Merrill Lynch’s international private client group is reaching a period of consolidation in the UK and Ireland after opening offices in Dubl...

Merrill Lynch’s international private client group is reaching a period of consolidation in the UK and Ireland after opening offices in Dublin and Leeds this year. The international business will still continue to expand despite disappointing results for the private client business based outside the US, John Maitland, managing director of international private client group UK and Ireland, told Private Client Management. The division will now concentrate on its segmentation strategy and developing its private wealth services group, targeted at ultra high net-worth clients. Maitland reports to José Malbran, managing director for the Middle East, Europe and Africa. He took up his post just under a year ago after managing the group’s operations in Geneva.

The profits of Merrill Lynch’s private client arm took a downturn in the first quarter of 2001, falling 27 per cent from the previous year to $355m. The international business suffered more severely than the US, whose pre-tax margin was two points higher than in the first quarter of 2000. The majority of private client assets are held in the US, said Maitland.

“Inevitably if revenues are affected expansion plans can be curtailed. But it is only a matter of degree because this is a long-term business. Swings in the market and profitability do have an effect but the important thing is to plan for the future,” he said.

The international business is not performing particularly better or worse than the US division, but it is considerably smaller and less developed, said Maitland. “The international market is much more complex because each country needs different products and services and to take a different approach to relationship management. All these things need to be created. Its just that the Merrill Lynch’s US private client arm is at a different stage of evolution if you like – its much older and mature internationally,” he commented. Merrill Lynch opened up private client offices internationally around 30 years ago, while it started in the US during the 1930s.

The group is investing quite heavily in the international business, particularly in Europe and Japan, in order to allow other countries to catch up with America, said Maitland. The international private client group covers UK, Ireland, Japan, Latin America, Middle East, Asia Pacific and Canada.

The development of the private wealth services group will be the key focus for the UK and Ireland in the future. The group segmented its clients into high net-worth and ultra high net-worth around 12 months ago. The private wealth services group was created to serve clients with more than $10m in assets to invest, while the standard minimum threshold for the bank is $1m. The bank also covers the mass affluent segment through its joint venture with Merrill Lynch, which it launched in May. The service offers online investment and banking facilities for clients with £10,000 in assets to invest. Maitland expects that the venture will also be an important referral channel for HSBC’s and Merrill’s private banking arms.

Maitland said that the group has no immediate plans to segment its clients along thematic lines, in the same way as banks such as Coutts & Co., “If you take that to the logical conclusion you would expect all sports stars or pop stars to think alike. I’m not sure of the advantages of segmenting along those lines. But we will continue to watch the situation.”