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Aiming to be market leader for the rich

May 21, 2010

by Guy Dinmore

Published: May 21 2010

In keeping with its pretensions to attract “ultra high net-worth individuals” – the very rich – Barclays Wealth has opened its first offices in Rome in a palace built with such generous stairways that visitors once reached the upper storeys on horseback.

Thomas Kalaris, London-based chief executive of Barclays’ private banking arm, said expanding in central and southern Italy was another part of his plan to take Barclays Wealth “significantly” above its global ranking as the 10th largest wealth manager, with $260bn (£181bn) of assets under management.

Preparing a reception for 250 existing and potential clients, each with at least €5m (£4.3m) to invest, the former US investment banker said the Italian market had a great deal of capacity as it moved from old to new wealth.

“You want to be close to your clients,” he said, explaining why Barclays Wealth decided to expand in Italy seven years after opening in Milan. “Products and services can be global but relationships are local in the sense they are personal.”

The timing is not auspicious, with the Milan stock exchange falling some 20 per cent in recent weeks and Italy’s centre-right government set to announce a deficit-cutting package. Nonetheless, Mr Kalaris said the bank was taking a long-term view as part of its additional £350m global investment spending this year.

“The time to make a commitment is when times look difficult. It is easy to be a follower in a market. We would rather be a leader.” That said, Barclays had no plans to open in Athens, he added, having just visited Greece, although it was “certainly an interesting market over the longer term”.

Barclays Wealth, which acquired Lehman’s North American business, has opened five offices in India over the past two years. It is in talks to launch a joint venture in Japan and is applying to open a branch in Saudi Arabia.

Calling the global private banking market “fragmented” with no single player holding more than 3 or 4 per cent, Mr Kalaris said: “There is a window of opportunity over the next couple of years as we make investments to capture a much more significant market share.”

Italians were not very happy with services and products of Italian banks and saw US banks as “aggressive”, he said, while Barclays projected a conservative image.

Asked about the flight of customers from Swiss banks, partly as a result of a campaign against non-co-operative jurisdictions led by Giulio Tremonti, finance minister, Mr Kalaris quoted author Thomas Friedman.

“The world is flat in terms of regulatory and tax environments. Whether in a week or five years, we are moving into a new environment of a level playing field across the board,” he said.

And distinguishing the honest rich from the mafia? “We check and double-check and double-check again,” said Daniele Bokun, Italy managing director for Barclays Wealth. “A top priority is to avoid any strange businessmen.”

Mr Kalaris added: “Integrity is at the core of everything we do. We are no less vigilant in Italy. We are incredibly vigilant.”

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