Danish banks are competing hard for the wealthiest customers. The weapon of choice is well-dressed consultants greeting potential customers with glittering smiles, high-end coffee, and a wide range of benefit programs.
According to a census by AMWatch, at least 20 Danish banks currently have a private banking unit. Most recently, Jutlander Bank is entering the fray.
"We are setting up a private banking unit because we see more and more wealthy customers on our own books. Some of these are potential customers, and we want them," says the CEO of Jutlander Bank, Per Sønderup, to AMWatch.
To begin with Jutlander Bank has hired a head of private banking who will be working on a strategy and setting up the unit. At this point, Per Sønderup cannot predict the unit's size or objectives.
Private banking is a crowded road, and we don’t want to get stuck in that jam right now
"But I definitely see big potential. There is a rapidly rising trend of customers flowing into the investment unit. The reason is, for one, that we have acquired more wealthy customers, but also the low interest rate which means that there is not much sense in having money deposited in the bank," Per Sønderup says.
After looking through the different banks' websites, AMWatch can confirm that all group 1 banks have a private banking unit, and in group 2, only Vestjysk Bank, Lån og Spar, and Den Jyske Sparekasse have no mention of a private banking unit on their websites.
One of the most recent newcomers to the private banking brawl is Arbejdernes Landsbank, which opened its unit about a year ago.
"We had some discussions about the business potential, but there's no denying it. Our customers have definitely received it well, and the development has far exceeded expectations," says CEO Gert Jonassen.
There is more than one reason behind the new trend of winning over wealthy customers with pleasantries. Firstly, the wealthy customers are willing to pay more to be part of "the club", and the bank can charge fees for investing the assets.
"This field gives us profit from trade and consultancy, and no credit risk," says Lars Petersson, CEO of Sparekassen Sjælland-Fyn, which has had a private banking unit for 12 years.
Secondly, the wealthy have become wealthier. Danish personal net capital has risen to DKK 7993 billion by the end of 2016 from about DKK 6,000 billion five years before, according to numbers from Statistics Denmark.
The FSA is watching
The Danish Financial Supervisory Agency (FSA) has conveyed a survey in February this year among small and medium-sized banks, which also confirms the intensity of Danish banks' competition for the growing private fortunes in the country.
"The FSA has seen an increased focus on asset management concurrently with a decline in the banking sector's profit from loans," the FSA wrote, warning that some wealthy customers might be treated more favorably than normal customers.
There is no fixed definition of private banking, and much variation in the wealth needed to join the exclusive club.
According to the Danish FSA's survey of small and medium-sized banks, the customers' assets ranged down to DKK 1-2 million. At Arbejdernes Landsbank, the lower limit is about DKK 2.5 million, while Sparekassen Sjælland-Fyn requires investable assets of about DKK 3 million.
Nordea's website says that the admission requirement is a minimum of DKK 4 million.
Skjern Bank will not join the queue
The private banking units are fewer and further between among smaller banks in group 3. Danske Andelskassers Bank is one of the very few small banks that has a private banking unit. But most of the banks – like Skjern Bank – don't have a specific private banking unit.
"We have wealthy customers whom we help and give advice to and such. So we offer the same experience as private banking, we just don't call it private banking," says the CEO of Skjern Bank, Per Munck.
Why don't you call it private banking?
"Private banking is a crowded road, and we don't want to get stuck in that jam right now. We are considering the option, but there is currently no reason that I see for us to do it."
While many banks are competing to shout the loudest about private banking on their websites, very few financial statements contain any mention of the number of customers and fortunes in the units. This makes it difficult to form a general idea of which banks are ahead in the private banking race.
The same problem permeates various nominations for best private banking units, as they only include the largest banks. Swedish Prospera, which ranks Nordic private banking every year, states that the reason for only including major banks is that the ranking is based on customer interviews, and Prospera was unable to contact enough small bank customers to provide a basis for a ranking.
Last year's ranking from Prospera was won by Danske Bank, then Sydbank, Nordea, Nykredit, and Jyske Bank.
English Edit: Marie Honoré