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ANDILE NTINGI

THE allure of the new black elite and upper black middle class has not gone unnoticed by the private banks and wealth managers.

These exclusive institutions are stepping up the recruitment of black clients, most of whom have seen their wealth and income sky-rocket over the past decade on the back of state-sponsored policies such as black economic empowerment (BEE), preferential procurement and affirmative action.

Unlike their white counterparts, who are concerned about preserving their wealth, the black elite focuses on accumulating wealth and assets which include holiday homes, second residential property, expensive jewellery, furniture, boats and even private jets.

Some are throwing their money into the equities market, where the returns are usually higher than investing in bonds or cash.

Eric Enslin, chief executive of FNB’s private banking division, says the bank has seen an increase in its black customer base driven by females.

Growth has been particularly strong among black clients in the age category 30 to 45, who are mostly building their wealth and reducing debt.

Potential customers need to earn a minimum salary of R750 000 a year to qualify for FNB’s private banking service.

This qualifying salary is set to rise to R1 million from July so the bank can concentrate on fewer clients in a bid to improve its service.

“We do not want to be a volumes player. We want to concentrate on . . . really wealthy clients,” says Enslin.

FNB is not the only bank that is experiencing growth. The newly appointed head of Absa Private Bank, Hlengani Mathebula, says blacks account for about 52% of the lender’s 111 780-strong customer base.

“The emerging wealth market is key for us. There is a large market with the potential for great wealth, whether it comes from entrepreneurial ability, BEE opportunities or high professional earnings,” says Mathebula.

“We need to start with these clients in their accumulation of wealth phases and grow with them to the preservation of wealth stage. They may not be immediately wealthy at the moment, but the aspirations and possibilities are certainly there.”

Absa Private Bank deals with clients who earn more than R650 000 a year.

Its competitor, BoE Private Clients, requires its clients to earn more than R1 million a year, while Nedbank Private Bank offers its services to customers with a yearly salary of between R400 000 and R1 million.

Nedbank owns BoE Private Clients and the two private banks have more than 100 000 customers.

The bulk of the clients in private banking are entrepreneurs, senior managers in large private-sector corporations, senior government officials including cabinet ministers and senior managers in government departments and state-owned companies.

The future of private banking appears rosy.

A study released earlier this year by the Bureau of Market Research indicates that the number of people earning between R650 000 and R2.5 million a year will grow from 185 000 people to over 258 000 over the next four years.

Blacks and Asians in this income category are expected to show the strongest growth during this period.

“The outlook for the private banking market is very good because it is not affected by inflation and interest rates.

“This market is dependent on activities such as government infrastructure spending, entrepreneurship and economic transformation. But this market is very demanding and as a bank we need to give it the kind of service it wants,” says Rob Shuter, the managing director of Nedbank Retail.

As blacks become wealthier, Enslin predicts they will have to look to professional wealth managers and private banks to preserve and expand their fortunes.

Some of the services that may be in big demand over the next few years include estate planning, high-level tax advice, wills, assets and liability restructuring and management, succession planning and exiting of businesses, property management, cash flow management and trust formation.

These will be provided over and above normal transactional banking services like credit cards, cheque books, debit cards and overdraft products.

But wealth management firm Barnard Jacobs Mellet Private Clients is of the opinion that wealthy blacks are still dragging their feet in using professional private wealth management.

This is because blacks are still generating wealth as opposed to protecting wealth.

“Among highly successful black clients we see an increased take-up of stockbroking and asset management services.

“But this has not yet been mirrored in classic wealth preservation areas like trust formation,” says Alan Botha, the firm’s Gauteng head of wealth management.

“That said, we did anticipate that after five years of BEE deal-making and successful entrepreneurship by black go-getters . . . we would see greater emphasis on wealth preservation.”

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