Banca March has the highest solvency ratio in Europe according to the European Banking Authority’s stress tests
Banca March is the only completely family-run bank in Spain. Founded in 1926 in Palma de Mallorca by Juan March Ordinas, Banca March backed business growth on the Balearic Islands in its first years before later moving on to the Canary Islands, and more recently, in to the rest of the country. Specialising in wealth management and private banking, with particular dedication to family-run businesses and entrepreneurial families, Banca March has strengthened a network specialised in providing financial consulting to high net-worth clients. The company has offices in the Balearic Islands, Canary Islands, Madrid, Barcelona, Zaragoza, Valencia and Alicante, and 240 offices in total.
The family nature of the bank has created a rigorous management approach, making Banca March the most solvent bank in Europe in the two stress tests carried out by the European Banking Authority. As a bank focused on family-run assets, Banca March has a comprehensive understanding of the client, a prudent management style and targets the avoidance of risk, which has been at the root of serious problems at other European financial institutions.
As a result of its rigorous management, as at December 31 2011, Banca March had consolidated the strength of its balance sheet with a solvency ratio of 26.7 percent (Tier 1), well above that of any other European entity. During the 2011 fiscal year, Banca March continued strengthening its strategic areas of wealth management, private banking and corporate banking, with particular emphasis on entrepreneurs and family-run businesses as well as those with medium-high to high incomes. As at December 2011 Banca March’s volume of business under management reached €6.425m in its private banking and wealth management areas, an increase of 14 percent, and €3.190m in its corporate banking sector, showing an increase of nine percent. In the previous fiscal year the number of clients also rose by 17 percent in private banking and wealth management, and by 18 percent in corporate banking.
This specialisation has allowed Banca March to enjoy a privileged position in the complex Spanish financial system. Thanks to its well-defined approach, Banca March is situated to maintain its position as a specialised bank; a niche entity with a deep understanding of its clients, a very high capital adequacy rate and the positive values it brings as a family-run business. For this reason, Banca March continues to work along the lines of its solid, proven strategy and has opted to sit out the concentration of banking processes put in place in the past few years among Spanish financial entities.
“We will only stay in the niches where we want to be and nothing more. We know that we have a goldmine in wealth management and private banking, and we are developing these areas. Moreover, we also know that we are competitive with national and foreign banks, and that we can provide a variety of services which they cannot. Among big companies, our model is also working very well and we believe that with the financial reorganisation in Spain we still have two years to consolidate our franchises,” states José Nieto, CEO of Banca March.
An opportunity for wealth management
Banca March has known how to benefit and grow from the economic turmoil of the past few years by attracting clients looking to find tranquility for their investments, far away from the turbulence in which the Spanish financial system has found itself. As Hugo Aramburu, Director of Wealth Management at Banca March, points out “assets under management in private banking and wealth management have gone from €3.870m at the end of 2008 to €6.425m at the close of 2011, which shows an annual growth of 18.4 percent.” In the last fiscal year alone, wealth management grew 21.7 percent as a result of new client acquisition and new family businesses. “This figure raises the total number of clients in the area of high net worth management to 5,900,” underlines Aramburu. By geographic zones, Barcelona, Madrid and the entire area of Levante particularly stand out for their positive development.
The key to this success, according to the Director of Wealth Management, is based on the security offered by a financial institution with the highest solvency ratio in Europe, a very low number of non-performing assets and 80 percent allowance coverage for insolvencies. In addition, at a time of restrictive credit, Banca March is attracting clients through loans. “Some businesses are having difficulty financing and we are in a comfortable position to lend. In 2011 our credit portfolio increased 17 percent and now represents 20 percent of our total assets,” or about €1.300m, confirms Hugo Aramburu.
Family businesses fund
This growth is also seen in the number of SICAV under management, now totaling 58, plus a further eight currently in the process of being transferred. However, Banca March’s latest innovation is the launch of the Family Businesses Fund, a global equity fund investing exclusively in a selection of the best family-run enterprises. The fund invests in listed companies where more than 25 percent of its shareholders belong to one single family, at least one member of the family is involved in management and there is the aim of passing on the company to the next generation.
“The characteristics of family businesses are a long-term perspective, compromise, loyalty, motivation and little leveraging. These aspects turn them into stable businesses with greater resistance when compared to non-family-run businesses, as demonstrated during periods of financial crisis. In fact, historically the financial results and profits of family businesses are greater than that of other companies,” explains José Luis Jiménez, General Director of March Gestión.
More than 80 percent of all companies worldwide are family-run businesses and nearly 15 percent of those comprising the S&P500 and the Stoxx600. An investor having invested equally in European family-run businesses over the past 16 years would have attained a 250 percent cumulative total return as compared to little more than 50 percent on the MSCI World or the Stoxx600.
With the launch of this fund Banca March continues to foster its national and international growth with highly specialised products which support its investment philosophy: combining long-term value creation with capital protection through active management.
In addition, “this fund allows us to couple our deep knowledge of family businesses with asset management due to the fact that since its foundation in 1926 the Banca March Group has belonged 100 percent to one family and has specialised in wealth management and in financing family enterprises,” comments José Luis Jiménez.
As with the March Vini Catena Fund and Torrenova, the Family Businesses Fund is registered for commercialisation in Spain, Italy and Luxemburg, and will soon be available in Austria and the UK.
A successful team
Thanks to the extraordinary development of Banca March these past years, the areas of wealth management and private banking have also increased the size of their teams by signing on talent at a time during which other entities are not offering a positive outlook for career development. In 2008 wealth management (responsible for managing high wealth clients) was made up of a team of 35 private bankers. Today this figure stands at 57 with 12 more staff expected to be added during the course of 2012. In private banking more than 110 specialised staff members are responsible for personally meeting client needs in this area of the business.
During these years of crisis, Banca March has stood out as a solid bank recognised throughout Europe for its sustainable growth. It continues on a forward path with its approach which has proven to be the best one thus far and which, because of its philosophy, puts Banca March at present in an unbeatable situation to continue to stand along side its main asset: its clients.
For more information: www.bancamarch.es