RI Interview: Reto Ringger. SAM founder brings his new sustainable private bank to market

Globalance on the cusp of picking up one of its first major pieces of business.

In just under a week, Globalance, the new sustainable private banking business of Reto Ringger, founder and former CEO of Swiss sustainable fund manager, SAM, will know if it has picked up one of its first major pieces of business. Ironically, the business could come partly at the expense of Ringger’s old house, which he sold to Dutch fund manager Robeco in 2008. As RI revealed last week, on June 6th, Swiss sustainability investment vehicle, Sustainable Performance Group AG, will put to a shareholder vote plans to liquidate itself and transfer its assets from existing asset adviser SAM Group into units of Sokrates, a Luxembourg-domiciled SICAV run by Globalance. SAM managed a listed equities portfolio for SPG.
Various Swiss pension funds – Sulzer Vorsorgeeinrichtung, Pensionskasse Thurgau, Pensionskasse des Kantons Glarus, Zuger Pensionskasse and the Caisse de prévoyance du personnel de l’Etat du Valais – all have stakes of around 4% in SPG. There are around 1,500 shareholders in total, of which around two-thirds are institutions.
 SPG chose Globalance after a beauty parade consisting of SAM and three other banks. Speaking to Responsible Investor, Ringger, who launched Globalance in October last year, says the reason for starting the bank was the experience of trying to find an institution to manage his own assets: “I couldn’t find one that reflected my values. And to use a euphemism, as a cook myself I know what is happening in the finance kitchen. I think you also have to have an entrepreneurial spirit to take on an existing industry, but I think there is a very good window of opportunity at the moment in terms of sustainability and a new businessmodel.” SAM was an institutional business, but when deciding to launch Globalance Ringger says he had seen significant interest amongst private clients on the sustainability side, not just in terms of products but for overall service advice on investment classes such as real estate, bonds, and private equity. However, he is realistic about the challenges of breaking into a market like private banking: “I don’t know many industries where clients are as unhappy with the service that they get but unusually reticent to change provider. I think this is beginning to change though.” For the moment, Ringger says Globalance will target only Swiss and German high net worth clients: “Regulations in Switzerland have become quite tough for Swiss banks and we still have some homework to do with regards to other countries but there is certainly an ambition to be more international. I think that amongst foundations and family offices there are plans to expand how they invest to mirror the opportunities, which are global now, notably in Asia.” Globalance, he explains, is a fund-of-funds business: “We want to provide international investment opportunities with an independent view on how those should be sourced. We are looking at active and passive large cap equities and bonds, real estate and alternative assets.” He says the firm has built a proprietary database of asset managers that it is using to screen the market for providers: “We have found a lot of sustainable equity product, some fixed income product but very little real estate product. Our major interest is to serve the clients, to protect and develop their wealth. And we are trying to avoid the biggest conflicts of interest in banking and private wealth management. For example, we will have no kickbacks on product selection; we are only paid by
the client. We will also not be selling our own products. Fees will be based on the size of portfolio and all costs will be transparent such as foreign exchange, so there are no hidden charges, etc. I think that many people aren’t particularly aware of what happens in terms of these conflicts of interest in banks, or with banks pushing certain products. I think this will become a theme. It is easier for a new bank to do something about this because of the necessary changes in culture, processes and business models that are required.” He says the other important part of the business will be as a client asset allocation advisor: “We think that a sustainable asset allocation will look somewhat different in a couple of years as more types of funds become available. It may be that we also act as a kind of market incubator by sitting down and discussing with fund managers the availability of certain sustainability funds that clients are asking for. Ringger says the bank is fully funded by management and has a good equity base that will see it through its start-up phase. It now has a full compliment of 18 staff for its start-up phase: “We’ve spent a lot of time in the last 15 months putting together our team and I think that some of the people we have attracted from larger companies are open to a much more entrepreneurial model.” He says the bank did not want to look at the retail market because of the different network needed to realise market potential: “Surveys byorganisations such as Eurosif have identified a potential client base of some 10 to 15% of the private high net worth market interested in sustainability issues. It’s difficult to differentiate yourself in the retail space and it’s also difficult to have the close kind of contact that we will have with high net worth clients. Also, our business model is based on outsourcing totally across the business from trading to back office to information technology.”
Ringger says Globalance is also looking to make serious in-roads into the ‘proof’ side of sustainability by constructing a methodology for data that can be used to map ESG quality and value: “You could compare it to the development of the Dow Jones Sustainability Index, but we want to be able to get something on the portfolio level. This is easier with equity where you have information on companies, etc. But it’s a lot more difficult, for example, in real estate where ideally we would like to get information on urban planning and regeneration. But we are in the process of doing this and it will take some time to get final results. What we would also really like to do is to get some measure of the finance supply chain, which doesn’t exist yet. There are clients that have some interest in this and I believe that if you can achieve it than you could have a clear business differentiator. I think if you look at consumer markets in other areas then it is already there. It’s strange that we haven’t got it yet in finance.”