UK banking and financial services giant Barclays says it plans to expand "aggressively" in Europe by finding alliance partners to help sell more products to wealthy individuals. Chief Executive Matthew Barrett hopes to forge alliances with companies, including life insurers, to become a distributor of a host of products, including Barclays' own, rather than making outright acquisitions.
Like its UK rivals, Barclays is facing falling margins and if it was to try and expand at home, it may well face opposition from banking and financial services regulators. So Mr Barrett intends to turn towards Europeans who make more than $100,000 a year - the so-called mass affluent.
Mr Barrett said: 'There is a growing cadre of mass affluent in Europe. That market is not being served as they should be. I spent my first period here preoccupied with the UK Now I'm very much moving to Europe.' He continued: 'Increasingly people want multiple products. We will package the best products from around the world and develop a competency of searching that out for the clients. Networking with (other companies) would be my bias, rather than rushing out to buy an investment management company tomorrow.'
Barclays is no doubt looking to the fact that the number of people with money to invest is constantly growing, one indication being the surge in the number of online brokerage accounts in Europe. JP Morgan has forecast as massive jump from 2.9 million at the end of June to 17 million in the next two years.
However, Barclays does not face an easy road ahead. It will have to try and cut into an increasingly competitive market for rich individuals. For example, Germany's Commerzbank is teaming up with Italy's Assicurazioni Generali to jointly sell products to high-net worth individuals. And Barclays' arch rival in the UK, HSBC, is joining up with Merrill Lynch to open a $1bn online bank for people with between $100,000 and $500,000 to invest. Moreover, Credit Suisse Group, already a leader in private banking for millionaires, is opening an online investment service for affluent Europeans outside Switzerland.
Whilst the mass affluent market is undoubtedly becoming more crowded, Barclays already has a good grounding in catering to rich people and can draw on its experience. Wealth management, which includes stockbroking, private and offshore banking, and retail businesses in continental Europe and the Caribbean, accounted for 14 per cent of Barclays' total pre-tax profit in the first half of 2000.
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