A Quebec-based bank plans to take advantage of the growing number of wealthy people in the Vancouver area by opening a branch of its exclusive private banking wing.
“Given their somewhat limited presence out here now, that gave them the wherewithal to grow and expand in what is probably one of the highest-growth markets from a financial services point of view – the wealth management market,” said Darwin Schandor, vice-president of Private Banking 1859, which is operated by National Bank. (The name refers to the year National Bank received its charter.)
National Bank has also opened an 1859 branch in Calgary, which Schandor said is a more challenging market given the oil price-caused economic downturn in Alberta.
Vancouver, however, is booming.
“The West has seen a lot of success and expansion, and particularly in Vancouver with a lot of the immigrants and the expansion of Vancouver becoming a true international city,” Schandor said.
Private banks provide a high level of service to wealthy clients in everything from day-to-day banking and estate planning to credit lending and investment.
Schandor, who has worked in wealth management in Vancouver for over 20 years, said there are several factors behind the increase in wealthy families in the region.
Successful entrepreneurs from the baby-boom generation have built up wealth and are now looking to pass it on to their heirs. Wealthy people from outside Canada are buying real estate in Vancouver, a trend that Schandor thinks will continue especially because “many people are of the view that Vancouver, on an international scale, is still affordable.”
He said that international wealth is mostly coming from China now, but the city has “seen clients coming from everywhere.”
A “back of the envelope” calculation from a National Bank analyst estimated that Chinese buyers made up a third of $38 billion in residential real estate sales in Vancouver in 2015.
Finally, the rapid price escalation of real estate has contributed to wealth generation: “this market loves real estate,” Schandor said.
The bank will service people who have at least $1 million in investable assets, but Schandor characterized the level of wealth common in the Vancouver area as families with a minimum of $3 million in net worth and $500,000 in annual income. There are also a number of potential clients worth more than $25 million, often because of the real estate those families possess, including the primary residence.
The bank is in downtown Vancouver on Alberni Street, a shopping area that has become the home of high-end stores such as Tiffany and Prada. The bank’s upscale storefront is key to attracting clientele, Schandor said, with an aim to emulate the boutique banks of Europe.
“We’ve had people come in and say, ‘You look like a private bank that I’ve seen in Switzerland.’