European High Net Worth Customers 2003

SUMMARY

Introduction

European High Net Worth Customers 2003 is Datamonitor's key report covering the European onshore wealth management marketplace. Building on the resources and expertise of Datamonitor Global Wealth Service team, the latest report is data-rich, and provides in-depth and impartial market assessment, competitor intelligence and forecasts for the European HNW market.

Scope

• Sizes the HNW market for a range of European countries in terms of the number of individuals and the liquid assets they hold.

• Data is segmented across 5 liquid assets bands, starting at EUR 300,000 and rising to EUR 3M+

• Financial performance and assets under management data covers a sample of 30 or more wealth managers, depending on the variable in question.

• Country coverage includes France, Germany, Italy, the Nordic region, Spain and the UK

Report Highlights

The number of HNW individuals across Europe's the six major economies has grown by 7.9 per cent compounded annually over the 1997-2002 period to reach 2.6m individuals. Germany has the largest HNW population of all European countries with 648,000 individuals. In 2002 France also overtook the UK as Germany's closest rival in terms of market size.

Based on an analysis of 48 wealth managers, assets under management fell by an average 8.6 per cent between in 2002 with a number of large competitors including Merrill Lynch, ABN Amro and BNP Paribas registering a decline in this region of magnitude.

The definition of "wealth management" is changing. The concept is referring less to the provision of portfolio management and financial planning services and increasingly to the management of all financial affairs and activities for HNW individuals. However, very few players are sufficiently equipped or prepared to take this "holistic route".

TABLE OF CONTENTS

EXECUTIVE SUMMARY 3

Market Context 3

Competitive Dynamics 4

Future Decoded 6

INTRODUCTION 12

What is this report about? 12

Who is the target reader? 12

How to use this report 13

MARKET CONTEXT 14

Introduction 14

Wealth market drivers 14

The nature of wealth generation 14

Economic and financial backdrop 16

Net effect on liquid wealth 19

European HNW market overview 21

Country comparison: Number of HNW Individuals 24

Country comparison: Liquid assets of HNW Individuals 27

European HNW market data 30

Country specific HNW market data 33

France 33

Germany 34

Italy 35

Nordic Region 36

Spain 41

UK 42

COMPETITIVE DYNAMICS 43

Introduction 43

European competitive landscape 43

Jumping on the wealth management bandwagon 44

Europe? place in the global wealth management game 44

Product/service substitution 46

Managing market conditions 48

Enhancing financial performance 50

Wider strategic issues requiring a response 56

Organization and structure 57

Product and service proposition 58

Investment Process 60

Technology 62

Competitive environment: France 63

Competitive environment: Germany 65

Competitive environment: Italy 67

Competitive environment: Nordic region 69

Competitive environment: Spain 70

Competitve environment: UK 72

European competitor data 75

Selected financial performance data 75

Selected assets under management data 78

Global ranking of wealth managers: Top 25 80

FUTURE DECODED 82

Introduction 82

Economic and financial outlook 82

Forecast assumptions 82

European HNW forecast overview 84

Country comparison: HNW Individual forecasts 85

Country comparison: HNW liquid asset forecasts 88

European HNW forecast data 91

Country specific forecast data 94

France 94

Germany 95

Italy 96

Nordic region 97

Spain 102

UK 103

APPENDIX 104

Research Methodology 104

New developments to the Global Wealth Model 104

The New Methodology 104

The UK sub model 105

European sub model 105

Differences to the old model 105

Forecasting methodology 106

Further information 106

Definitions 107

Further reading 110

Datamonitor Savings & Investment Reports 110

Datamonitor Global Wealth Service: Insight reports 110

Datamonitor Global Wealth Service: Competitor Tracking 110

Datamonitor Financial Services Consulting 111

SPP writing team 112

List of Tables

Table 1: Number of European high net worth individuals by country, 1997-2002 30

Table 2: Number of European high net worth individuals by liquid asset band (EUR), 1997-2002 30

Table 3: Number of European high net worth individuals across European countries, segmented by liquid asset band, 2002 31

Table 4: Aggregate liquid assets of European high net worth individuals by country, 1997-2002 31

Table 5: Aggregate liquid assets of European high net worth individuals by asset band (EUR), 1997-2002 32

Table 6: Aggregate liquid assets of European high net worth individuals across European countries, by liquid asset band (EUR), 2002 32

Table 7: Number of French high net worth individuals by liquid asset band (EUR), 1997-2002 33

Table 8: Aggregate liquid assets of French high net worth individuals segmented by liquid asset band (EUR), 1997-2002 33

