Private banks serving a single business family proliferate in Spain from 100 or 150 million euros. This is one of the conclusions drawn from the report. ‘Single Family Office Survey 2021’, prepared by Credit Suisse at an international level, which sheds a little more light on a market segment that is used to giving little information about its business.
Exclusivity and secrecy in single-family private banks is the norm for doing business. But the Credit Suisse report gives some relevant insights into how this network of investment firms is sustained throughout the world.
On average, the single family offices (SFO) support six members of the family that is a client, and a majority 60% work with two generations of the family clan, compared to 20% who work with the first generation and 17% who reach the third generation.
Normally, a dozen people work in an SFO, and 61% of these firms employ one or more of the members of the family in questionwhich are dedicated to investments, taxation or philanthropy, according to the Credit Suisse barometer, which has been carried out in collaboration with the University of St Gallen.
25% manage assets worth between 500 and 1,000 million dollars (from 430 to 860 million euros, approximately), followed by 22% that have between 250 and 500 million dollars (from 215 to 430 million euros), the two predominant subgroups by volume.
Among its current concerns is sustainability, as has been happening in the financial sector as a whole. 49% of SFOs plan to increase their sustainable investments in the next two to three years. Their main areas of interest in this matter are renewable energies (63%), health (61%) and education (48%).
But, how much does it cost to maintain a private bank of this depth? Costs can range from $750,000 to $2 million a year (€644,000 to €1.7 million) for family offices smaller and administrative; between 1.5 and 20 million dollars per year (from 1.3 to 17 million euros) for hybrids, and more than 15 million dollars per year (more than 12.8 million euros) for large and fully integrated .
the spanish profile
According to Paul Carrasco, director of Family Office and Institutional Private Banking Clients for Europe at Credit Suisse, the number of SFOs in Spain has grown “considerably” in recent years. Currently, it is common to see SFOs set up from €100-150 million in assets under management.
Spanish single-family private banks are characterized by their significant penetration in the investment Property (residential, tertiary, retail and logistics), assuming more than 50% of the global portfolio in many cases.
However, they have less exposure to alternative investments, that is, venture capital and hedge fundsalthough investments in private capital have been gradually increasing in the last five years due to the environment of negative interest rates.
The Credit Suisse director puts in context that these Spanish banks concentrate another good part of their investments in European companies, but less in American and very little in Asian or emerging markets in general.
“SFOs in Spain have a more conservative approach than in other markets. Its main objective is preserve your wealth and ensure the transition to the next generation, rather than the growth or multiplication of your fortune exponentially. They also show a strong commitment to philanthropic activities and development projects in their respective communities.” This last point is evident in the role that family members play in the management of their foundations.