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BBVA Compass Appoints Rafael Bustillo as Chief Operating Officer

In a move aimed at fostering deeper ties to both clients and communities, BBVA Compass named Rafael Bustillo as the bank’s Chief Operating Officer to oversee the bank’s three lines of business – Retail, Wealth Management and Commercial.

Bustillo will lead the Consumer and Commercial Bank, working alongside Chief Digital Banking Officer Jeff Dennes, who leads the Digital Bank. BBVA Compass Chairman and CEO Manolo Sanchez said the new structure, which came after a careful review, will allow the bank to be more relevant and responsive to customers and the towns and cities where it operates.

“We’re organizing in a way that is both comprehensive and efficient,” said Chairman and CEO Manolo Sanchez. “Our leadership model will yield superior cross-line-of-business synergies, creating an opportunity for our business and our brand. But the key is that the new organization will allow us to better meet the needs of the people and places we serve.”

Four Regional Executives will report to Bustillo, as will Champions for the lines of business in the bank, including Retail Banking, Wealth Management and Commercial Banking as well as Commercial Real Estate. This new leadership team will be tasked with capitalizing on opportunities and mitigating challenges across the bank’s footprint.

Chief Executive Officers will be named in the major cities in the bank’s footprint, in addition to a Texas border CEO, a New Mexico CEO and CEOs representing the bank’s community markets in each region. These positions will help the bank tap even further into local business opportunities.

Bustillo has been with BBVA Compass since 1987, leading Commercial Banking for the past five years. Prior to that, he was Commercial Banking’s Denver Market President and Western Region Executive, Gainesville Market President and Regional Executive for Northeast Florida and Southeast Alabama Community Markets, and Commercial and Private Banking Manager in Huntsville, Ala.

“Rafael has guided our Commercial line of business through a period of transformation and growth, made all the more remarkable by the prevailing economic headwinds,” said Sanchez. “He’s an excellent choice to help lead the bank to even greater success.”

Bustillo will be based in Houston.

Madoff Trustee Reaches Recovery Agreement of Nearly $500 Million with Herald and Primeo Feeder Funds

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Irving H. Picard, Securities Investor Protection Act (SIPA) Trustee for the liquidation of Bernard L. Madoff Investment Securities LLC (BLMIS), filed a motion in the United States Bankruptcy Court for the Southern District of New York seeking approval of a settlement agreement with Herald Fund SPC and Primeo Fund, two feeder funds primarily invested in BLMIS.

Under the terms of the agreement, the settlement will benefit the BLMIS Customer Fund by approximately $497 million. The agreement, once approved, will increase total Customer Fund recoveries to more than $10.3 billion.

“By any measure, the settlement terms are highly advantageous, not only to BLMIS direct customers with allowed claims, but also potentially to the indirect investors in the Herald Fund,” said Oren Warshavsky, lead counsel for the matter and architect of the settlement on behalf of the SIPA Trustee. “Every account in the SIPA liquidation must first be brought to a level playing field, so that those entitled to Customer Fund assets may receive distributions. These recoveries – once approved by the Court – will be combined with existing, available funds and distributed on a fair and orderly basis to all BLMIS customers with allowed claims. That will now include Herald Fund SPC.”

The Herald Fund will receive an allowed claim of approximately $1.6 billion in the BLMIS liquidation. With this allowed claim, Herald is entitled to catch-up payments from the four interim distributions to BLMIS victims to date. Out of these catch-up payments, the first approximately $497 million will be used to pay the amount owed by Herald Fund to the BLMIS Customer Fund. As of approval of the settlement, Herald Fund SPC becomes an allowed claimant and will receive further distributions along with all other BLMIS customers with allowed claims not yet fully satisfied.

