CANADA’S BIG BANKS ARE looking to build out their wealth-management and private-client businesses serving the burgeoning – and lucrative – global high net-worth (HNW) marketplace. To do this, the banks are extending their services beyond the domestic market to the U.S. and overseas.

“The global private banking market is changing rapidly,” says Keith Sjögren, senior consultant and managing director of consulting services with Investor Economics Inc. in Toronto, “thanks to the new sources of wealth in emerging markets, the heavy hand of regulators and tax collectors, and the fading of some of the old offshore centres.”

Last year, the total number of HNW individuals in the world – those with US$1 million or more in investible assets – grew by 9.2% to 12 million people, according to the 17th annual World Wealth Report, a joint venture of Paris-based global consulting firm Capgemini Service SAS and Royal Bank of Canada’s (RBC) wealth-management division. Total assets among this group grew by 10% in 2012 to US$46.2 trillion. By 2015, total global HNW assets are projected to reach US$55.8 trillion.

The global financial crisis and Great Recession led to a shakeout in the HNW space, with some global banks shedding their private-banking arms. Others in the HNW market are consolidating or pursuing niche markets.

This is creating opportunities for Canadian banks, which, as a group, can take advantage of their strong reputation and the perceived stability of this country.

“Many [global HNW] people find it easier to do business with Canada,” says Raj Kothari, managing partner for Greater Toronto and leader of the national asset management practice for PricewaterhouseCoopers LLP in Toronto. “The Canadian banks are great conduits to assist such individuals.”

Adds Sjögren: “Canadian banks are well liked. They’re big, well-capitalized, well- regulated and well-managed. They’re North American without being American, and provide comfort to wealthy people.”

Each of the big Canadian banks is focusing on a distinct strategy, targeting niches or regions that will best leverage their respective strengths and position them to claim a slice of the market. The banks are also increasing their global asset-management capabilities, often through acquisition, to offer a broader range of products.

RBC is the front-runner, with not only a strong business in Canada but growing ones in the U.S., the U.K. and Channel Islands, and the emerging markets. RBC’s total wealth-management business, including its Canadian operations, ranks as the sixth among wealth managers in the world, according to a global ranking for 2013 published by Scorpio Partnership Ltd., a U.K. consulting firm.

RBC has bulked up its global advisory sales force, hiring more than 600 wealth-management advisors in the U.S. over the past four years, doubling the number of relationship managers in its London office over the past three years and doubling the number of relationship managers in the firm’s Hong Kong and Singapore offices in the past two years.

Rather than expanding into new countries, RBC is focusing on building scale in its existing centres through a three-pronged strategy of continuing investment in global asset managers, leveraging the full capabilities of the bank across all platforms and concentrating on meeting the complex needs of HNW clients.

Bank of Montreal (BMO) also is focusing on serving its HNW clients in several jurisdictions, particularly recent immigrants to Canada from Asia. In January, BMO opened two new private-banking offices, in Hong Kong and Singapore, with roughly 100 employees in total.

“To attract wealth,” says Yannick Archambault, vice president and chief operating officer of BMO Harris Private Bank in Toronto, “we need to anticipate the needs of new Canadians before they make their move from their country of origin.”

In the U.S., where BMO Harris has built a significant retail presence, the firm has operations in 14 states that target both HNW and mass-affluent clients (less than US$1 million in investible assets).

Toronto-Dominion Bank (TD), for its part, is looking to build its U.S. wealth-management division, including private banking for its HNW customers. TD plans to double the number of its U.S. investment advisors.

Earlier this year, TD bolstered its U.S. asset-management business by acquiring New York-based Epoch Investment Partners Inc.

As for Bank of Nova Scotia, that bank is leveraging its existing retail footprint in Latin America and the Caribbean to tap into the growing HNW market in Latin America. In 2009, Scotiabank opened a private-client office in Miami, an increasingly important global financial centre, that provides services to non-American clients.

In April, the Canadian Imperial Bank of Commerce acquired Atlanta-based Atlantic Trust Private Wealth Management, which manages about US$20 billion for HNW individuals and foundations.

© 2013 Investment Executive. All rights reserved.