Anglo controlled huge private wealth
Published 22/10/2010 | 05:00
Anglo Irish Bank was managing a huge amount of private wealth in Ireland and the UK before its collapse in early 2009, figures given to the EU Commission indicate.
The bank claims it was controlling up to 40pc of the entire private banking market in Ireland before its nationalisation in January 2009. The bank believes its market share of wealth management in Ireland was between 30pc and 40pc and even up to 5pc in the UK market.
Private banking involves banks advising high net worth individuals about how to manage their money. Banks then charge a fee and often also benefit from deposits from these wealthy clients. The identity of wealthy clients is completely confidential.
Rival banks were sceptical of the UK figure yesterday, but acknowledged Anglo's private banking presence in Ireland was considerable. The figures are included in the latest EU Commission approvals for capital injections into Anglo, which were released in Brussels.
The private banking area -- or wealth management -- was reported to be worth €20bn at the peak of the boom, although some thought it was far larger than this. Taking the €20bn figure would have left Anglo managing about €8bn of assets and cash on behalf of clients.
The current website of Anglo Irish wealth management talks about the bank managing cash and funds of €2bn. Many of the bank's clients were sold tax-efficient products through a company called Anglo Irish Assurance Company.
A range of investment services are also provided, ironically among them are investments in hedge funds, which were blamed in 2008 in shorting the bank's shares and impacting on its position in the inter-bank markets.
At the peak of the market in early 2007 BoI did research claiming there were 30,000 millionaires in Ireland.
At that time private banking was reported to be growing by between 40pc and 50pc a year and AIB and BoI were expecting strong returns from their private banking arms.
One of the big issues in recent years has been stockbrokers taking a greater share of this private wealth market, offering alternative investments that banks sometimes don't have access to. Ireland also plays host to a small number of hedge funds.
Several large international banks are now either operating in private wealth in Ireland or have plans to.
Barclays has a wealth management arm in Ireland and South African banking giant Investec has expressed a wish to buy a wealth manager in Ireland.