Foreigners seen as “interesting market” for private banking says BPI
The growing number of overseas relocants and investors in Portugal is seen as an “interesting market” by António Luna Vaz, the CEO of BPI Private Banking.
BPI currently lacks the tools to compete with the international wealth management firms entering the country, despite being the market leader in the “private banking” segment. CEO António Luna Vaz says, in an interview with business daily Negócios, that the bank is nevertheless benefiting from the boom in Portugal through lending.
BPI’s “private” business – clients with assets exceeding €500,000 – and “wealth” business – clients with assets exceeding €2 million – is currently worth €10.9Bn. The higher segment, resulting from a spin-off to differentiate its service to clients and which has had “fantastic acceptance,” represents €2.6Bn, with an average of €4 million per account (compared to €1.2 million in the “private” segment). “More than 90% are Portuguese. We don’t have a very active role in ‘chasing’ foreign clients,” admits António Luna Vaz.
With the exception of relationships the bank already had through immigrant communities (such as in Venezuela or Brazil), business with foreigners is lackluster. “Cross-border wealth management is a very risky business; it doesn’t make sense. Nowadays it’s fully regulated, and we don’t think the investment makes sense for the return it gives,” he explains. However, in the case of the fortunes that are coming to Portugal and that have driven the arrival of a number of banks, mainly Swiss, the situation is different.
“The client who is here and has tax residency or temporary residency in Portugal is interested in having money abroad, not in Portugal. It is much more tax-efficient for them to be here as a resident and have the money in Luxembourg, Switzerland, or another country,” says the manager, recalling, for example, that under the Non-Habitual Resident Regime, it is more tax-favorable to have income outside of Portugal.
António Luna Vaz — whose career included working at BPI bank in Switzerland — believes that this economic rationale explains the proliferation of branches in Portugal of international banks dedicated to wealth management. Despite being here, their domicile is in Luxembourg or Switzerland. “Where do we focus our efforts? We focus on providing something that international banks don’t have, which is credit,” he says.
The CEO explains that with loans paying between 2 and 3% and the option of investing the capital to yield 4%, for example, it ends up being worthwhile for these clients to take out a mortgage to buy a house in Portugal. “It’s a business where we have added value for foreigners.
In this area of credit, we are very active, but, once again, reactively. Where we have taken a slightly more proactive approach is at events,” he says, adding that clients of various nationalities “come to the conclusion that BPI can be a bank that supports their daily lives, from cards and condominiums to credit,” he says.
Source: Negócios; Credits: Vector Mais
