Notable growth of private banking in Spain drives new trends and challenges.

Private banking in Spain is experiencing a notable growth period, evidenced by a significant increase in managed wealth, which has reached 787 billion euros by the end of 2023. This increase, which has allowed the figure to double over the last decade, reflects not only a boom in results and portfolio management but also the need for the sector to adapt to a constantly evolving environment and to the demands of increasingly informed and demanding clients. Alicia García, director of M&G Investments, emphasized during the forum "Challenges and Perspectives of Private Banking in the Coming Months," organized by EXPANSIÓN, that investment funds remain the most popular product in the sector, accounting for 40% of the business of international asset managers. She also highlighted that the average wealth of clients stands at 900,000 euros, although there has also been an increase in the number of portfolios below 500,000 euros, indicating a shift in the profile of private banking clients. In this context, Juan Llamas, commercial director of CaixaBank Private Banking, pointed out that market behavior in 2024 has been divided into two phases. The first half of the year was marked by a flight to low-risk assets, such as treasury bills, while in the second half, investors began to explore riskier opportunities. Llamas also advocated for the evolution towards an independent business model, in which clients explicitly pay for the services they receive, reflecting a trend towards transparency in the relationship with financial advisors. Javier García, deputy director of Santander Private Banking, complemented this view by noting that, contrary to what was thought at the beginning of the year, equity markets have provided the greatest value to portfolios, rather than fixed income. In this regard, he emphasized the importance of offering suitable and personalized solutions to clients, allowing them to choose how they want to interact with their private banking services. Olga Montañés, deputy director of BBVA, also shared her optimism regarding the growth of private banking, with an 18% increase in assets under management, approaching 140 billion euros. She highlighted that the diversification of portfolios, which now include a wider range of assets, has contributed to generating positive returns and has driven the creation of new portfolios. However, the sector faces the challenge of moving clients from low-risk investments to more complex and potentially more profitable products. Joaquín Calvo-Sotelo, director of Private Banking at Bankinter, emphasized the importance of educating clients about the value of fixed income and how it can play a role in generating income, even though the expectations for appreciation may not be as favorable as in previous years. Regulation also plays a crucial role in the evolution of the sector, especially regarding investment in alternative assets and private markets. With the recent reduction of the minimum investment requirement by the regulator, there is a growing need to educate clients about these products, which require specialized advice due to their complexity. Private markets, which include investments in unlisted companies, private loans, and real estate assets, are gaining relevance. Javier García from Santander highlighted that as markets evolve, it is essential for clients to have access to these opportunities, which represent an important part of the economy and should be included in investment portfolios. On the other hand, the integration of technology in the management of private banking has become a fundamental aspect, as stated by various executives during the forum. Technological tools are key to providing a more efficient and personalized service, which will enable firms to add value to their clients in such a competitive environment. Finally, the uncertainty surrounding potential changes in the global economic landscape, with figures like Donald Trump influencing the market, adds another layer of challenge for the sector. The need to eliminate conflicts of interest and improve the perception of private banking's work are objectives that must be prioritized in the near future, ensuring that client trust is maintained and fostering sustained growth in this vital sector of the Spanish economy.