Private bank Citibank has a very select clientele, drawn from a pool of high net worth clients which have a minimum of $3m (£2m) in the piggy bank.
Bruce Hogarth-Jones is vice-president and legal officer of the bank’s Europe, Middle East and Africa division (EMEA) in which clients are drawn from 46 of the 118 countries in the region. As well as the rich-list clients, Citibank retains its traditional market, which is made up of offshore accounts and Third World investment.
Citibank is part of Citigroup, a global financial services company that was created after parent company Citicorp merged with Travelers Group in August 1998. The integration of Citibank and Salomon Smith Barney enabled Salomon Smith to attain a number one ranking in the global debt and equity underwriting division. Many believe that star player Morgan Stanley will remain dominant in the market but Hogarth-Jones says that Citicorp and Credit Suisse First Boston are natural competitors.
Hogarth-Jones joined Citibank Private Bank in September 1995, taking responsibility for the private banking division in EMEA. He is now a member of the “leadership team” which manages business in the region.
The creation of wealth by the new economy has moved the bank’s regular market outside its traditional remit and, according to Hogarth-Jones, it has had to adjust its services to fit the new climate. “There is little in common in terms of services required by a Middle Eastern family and a German software company entrepreneur and how they want that service delivered.”
Citibank has benefited from the current financial climate, posting record growth with core income rising by 11 per cent and private bank client volume business increasing by 19 per cent to $149bn (£100bn). Future projections anticipate a further rise of 40 per cent in 2000.
The banking world attracted former barrister Hogarth-Jones because “it was the mid-1980s and [banking] was exciting”. The attraction has held and he still enjoys the fast-moving pace. “Change is in the nature of my business,” he says.
Hogarth-Jones’ job is to ensure that consistency is maintained throughout the changes. He defines the role of the in-house lawyer by quoting Citigroup general counsel Charles Prince: “It is like being the co-driver or navigator in a road race. You can read the map and direct the driver but ultimately you can’t be the driver, although you can forewarn him of dangerous bends.”
Although Citibank uses the services of magic circle panel firms Allen & Overy, Clifford Chance, Denton Wilde Sapte and Linklaters, Hogarth-Jones is open to looking outside this circle as he believes that individual reputations are more important than status.
His first points of contact are banking lawyers Malcolm Glover at Denton Wilde Sapte and Malcolm Sweeting at Clifford Chance. “We go to individuals rather than law firms but in new areas of litigation we always seek recommendations based on areas of expertise,” he says.
Around 5 to 10 per cent of Citibank’s legal workload is litigation and is always handled by external lawyers. “Due to the nature of private banking, disputes between clients [and Citibank] are sometimes unavoidable, but we try to resolve problems through negotiations because relationships are important. If litigation is inevitable we choose external lawyers,” says Hogarth-Jones.
But rather than shipping out work wholesale, Hogarth-Jones prefers to have tight control of the process. This is done through a series of checks.
He says: “There are people [monitoring the external lawyers] in the credit group, banking or in-house legal department as they must record both cost and advice. We always make the business decisions on what to do but in some cases we must rely on external lawyers, whereas sometimes we only need specific input.”
Citibank has attracted a wide base of internal lawyers and is currently adding to the five-strong EMEA legal team. Hogarth-Jones says: “We have in-house lawyers spread across Europe with two in London, two in Zurich and one in Geneva. A qualified lawyer from Italy with a knowledge of Spanish law is joining the London office soon.”
The legal team will be closely involved in future developments planned by the bank, which has several new initiatives in the pipeline, although Hogarth-Jones is sworn to secrecy on what they are.
Citibank already gives clients online access to account information but will extend this to research information for consolidating customer finances. It also plans to increase advisory work and tailor client solutions by using the US model for providing banking services to professional partnerships, particularly legal and accountancy firms, around the globe.
“The European client would previously have an account in their country but now the account is with a branch in London, so they get the benefits of economies of scale and a broad range of international products” he says.
He predicts that banking lawyers will become more integrated in the decision making process. “[Charles Prince] is on the management com-mittee of Citigroup and is responsible for several businesses and the legal function,” he says.
According to Hogarth-Jones, banks can only benefit from the blurring of the banking and legal functions. “The benefit of an in-house lawyer is that they understand the business… and can therefore translate this into business involvement or management rather than just pure legal functions.”
Head of legal, vice-president and legal officer for Europe, Middle East and Africa division (EMEA)
Citibank Private Bank EMEA, part of Citigroup
|Organisation||Citibank Private Bank EMEA, part of Citigroup|
|Dow Jones ranking||7|
|Market capitalisation||$244bn (£162bn) plus|
|Legal capability||Five lawyers (soon to be six)|
|Head of legal||Bruce Hogarth-Jones, vice-president and legal officer for the Europe, Middle East and Africa division (EMEA)|
|Reporting to||Stephen Dietz, general counsel of Citibank Private Bank in New York and Colin Woolcok, division executive for the EMEA division based in Geneva|
|Main location for lawyers||London, Zurich and Geneva|
|Main law firms||Allen & Overy, Clifford Chance, Denton Wilde Sapte and Linklaters & Alliance|