Macquarie announces major restructure

The group’s Banking and Financial Services (BFS) division has announced that it will merge its private banking and wealth management businesses to focus on a growth strategy that targets high-net-worth individuals (HNWI), claiming that this market is the “exclusive focus” of Macquarie’s private bank.

The group said that the HNWI segment presents “significant opportunities for growth”, citing data from the Credit Suisse Research Institute which revealed that Australia ranks among the top 10 countries globally for HNWIs, with more than 1.2 million adults with wealth of $1.3 million or more. Macquarie also noted that the segment has grown by 7.4 per cent, or approximately 80,000 adults, since 2011.

“We are striving to create a comprehensive and tailored wealth and banking offering for our clients that can take them from the wealth accumulation stage of their lives through to retirement. Concentrating on one client segment enables us to better deliver on this commitment,” Macquarie’s head of wealth management, Bill Marynissen, said.

“Focusing on attracting high-net-worth clients is a logical evolution of our private client business and we believe it is a space in which we can be a market leader.

“We have carefully assessed growth opportunities in the high-net-worth segment against the strong fundamentals of our business. These include a deep understanding of the high-net-worth segment, our wealth and banking expertise and suite of solutions, and the capacity to build on our existing digital capabilities.”

Macquarie has acknowledged that its decision will impact a number of advisers, claiming that it’s facilitating discussions with other firms and assisting with their transition.

In April, Macquarie sold off some of its shares in wealth management and mortgage company Yellow Brick Road, dropping its holding to below 10 per cent.

The group held nearly a fifth (18.4 per cent) of YBR’s shares, but an ASX release earlier this week revealed that the banking group had dropped its stake to 7.8 per cent.

The announcement follows the release of Macquarie’s 2018 financial year results (FY18), which revealed that its net profit for its BFS division grew by 9 per cent, from $513 million in FY17 to $560 million in FY18.

Macquarie Bank also expanded its mortgage book by 14 per cent, bringing its total mortgage portfolio to $32.7 billion for the 12 months ending 31 March 2018.

The lender’s home loan portfolio growth now represents approximately 2 per cent of the Australian mortgage market.

Macquarie has said that the merger will not affect the BFS sector’s retail banking activities which include home lending, deposit and credit card offerings.

[Related: Macquarie offloads shares in YBR]