“These were complex negotiations conducted across international borders. This settlement is a testament to the determination of the SIPA Trustee and the sophisticated asset-tracing and recovery skills of our legal teams, who negotiate on the SIPA Trustee’s behalf for the benefit of all BLMIS customers,” said Geoffrey North, a partner at BakerHostetler LLP, the court-appointed counsel to the SIPA Trustee. “In the filing, the SIPA Trustee noted that the agreement avoids the cost and delay of what could otherwise have been lengthy and contentious litigation.”

Both Primeo and Herald, currently in liquidation in the Cayman Islands, deposited more in BLMIS than they ultimately withdrew before the bankruptcy was announced on December 11, 2008. In accordance with the United States Bankruptcy Code, the SIPA Trustee and his team negotiated a return of the approximately $497 million for equitable distribution to all BLMIS customers with allowed claims whose claims are not yet fully satisfied. To date, the SIPA Trustee has allowed 2,528 claims related to 2,198 BLMIS accounts. Of these accounts, 1,131 accounts – or all allowed claims totaling $925,000 or less – have been fully satisfied.

Additional terms of the settlement with the Funds’ liquidators are as follows:

The approximately $497 million represents the return of the $500,000 SIPC advance to the BLMIS Customer Fund and settlement payments from the Funds consisting of 100 percent of the withdrawals made by Herald from BLMIS within six years prior to the BLMIS liquidation filing date and approximately $29 million from Primeo.
At closing, the SIPA Trustee shall pay Herald approximately $258 million, consisting of the balance of the catch-up distribution owed to Herald under its allowed claim, for distribution to indirect investors. Herald shall continue to have an allowed customer claim of approximately $1.6 billion, representing the net equity of the indirect investors in the Herald Fund. Primeo has forfeited all claims.

One hundred percent of the SIPA Trustee’s recoveries will be allocated to the Customer Fund for distribution to BLMIS customers with allowed claims. To date, the SIPA Trustee has recovered more than $9.8 billion and has distributed almost $6 billion, which includes approximately $816.2 million in committed advances from the Securities Investor Protection Corporation (SIPC). The costs associated with the SIPA Trustee’s recovery and settlement efforts are paid by SIPC, which administers a fund drawn upon assessments on the securities industry. No fees or other costs of administration are paid from recoveries obtained by the SIPA Trustee for the benefit of BLMIS customers with allowed claims.

Global Ultra Wealthy Population Reaches Record High and a Combined Net Worth Of Nearly US$30 Trillion

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The combined wealth of the world’s UHNW individuals – defined as those with US$30 million and above in net assets – increased by 7% to US$29.725 trillion in 2014, almost twice the GDP of the world’s largest economy, the United States as report by the Wealth-X and UBS World Ultra Wealth Report 2014, released today, that shows too that 12,040 new ultra high net worth (UHNW) individuals were minted this year, pushing the global UHNW population to a record 211,275, a 6% increase from 2013.

North America and Europe continue to dominate the global landscape as the regions with the largest UHNW population and wealth. The United States maintains its position as the world’s top UHNW country in 2014 with a population of 69,560 UHNW individuals with a combined net worth of over US$9.6 trillion, a 6% and 7% increase respectively from last year.

The Wealth-X and UBS World Ultra Wealth Report 2014 forecasts that the global UHNW population will reach 250,000 individuals in the next five years. The report also predicts that Asia will be the region that sees the fastest growth in UHNW wealth, overtaking Europe in terms of UHNW wealth in the next ten years.

Below are other key findings from the Wealth-X and UBS World Ultra Wealth Report 2014:

The world’s UHNW population accounts for only 0.004% of the world’s adult population, but controls almost 13% of the world’s total wealth.
North America’s UHNW population grew by 6.2% to 74,865 individuals and their combined net worth rose 6% to US$10.3 trillion.
Europe’s UHNW population expanded by 6.5% to 61,820 individuals and their combined net worth rose nearly 9% US$8.4 trillion.
There are almost twice as many UHNW individuals in Asia than in the Middle East, Latin America and the Caribbean, Africa and the Pacific regions combined. Yet, Asia’s UHNW population grew by only 4.8% to 46,635 individuals and their total net worth rose by less than 6% to nearly US$7 trillion. Only Latin America and the Caribbean had lower growth rates.
Latin America and the Caribbean saw the slowest UHNW population growth of any region. The region’s UHNW population grew by 4.6% to 14,805 individuals and their combined net worth rose 5.5% to US$2.2 trillion. This performance, however, indicates a recovery from last year’s decline.
The UHNW population of the Pacific grew by 5.4% to 4,170 individuals and their combined net worth rose 6.2% to US$515 billion.
The Middle East saw the fastest growth in terms of both UHNW population and wealth for the second year in a row. The region’s UHNW population swelled to 5,975 individuals with a combined net worth of almost US$1 trillion, a 12.7% and 13.1% increase since 2013, respectively.
Africa experienced the second fastest growth in terms of UHNW population and wealth, with an 8.3% increase in the region’s UHNW population (3,005) and 12.9% growth in UHNW wealth (US$395 billion).
There are 183,810 male UHNW individuals as of 2014, and 23.6% are involved in the finance, banking & investment industry, a 3.6% increase from last year.
There are 27,465 female UHNW individuals as of 2014, and 48% of them fully inherited their wealth, a decline from 53% in 2013.
Almost US$13 trillion of the world’s UHNW wealth is held in private company holdings, nearly twice the amount held in public company stakes.
64% of the world’s UHNW population is self-made and only 17% have fully inherited their wealth.
The world’s UHNW population is a significant source of revenue for the luxury industry, accounting for almost 19% of the luxury industry’s market.

The Wealth-X and UBS World Ultra Wealth Report 2014 – which looks at the global UHNW population from July 2013 to June 2014 – examines this wealth segment by geographical location, gender, and sources of wealth.

“Wealth-X is pleased to partner with UBS for a second consecutive year to produce the Wealth-X and UBS World Ultra Wealth 2014,” Wealth-X CEO Mykolas Rambus said. “The report underscores Wealth-X’s commitment to conducting groundbreaking research on the world’s ultra high net worth (UHNW) population. Expert commentary from UBS complements Wealth-X’s global intelligence on the world’s UHNW population, producing a report that demonstrates a true collaboration between the global leader in wealth management and the world’s leading UHNW intelligence provider.”

Simon Smiles, Chief Investment Officer UHNW, UBS Wealth Management, said, “The second Wealth-X and UBS World Ultra Wealth Report is the most comprehensive study of its kind and provides unparalleled insights into this sophisticated and global client segment. We believe that wealth concentration is one of the biggest risks facing UHNW individuals. The report finds that UHNW individuals have over two thirds of their wealth in their core businesses. We believe that this could expose UHNW individuals to many unintended risks and so we have been helping them address these concentration biases.

“UBS has one of the world’s largest dedicated teams whose focus is entirely on UHNW clients and we continue to strive to become a strong, effective and trustworthy partner to this valued clientele.” Simon Smiles added.

Concerns About Frontier Markets Debt? Global Evolution Answers

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Global Evolution has been investing in frontier markets sovereign debt for more than 10 years, which gives the asset management firm a solid background and expertise in identifying investment opportunities with attractive risk-return characteristics.

Nevertheless, investors in frontier markets have some questions or concerns about an asset class that, in many cases, is something new for their portfolios. Funds Society has gathered these questions and asked Soren Rump, CEO of Global Evolution, to give us his insight on these issues. Soren Rump, who will be joining Capital Strategies on a road show across Chile and Peru next week, answered the following:

Is liquidity an issue when investing in frontier markets?

Frontier markets have over the recent years developed significantly in terms of size and liquidity. Liquidity in frontier markets is daily, but bid/offer spreads and the size of individual trades are typically smaller than those in traditional emerging markets, but often with a larger pool of price providers than, for example, emerging markets corporate bonds.

How do you manage the different regulations in each country?