Table 9: Number of German high net worth individuals by liquid asset band (EUR), 1997-2002 34

Table 10: Aggregate liquid assets of German high net worth individuals segmented by liquid asset band (EUR), 1997-2002 34

Table 11: Number of Italian high net worth individuals by liquid asset band (EUR), 1997-2002 35

Table 12: Aggregate liquid assets of Italian high net worth individuals segmented by liquid asset band (EUR), 1997-2002 35

Table 13: Number of Nordic high net worth individuals by liquid asset band (EUR), 1997-2001 36

Table 14: Aggregate liquid assets of Nordic high net worth individuals segmented by liquid asset band (EUR), 1997-2001 36

Table 15: Number of Danish high net worth individuals by liquid asset band (EUR), 1997-2002 37

Table 16: Aggregate liquid assets of Danish high net worth individuals segmented by liquid asset band (EUR), 1997-2002 37

Table 17: Number of Finnish high net worth individuals by liquid asset band (EUR), 1997-2002 38

Table 18: Aggregate liquid assets of Finnish high net worth individuals segmented by liquid asset band (EUR), 1997-2002 38

Table 19: Number of Norwegian high net worth individuals by liquid asset band (EUR), 1997-2002 39

Table 20: Aggregate liquid assets of Norwegian high net worth individuals segmented by liquid asset band (EUR), 1997-2002 39

Table 21: Number of Swedish high net worth individuals by liquid asset band (EUR), 1997-2002 40

Table 22: Aggregate liquid assets of Swedish high net worth individuals segmented by liquid asset band (EUR), 1997-2002 40

Table 23: Number of Spanish high net worth individuals by liquid asset band (EUR), 1997-2002 41

Table 24: Aggregate liquid assets of Spanish high net worth individuals segmented by liquid asset band (EUR), 1997-2002 41

Table 25: Number of UK high net worth individuals by liquid asset band (EUR), 1997-2002 42

Table 26: Aggregate liquid assets of UK high net worth individuals segmented by liquid asset band (EUR), 1997-2002 42

Table 27: Operating revenues of selected wealth managers with a European onshore presence, EUR m, 2001-2002 75

Table 28: Operating costs of selected wealth managers with a European onshore presence, EUR m, 2001-2002 76

Table 29: Operating profit of selected wealth managers with a European onshore presence, EUR m, 2001-2002 77

Table 30: Global assets under management (EUR bn) of selected wealth managers with a European onshore presence, 2001-2002 (A) 78

Table 31: Global assets under management (EUR bn) of selected wealth managers with a European onshore presence, 2001-2002 (B) 79

Table 32: Top 25 wealth managers globally by worldwide assets under management (EUR bn), 2001- 2002 80

Table 33: Forecasted evolution of total retail savings and investment markets, 2002 -2007 83

Table 34: Forecasted population of major European economies, 2002-2007f 83

Table 35: Forecasted growth in real GDP 2002 ·007f 83

Table 36: Forecasted total European HNW individuals, segmented by country, 2002-2007 91

Table 37: Forecasted total European HNW individuals, segmented by liquid asset band (EUR), 2002-2007 91

Table 38: Forecasted number of European HNW individuals, segmented by liquid asset band (EUR) and country, 2007 92

Table 39: Forecasted European high net worth aggregate liquid assets, by country, 2002-2007 92

Table 40: Forecasted European high net worth aggregate liquid assets, by liquid asset band (EUR), 2002-2007 93

Table 41: Forecasted aggregate liquid assets of European HNW individuals, segmented by liquid asset band and country, 2007 93

Table 42: Forecasted total French HNW individuals, segmented by liquid asset band (EUR), 2002-2007 94

Table 43: Forecasted French high net worth aggregate liquid assets by liquid asset band (EUR), 2002-2007 94

Table 44: Forecasted total German HNW individuals, segmented by liquid asset band (EUR), 2002-2007 95

Table 45: Forecasted German high net worth aggregate liquid assets by liquid asset band (EUR), 2002-2007 95

Table 46: Forecasted total Italian HNW individuals, segmented by liquid asset band (EUR), 2002-2007 96

Table 47: Forecasted Italian high net worth aggregate liquid assets by liquid asset band (EUR), 2002-2007 96

Table 48: Forecasted total Nordic HNW individuals, segmented by liquid asset band (EUR), 2002-2007 97

Table 49: Forecasted Nordic HNW aggregate liquid assets by liquid asset band (EUR), 2002-2007 97

