, they come to us on recommendations from existing clients or with a question that they could not solve in another bank, and gradually they move to more comprehensive services. The first thing we offer to the client is the “investment check-up” service, which allows you to analyze the client's portfolio regardless of the location of assets and give recommendations for optimizing their structure. And then many VIP clients choose our “advisory” service, which proved itself last year with a steady growth of the portfolio by more than 220%. It allows our clients to make investment decisions based on VTB's expertise, keep abreast of all proposals and strategies, adjust their portfolio in a timely manner, and stay involved in the process at every stage.
– Have you seen the difference in the behavior of VIP clients before the pandemic and after the purchase and maintenance of foreign real estate and financial assets?
– Now, as before, we have access to international financial platforms and tools for resolving issues in foreign jurisdictions. Thanks to subsidiaries, representative offices and partners of VTB Group, we are able to offer VIP clients a product line of Western banks, as well as to make complex transactions involving foreign assets, provide legal and tax support.