Similar to traditional emerging markets debt, we access the individual regulations, such as holding periods, FX restrictions, withholding tax, etc. before entering individual local markets. We gather ongoing intelligence through our local network of market participants, such as local banks, stock exchange, regulatory bodies etc.

What is the presence and characteristics of institutional investor in these markets?

Local institutional investors are dominated by pension funds and local banks, as the two most dominant investors in the primary and secondary government bond market. By regulation, typically pension funds need to invest in local government bonds which provide a natural bid both at the ongoing auctions as well as in the secondary market.

What is the size of the market?

We estimate a liquid market capitalization of US$400bn based on sovereign bonds from 62 countries with daily valuations on Bloomberg.

What different types of bond issues are there in these markets?

You can find Eurobonds (issued in USD, EUR, JPY, CHF), offered to the market both through primary EMTN issuance programs by international banks, and in the secondary market through international banks and brokers. We also have Local T-bills and T-bonds, both offered to the market through primary auctions, and in the secondary market through primarily local market maker banks. Further to this we actively invest through the FX markets using spot FX, FX forwards, cross currency swaps etc.

Global Evolution, an asset management firm specialized in emerging and frontier markets sovereign debt, is represented by Capital Strategies in the Americas Region.

Reforms in Asia Will Have a Positive Impact on Dividend Returns

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Institutional investors believe the current reforms across Asia (excluding Japan) – from India, Indonesia, China and Korea – will have a positive impact on dividend returns in the region. This is the view of 65% of institutional investors interviewed by ING Investment Management (ING IM).

Nicolas Simar, Head of the Equity Value Boutique at ING IM, comments: “Asia provides an attractive and diverse universe of high dividend-paying stocks. Despite its reputation for growth, dividend investing in Asia has tended to outperform. Over the past five years investors tracking the MSCI AC Asia ex Japan Index would have seen a modest decline, with dividends being the only positive contributor to returns.

“We expect dividends to become an increasingly important element of total returns for investors in Asian equities because companies there are increasingly focusing on alignment with shareholders, and more are initiating or increasing dividends.”

In terms of why institutional investors expect reforms in Asia to have a positive impact on dividends, ING IM’s research reveals 43% believe the main reason is it will result in better corporate governance that will lead to companies increasingly looking to reward shareholders with higher dividends. Some 29% believe the key factor will be that reforms will encourage companies there to be more efficient, thereby improving returns.

ING IM says that as a higher proportion of Asian companies pay a dividend than in developed markets, it is possible to build a portfolio that is well diversified across countries and sectors. With Asian company balance sheets in good shape – the least leveraged globally – there are few constraints to increasing payouts, and Asia has delivered significantly stronger dividend growth than developed markets.

ING IM’s Asia Ex-Japan Equity Fund has returned 2.6% annualized since the inception of the strategy (31 March 2013). It invests in stocks of companies operating in the Asian region excluding Japan that offer attractive and sustainable dividend yields and potential for capital appreciation. The strategy combines quantitative screening with fundamental analysis to identify stocks that trade below their intrinsic value and offer an ability to grow their dividend in the future. The fund focuses on finding the strongest dividend payers from a valuation perspective and not the highest yielders.

Barclays Makes Two Senior Hires to Its Wealth and Investment Management Team in Palm Beach

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Barclays has announced the appointments of Josh Crossman and Ginny Neal as Directors and Investment Representatives for Wealth and Investment Management. Based in the Palm Beach office, they will be responsible for implementing Barclays’ global wealth management programs and for providing sophisticated alternative investment strategies to high net worth individuals, foundations, corporations, and not-for-profit organizations.

Mr. Crossman and Ms. Neal will report to John Cregan, Regional Manager for Palm Beach.

“We are very excited to have two talented investment professionals join our team in this rapidly growing region. Josh and Ginny both have the breadth of wealth management and investment expertise that our clients demand,” said Mr. Cregan. “Their appointments underscore our commitment to attracting the very best wealth advisors in order to deliver customized investment solutions that match the financial profiles and risk appetites of our high net worth clients.”

