Banks and rich clients go together like champagne and caviar, but there are times when the silky smooth relationship turns toxic.
Tycoon Oei Hong Leong is just the latest blue-chip investor to fall out with his banker. He is suing Citibank over the $1 billion in losses he incurred on foreign exchange and US Treasury bond transactions last year.
It is a headline-grabbing case, not just for the mind-boggling amounts of money involved, but also because it throws light on the often discreet world of private banks and their rich clients.
Courted by both foreign and local banks, such people typically need at least US$1 million (S$1.45 million) in investible assets to qualify as a private banking customer.
Then the personal pampering starts.
At Credit Suisse, for example, a potential client is first attended to by a senior private banker.
‘And if the client is very wealthy and has complex needs, then most likely the approach will be a team approach,’ said Dr. Francois Monnet, Credit Suisse’s head of private banking for South-east Asia and Australasia.
This means ‘experts’ such as tax experts, investment consultants and foreign exchange specialists are roped in to meet and advise the client.
High-net-worth individuals, as such clients are known, can invest in just about anything, from stocks and bonds to art and wine.
And while the bank may issue recommendations and suggestions, it is the client who makes the call to buy, sell or hold.
Mr. Ed Ng, a private banking client who works for a multinational, said he tells his private banker what to do - and not the other way round. ‘If you make your own wealth, you tend to be more careful,’ said Mr. Ng, who is in his 50s.
Banks, for their part, usually protect themselves by ensuring that all recommendations and decisions are documented by the client’s signature or telephone recorded.
Private bankers keep clients informed of their portfolios at least once a week but during volatile markets, they typically update clients as often as they can.
Some bankers even get phone calls from angry clients in the middle of the night inquiring about their investment losses - but that is all part and parcel of the job, they say.
‘There were more calls during the storm, such as when Lehman went bust. Now it is looking much better, but there is still a certain level of fear,’ said Mr. Wilfried Kofmehl, the chief executive of Julius Baer’s South- east Asian private banking business.
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Cosy private banker-client ties can sour
By Gabriel Chen
1 June 2009
Banks and rich clients go together like champagne and caviar, but there are times when the silky smooth relationship turns toxic.
Tycoon Oei Hong Leong is just the latest blue-chip investor to fall out with his banker. He is suing Citibank over the $1 billion in losses he incurred on foreign exchange and US Treasury bond transactions last year.
It is a headline-grabbing case, not just for the mind-boggling amounts of money involved, but also because it throws light on the often discreet world of private banks and their rich clients.
Courted by both foreign and local banks, such people typically need at least US$1 million (S$1.45 million) in investible assets to qualify as a private banking customer.
Then the personal pampering starts.
At Credit Suisse, for example, a potential client is first attended to by a senior private banker.
‘And if the client is very wealthy and has complex needs, then most likely the approach will be a team approach,’ said Dr. Francois Monnet, Credit Suisse’s head of private banking for South-east Asia and Australasia.
This means ‘experts’ such as tax experts, investment consultants and foreign exchange specialists are roped in to meet and advise the client.
High-net-worth individuals, as such clients are known, can invest in just about anything, from stocks and bonds to art and wine.
And while the bank may issue recommendations and suggestions, it is the client who makes the call to buy, sell or hold.
Mr. Ed Ng, a private banking client who works for a multinational, said he tells his private banker what to do - and not the other way round. ‘If you make your own wealth, you tend to be more careful,’ said Mr. Ng, who is in his 50s.
Banks, for their part, usually protect themselves by ensuring that all recommendations and decisions are documented by the client’s signature or telephone recorded.
Private bankers keep clients informed of their portfolios at least once a week but during volatile markets, they typically update clients as often as they can.
Some bankers even get phone calls from angry clients in the middle of the night inquiring about their investment losses - but that is all part and parcel of the job, they say.
‘There were more calls during the storm, such as when Lehman went bust. Now it is looking much better, but there is still a certain level of fear,’ said Mr. Wilfried Kofmehl, the chief executive of Julius Baer’s South- east Asian private banking business.
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