A few days ago former Julius Baer senior banker Ali Jamal created a new business, designed to appeal to ultra-high net worth individuals looking for solutions, such as forms of collateralised credit, a service not always on offer from their existing banks, particularly in cases where lenders are squeezing balance sheets to protect capital. Such has been the tale since the financial tsunami of 2008. 

The 37-year-old did not want, he told WealthBriefing, to only build a new business after yet another decade or so working for an established bank (a trend one often sees in this sector). Instead he wanted to make the jump now, and bring like-minded people with him. He argued that Azura can handle a gap that has been in the market for some time, and is likely to get wider.

Jamal believes that a large part of the banking system, including that element which handles high net worth clients, is becoming commoditised. Banks are migrating to using the same systems to save costs. (See a story about Nordic banks doing this here.) Clients in the area - from mass affluent to up to $10 million - are also getting more commoditised and technology-driven solutions aimed at them. And Jamal reckons that many private banks will go after those in the $10 million-$25 million bracket. “There is a huge number of millionaires in this segment….they don’t tend to need a bank’s balance sheet.”

But at the top end, such as from $250 million to $1.0 billion-plus, clients are seeking one trusted advisor to offer them multi-asset solutions, across multiple investment locations, as well as access to balance sheet capabilities. Ironically, however, a number of the large banks have compressed their balance sheets, and have pushed out some of the bankers who were used to dealing with such clients’ demands, Jamal said. He said this is even the case with large firms which make a noise about serving UHNW clients.

“I want to take the risk today because this process will happen in the next five to seven years,” he said, claiming that Azura is targeting assets under management of $8-10 billion in five years. 

That banks have reined in some of their older lending and credit activity since 2008 cannot be denied. This week, as widely reported, Deutsche Bank, Germany’s biggest bank, announced that it is cutting some of its investment bank exposure and slashing costs. For years Deutsche has been one of the mainstays of Europe’s largest economy, embedded in the business community. While the bank is actually boosting its wealth management headcount and investing in services, it remains to be seen if its cuts to the IB side of things will be a turnoff for UHNW clients who want the balance sheet of a big firm. Post-crisis, big, integrated banks as varied as Citigroup, Credit Suisse, Barclays, BNP Paribas and HSBC have pulled in their investment banking horns. But money, like water, has a way of finding a level and the past few years have seen the rise of private debt funds and alternative, “shadow” forms of credit. (It is also worth noting, as an aside, that relatively young Swiss private banks such as REYL make much of their corporate advisory, pro-entrepreneurship culture, based on the idea that today’s typical UHNW client has few divisions between operating business and liquid private wealth.)

Commercial banks have been squeezing some of their lending so there are business clients left wanting, Ray Soudah, chairman and founding partner, MilleniumAssociates, told WealthBriefing. When it comes to “Lombard Lending” (borrowing against assets such as equities), Soudah said private banks will demand a fairly large haircut on such a transaction. (His own firm offers services to find credit for such clients.)

Complex and needy
The ascent of firms such as Azura speaks to the idea that ultra-wealthy clients, with their often complex, idiosyncratic needs, require a range of advisors and institutions to manage their affairs. Jamal argued that one decisive advantage that he intends to offer is giving clients the fastest possible execution on transactions – and opportunities – as they arise. With many existing established institutions, services are increasingly cumbersome due to the regulatory burden levied on banks today.

Also, from a compliance point of view, because Azura will have already done its KYC and related due diligence on its clients, they can ease the process of onboarding the clients with the range of banks they have access to sourcing credit and other services, he said.

Tier 1 banker
Jamal used to work as a senior private banker and head of key clients, emerging markets, for Julius Baer. He spent five years there and is proud of “a very close and solid relationship” with its former chief executive Boris Collardi (who left Julius Baer in late 2017, becoming a partner at Pictet). Although there had been talk of a push by that bank after Collardi’s move to go harder after UHNW clients, Jamal decided that at this stage of his career, he wanted a new challenge and decided to create his own business. He was also inspired by the promising environment for building independent wealth management. 

“The first 18 months of Azura is to create a home for Tier 1-level bankers,” he said. He is looking for, say, a managing director overseeing $500 million-$1.0 billion in client AuM. (In Jamal’s own case, he oversaw more than $2.5 billion in AuM.) Azura will give such bankers equity in the business and flexibility over where they sit. Today the offices are in London and Monaco, and Azura’s plans include Switzerland and Asia.

“I don’t want anyone to be employed at the firm in the next five years; I aim to share equity ownership with everybody,” Jamal told this publication at his firm’s offices in Mayfair. 

Jamal knows he is dealing with UHNW clients who are used to having four, maybe five banking and advisory relationships. “We want to provide them with financial solutions for their private wealth and create time for them to build their day-to-day business.”

Part of the process involves building an in-house IT infrastructure and systems to give his new colleagues the maximum freedom to hunt for clients.

Jamal thinks he can disrupt the UHNW end of the wealth management sector by acting fast, hooking clients up with sources of capital and taking an entrepreneurial approach. In some ways, this sounds like what banking was meant to be all about in the first place.