Mr. Crossman joins Barclays with 19 years of industry experience. Most recently, he was a Vice President at JP Morgan Chase & Co., where he was a Senior Leader on the Private Bank Ultra High Net Worth Investment Team. Prior to joining JP Morgan in 2010, Mr. Crossman was the Chief Investment Officer at Frontline Management AS, a family office. He began his career at Bear, Stearns & Co. in 1995.

Ms. Neal brings 15 years of both financial and legal experience to the firm. Prior to joining Barclays, she was a Senior Private Banker at JP Morgan Chase & Co., where she serviced ultra high net worth individuals and family offices. Before joining JP Morgan in 2010, Ms. Neal was General Counsel for GenSpring Family Offices, LLC. She began her career at Greenberg Traurig, PA in 1999.

With 12 offices in the US, Barclays Wealth and Investment Management provides comprehensive wealth management solutions to high net worth individuals and families. The firm focuses on providing highly customized investment solutions to clients in alignment with their long-term risk tolerance, personal aspirations, specific financial needs and personality.

MFS Launches MFS Meridian Funds – Diversified Income Fund

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MFS Investment Management announced the launch of MFS Meridian Funds – Diversified Income Fund, a fund which seeks current income and capital appreciation. Led by James Swanson, MFS’ chief investment strategist, the strategy takes a disciplined investment approach that combines broad diversification, active asset allocation and bottom-up, fundamental security selection. In seeking to achieve its investment objective, the fund focuses on five income-oriented asset classes: US government securities, high-yield corporate bonds, emerging market debt, dividend-paying equities and real estate related investments.

“We think the fund’s disciplined and flexible approach to broad diversification, active asset allocation and fundamental security selection may help position the fund for favourable risk-adjusted returns”

“Similar to a strategy available in the US, this fund may be appropriate for investors who seek both income and growth potential through a diverse mix of income-producing securities”, said Lina Medeiros, president of MFS International Ltd. “The fund follows a disciplined and flexible approach and is managed by a team of highly-skilled portfolio managers who have managed money over long periods of time through varied market conditions”.

Lead portfolio manager James Swanson manages the asset allocation among the various types of securities in the portfolio. He works closely with co-managers and MFS’ Quantitative Solutions group and draws on insights from his 30-year career to determine the fund’s asset allocation. Working with Swanson is William Adams, co-head of Fixed Income for MFS and portfolio managers Ward Brown, David Cole, Richard Gable, Matthew Ryan, Jonathan Sage and Geoffrey Schechter. The management team has an average of more than 23 years of industry experience.

“We think the fund’s disciplined and flexible approach to broad diversification, active asset allocation and fundamental security selection may help position the fund for favourable risk-adjusted returns”, added Medeiros.

Issued by MFS Investment Management Company (Lux) S.àr.l. MFS Meridian Funds are a Luxembourg registered SICAV with US$27.0 billion in assets as of 30 September 2014. The MFS Meridian Funds are comprised of 31 equity, fixed income and mixed asset class funds. The MFS Meridian Funds are managed by MFS Investment Management, a global asset manager with US$424.8 billion in assets under management as of 30 September 2014.

The Multi-Family Office Channel Controls More Than US$700bn in the U.S.

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According to new research from global analytics firm Cerulli Associates, the multi-family office channel controls more than $700 billion.

“We estimate that the multi-family office channel is comprised of more than 200 firms that control more than $700 billion,” states Donnie Ethier, associate director at Cerulli. “Traditionally, the growth has been influenced by the independent registered investment advisor (RIA) segment of the channel. While this is still true, the highly-debated commercial multi-family office segment, which is financially backed by banks, posted the greatest asset growth in 2013.”

“Despite the debate of whether or not these offices are genuine family offices, the high-end wealth management units are paying off for many of their parent banks,” adds Ethier.