Table 50: Forecasted total Danish HNW individuals, segmented by liquid asset band (EUR), 2002-2007 98

Table 51: Forecasted Danish HNW aggregate liquid assets by liquid asset band (EUR), 2002-2007 98

Table 52: Forecasted total Finnish HNW individuals, segmented by liquid asset band (EUR), 2002-2007 99

Table 53: Forecasted Finnish HNW aggregate liquid assets by liquid asset band (EUR), 2002-2007 99

Table 54: Forecasted total Norwegian HNW individuals, segmented by liquid asset band (EUR), 2002-2007 100

Table 55: Forecasted Norwegian HNW aggregate liquid assets by liquid asset band (EUR), 2002-2007 100

Table 56: Forecasted total Swedish HNW individuals, segmented by liquid asset band (EUR), 2002-2007 101

Table 57: Forecasted Swedish HNW aggregate liquid assets by liquid asset band, 2002-2007 101

Table 58: Forecasted total Spanish HNW individuals, segmented by liquid asset band (EUR), 2002-2007 102

Table 59: Forecasted Spanish high net worth aggregate liquid assets by liquid asset band (EUR), 2002-2007 102

Table 60: Forecasted total UK HNW individuals, segmented by liquid asset band (EUR), 2002-2007 103

Table 61: Forecasted UK high net worth aggregate liquid assets by liquid asset band (EUR), 2002-2007 103

List of Figures

Figure 1: The value of HNW held liquid assets has outpaced the growth in the number of HNW individuals, 1997- 2002 3

Figure 2: Less than half of competitors saw operating costs fall from 2001-2002 6

Figure 3: Forecasted breakdown of HNW individuals by liquid asset band (EUR) and by country, 2007 7

Figure 4: Methodology diagram and report structure 13

Figure 5: Conceptualizing HNW wealth drivers and flows 15

Figure 6: Finland has seen the fastest growth in real GDP over the 1995-2002 period 17

Figure 7: European stock market indices have returned to pre-1997 levels 18

Figure 8: Major European stock market indices have started to turn around in the first half of 2003 19

Figure 9: Absolute growth in retail liquid assets has varied considerably across Europe between 1997 and 2002 20

Figure 10: Distribution of European liquid wealth, by segment, 1997 versus 2002 20

Figure 11: The value of HNW held liquid assets has outpaced the growth in the number of HNW individuals, 1997- 2002 21

Figure 12: High net worth owned liquid assets versus total retail assets, 1997-2002 22

Figure 13: European HNW individuals and HNW liquid assets, segmented by liquid asset bands (EUR), 1997 versus 2002 23

Figure 14: France has overtaken the UK as the second largest HNW market in Europe, 1997- 2002 24

Figure 15: Spain has been the fastest growing HNW market, 1997-2002 25

Figure 16: The bulk of European HNW individuals fall into the EUR 300k to EUR 750k liquid asset bands, 2002 26

Figure 17: France has overtaken the UK in terms of the value of HNW liquid assets, 1997-2002 27

Figure 18: Spain and France grow fastest in terms of the value of HNW liquid assets, 1997-2002 28

Figure 19: European HNW individuals with over EUR 1.5M in liquid assets, hold close to 40% of all HNW liquid assets, 2002 29

Figure 20: Wealth managers from the US and Switzerland dominate the top 25 global private banks, 2002 45

Figure 21: Different competitor types pose different threat levels, by asset class, 2001 47

Figure 22: 32 out of 48 competitors studied reported a decline in assets under management in 2002 49

Figure 23: Only 8 out of 29 competitors studied have seen operating profits increase in 2002 52

Figure 24: Only 10 out of 30 competitors studied increased operating revenues in 2002 53

Figure 25: Only 13 out of 29 competitors studied reduced operating costs in 2002 55

Figure 26: Longer-term strategic options for European wealth managers 59

Figure 27: Deconstruction of the investment process is focusing some wealth managers on a smaller number of core activities 61

Figure 28: 3.6m European HNW individuals will hold EUR 2,936bn in liquid assets by 2007 84

Figure 29: HNW individuals are set to continue to take an increasing share of total liquid assets through to 2007 85

Figure 30: Spain is forecast to be the fastest growing HNW market in terms of the number of individuals, 2002-2007 86

Figure 31: Forecasted breakdown of HNW individuals by liquid asset band (EUR) and by country, 2007 87

Figure 32: Forecasted growth in the value of HNW liquid assets, segmented by country, 2002-2007 88

Figure 33: Forecasted breakdown of HNW held liquid assets by liquid asset band (EUR) and by country, 2007 89