“This sizing reflects the total assets controlled by their advisor forces,” Ethier explains. “Although multi-family offices undoubtedly focus on high-net-worth (HNW) and ultra-high-net-worth families (UHNW), many do have a mix of clients that do not meet Cerulli’s HNW criteria. These non-HNW assets are still a massive opportunity for third-party managers.”

In their High-Net-Worth and Ultra-High-Net-Worth Markets 2014: Addressing the Unique Needs of Wealthy Families report, Cerulli analyzes the U.S. HNW (investable assets greater than $5 million) and UHNW (investable assets greater than $20 million) marketplaces. The report focuses on the three constituencies of investors, providers, and asset managers.

“Many executives agree that the phrase ‘multi-family office’ has lost its allure because so many wealth managers use it to explain their services geared to wealthy investors,” Ethier continues. “This has generally watered down the term to a marketing scheme. Evaluating a multi-family office should be based on the practices’ high-touch services and DNA versus its assets under management.”

Cerulli believes that third-party management opportunities will only grow as additional RIAs move upmarket, qualifying for multi-family office status. More national and super regional banks and trust companies will likely follow suit and establish family-office practices of their own. Appeal will grow across the segments as the firm count and assets swell.

Global Dividends Set to Soar to $1.19 Trillion in 2014, with Further Growth in 2015

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After adjusting for currency movements and one-offs, underlying dividend growth was 9.7% year on year, in line with the strong expansion seen in the first half of the year. On an underlying basis, the US, Europe, Emerging Markets and Asia Pacific ex Japan all achieved impressive double-digit dividend increases, while the UK, Canada and Japan lagged behind. The Henderson Global Dividend Index ended the quarter at 159.

For the full year, Henderson Global Investors expects dividends to reach $1.19 trillion, a headline increase of 12.6% (underlying +10.6%). For 2015, the Henderson’s preliminary forecast is $1.24 trillion for global dividends. Next year’s expected headline increase (4.2%) is slower than the underlying 7.2%, mainly because Vodafone will not repeat its record $26bn special dividend.

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The US remained the main engine of global dividend growth in Q3 2014. US firms paid out $87.4bn, 10.8% more year on year (underlying).

Dividend growth is coming from almost every sector in the US, with financials looking particularly strong. For the year to date, US financials have already distributed double what they did in the whole of 2010. By comparison, in the rest of the world, dividend payments from financials have increased just 12.1%, indicating how quickly the industry in the US has recovered from the financial crisis.

Seasonally, Q3 is the most important quarter for Emerging Markets, particularly for China, which pays out nine tenths of its annual total in the period. Underlying Emerging Market dividend growth of 11.0% to a total of $58.4bn was strong in comparison to recent quarters. With China accounting for almost half the total, its 14% underlying growth was key to the Emerging Markets’ successful performance. Russia saw flat headline dividends with underlying growth eroded by the plunging rouble. Q3 is also the seasonal peak for Asia Pacific, which grew 10.3% (underlying), with Taiwan leading the region.

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Q3 is a seasonally small quarter for dividend payments both in Europe (which extended Q2’s double-digit gains on an underlying basis) and in Japan. The UK is typically a big payer in Q3, but lagged behind other countries, as headline growth translated into an underlying decline once the gains from a strong pound were stripped out.

Alex Crooke, Head of Global Equity Income at Henderson Global Investors said: “2014 will break a new record for global dividends. The third quarter has extended the rapid growth in income that investors have been enjoying from their shares in 2014, and we are confident of double digit growth for the full year. The US is particularly impressive, as American firms increase dividend payouts helped by rising profits. Globally, investors should reap approximately $133 billion more in dividends this year than last.

“Despite the uncertain outlook for economic growth in 2015, we expect another good year of dividend growth, albeit at a slower rate than this year. A global approach to income investing continues to offer investors an attractive mix of opportunity and diversification.”

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Private Banks and External Asset Managers Will Thrive in LatAm Serving the Region’s HNWIs

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Bancos privados y gestores externos prosperarán en LatAm ante las nuevas demandas de los HNWI — Photo: Carles Cerulia, Flickr, Creative Commons. Private Banks and External Asset Managers Will Thrive in LatAm Serving the Region’s HNWIs

Latin American high net worth individuals (HNWI) are on average far wealthier than those in other regions (USD 13.5 million compared to e.g. European HNWIs with USD 3.3 million). The USD 2.66 trillion wealth management industry servicing this clientele is changing, evidenced by a shifting landscape of market participants. The drive towards localisation, the rise of transparency and the renewed role of cross-border banking accelerate the demand for a refined HNWI service offering, focused on a sophisticated understanding of client needs and circumstances, professionalism and accessibility. In light of this new environment, financial institutions such as dedicated private banks and professional external asset managers – if committed to adapting accordingly – will thrive given the dynamism and value that can be achieved from serving the region’s HNWIs.

Julius Baer has launched the first edition of the ‘Industry Report Latin America’, covering wealth creation, wealth management and investment behaviour in Latin America. The report was produced – according to Julius Baer’s open product and service philosophy – in cooperation with leading market specialists such as Aite Group and BlackRock. Roi Y. Tavor, Head Independent Asset Managers & Global Custody Americas and Africa, who initiated the study, said: “With this inaugural edition of Julius Baer’s first Industry Report on Latin America we aspire to highlight various aspects of the changing wealth management landscape in Latin America. We hope that this report will serve as a reference for all participants in the Latin American wealth management industry, including private clients, family offices and external asset managers.”

Evolving investment behaviour

Latin American investors have become younger and more sophisticated over the past decades, resulting in an increasing risk appetite and a more diversified portfolio to achieve investment objectives. But cash, fixed income and real estate investments still represent 76% of average Latin American asset allocation today. Latin American economies, at the same time, are more integrated into the global economy today than ever before and thus more exposed to international economic cycles and global social trends. With total wealth in the region set to continue to grow, heightened exposure to external shocks and increased investor sophistication will lead to new investment behaviours. The growing middle classes are forced to think beyond their immediate consumption needs and to re-evaluate notions of saving, wealth protection, investment preferences and allocations, while considering systematic risks amongst others.

The inaugural ‘Julius Baer Industry Report Latin America’ was presented at the 35th anniversary of Julius Baer Bank & Trust (Bahamas) Ltd. in Nassau. Gustavo Raitzin, Head Latin America and Israel and Member of the Executive Board, commented: “The ‘Julius Baer Industry Report Latin America’ reflects our dedication to guiding our clients through complexity by anticipating trends and jointly developing strategies to prepare for a prosperous future.”

Ingredients for sustained wealth creation

There are a number of ingredients for sustained wealth creation in place in Latin America today. Growing at a strong pace, the region has almost tripled its gross domestic product since 2002, allowing for sustained periods of political stability. An overall higher purchasing power has enabled important parts of the population, which historically speaking were economically insignificant, to influence the overall level of activity in the region. In Brazil, for example, demand for cars has surged from 1.7 million units in 2005 to 3.8 million units in 2012. This rise of the middle class continues to shape the economic structure of Latin America.

Governments in the region have wisely used the windfall profits of the commodity super cycle to strengthen their financial position. External debt in % of GDP declined since 2002 from 42% to 25% of GDP, driving institutional and socio-economic change. A more business-friendly environment as well as checks and balances on governmental institutions continue to be established, a precondition for sustained growth. For example: Colombia carried out 27 reforms over the past eight years to improve the regulatory environment for doing business; key economies within the region have more than halved the time to start up a new business between 2003 and 2013 and the rising middle class in Brazil is increasingly educated, as reflected by a growth of tertiary education by 215% from 1998 to 2011.

Thus, the ingredients necessary to reveal the region’s full potential for wealth creation are provided for. Latin America today is one of the regions with the highest expected growth rates of wealthy individuals with the number of ultra high net worth individuals (UHNWI) expected to grow by 42% until 2023.