Singapore’s private banks retain high entry barriers as business booms
By SIOW LI SEN 30 September 2009
(SINGAPORE) While some private banks in Switzerland have had to fish lower down the wealth charts to attract new clients, their Singapore peers can afford to stay proudly elitist.
It’s not that the fabulously wealthy in Asia did not take a hit from the financial crisis, but the strong regional growth and sharp market rebound has meant that the pie is an expanding one and standards can be maintained.
‘Clients who managed to participate in the recovery over the past six months managed to double their money by buying blue-chip stocks,’ said Kwong Kin Mun, the Singapore head of private banking at DBS Bank, South- east Asia’s biggest bank.
DBS and OCBC said private bank clients must have a minimum of US$1 million in assets and that has not changed.
But in Switzerland, private banks including Credit Suisse and Julius Baer recently said they were willing to look at less wealthy clients if they have the potential to multiply their assets. Switzerland’s private banking industry is reeling as it adjusts to a new world where it can no longer promise clients banking secrecy.
Boris Collardi, chief executive officer of Zurich- based Julius Baer Holding AG said the bank will look at clients with 500,000 Swiss francs (S$687,000) if they have the ‘potential’ to multiply their assets.
But not here, it seems.
Her bank accepts clients with average assets of US$3-5 million and this has not changed despite the crisis, said Lim Li Koon, spokeswoman for Bank Julius Baer Singapore.
‘For Singapore, the growth and high concentration of millionaires will present us with lots of untapped opportunities,’ she added.
Julius Baer, which is building Asia as a ‘second home’ market, now has more than 350 staff in the region, making up more than 10 per cent of its global head count.
Opened in 2005, the Singapore office is the Swiss bank’s main centre in Asia. It is the hub for marketing in Southeast Asia, a global booking centre and the product platform and backoffice for Asia.
The bank expects to hire 40-50 relationship managers (RMs) this year, with a significant number to be based in Asia.
Over at BNP Paribas Wealth Management Asia-Pacific, chief executive Serge Forti said: ‘We have been even stricter in applying the US$1 million minimum.’
‘The only difference now is that we are not granting exceptions,’ he added.
The French-owned private bank ‘has very significantly increased its number of clients since October 2008 because of the flight to quality’, said Mr. Forti.
Some new clients have transferred all their assets to BNPP while the bank has also acquired new clients from hiring additional private bankers, he said.
Standard Chartered, which also insists on a minimum of US$1 million from clients, says it has seen a steady flow of new clients.
Rajesh Malkani, regional head, Southeast Asia, The Standard Chartered Private Bank, said the bank is in a strong position and well positioned in dynamic growth markets.
‘In this current environment, we have seen a steady inflow of new-to- bank clients, bringing in new assets under management,’ said Mr. Malkani.
‘There is also an increase in the share of wallet from existing private banking clients,’ he said.
There is no change to the bank’s plan to add about 100 new private bankers globally, to beef up its current 350-strong group, he said.
Standard Chartered Private Bank managed strong growth in a tough environment with assets under management (AUM) up 10 per cent since the second half of 2008, compared to an industry decline of 16 per cent during 2008, Mr. Malkani said.
DBS saw an influx of new money as clients sought to diversify away from international banks.
‘We noticed a trend of clients diversifying out of American and European banks to Asian banks,’ said Mr. Kwong.
‘We noticed new funds coming from other banks at the beginning of 2008 and reaching a peak in the last quarter of the year,’ he added.
There has since been a leakage because of government guarantees on bank deposits and clients shopping for higher interest rates - which is okay, he said.
DBS pays 0.45 per cent for a 12-month fixed deposit for amounts between $1,000 and $999,999.
Being able to attract more clients does not necessarily translate into higher profits, though.
Shell-shocked clients have become extremely risk-averse, said DBS’s Mr. Kwong. ‘Today, we are seeing clients doing the very plain vanilla products and the fear is that these vanilla products carry very low margins,’ he said.
Those who have doubled their money by just buying blue-chip stocks and bonds the last six months have little incentive to invest in exotic products which earn high margins for banks, said Mr. Kwong frankly.
He said it is common for the industry to see a fall in profitability of 30-40 per cent from the record in 2007.
2 comments:
Banks refuse to dilute exclusive clients’ club
Singapore’s private banks retain high entry barriers as business booms
By SIOW LI SEN
30 September 2009
(SINGAPORE) While some private banks in Switzerland have had to fish lower down the wealth charts to attract new clients, their Singapore peers can afford to stay proudly elitist.
It’s not that the fabulously wealthy in Asia did not take a hit from the financial crisis, but the strong regional growth and sharp market rebound has meant that the pie is an expanding one and standards can be maintained.
‘Clients who managed to participate in the recovery over the past six months managed to double their money by buying blue-chip stocks,’ said Kwong Kin Mun, the Singapore head of private banking at DBS Bank, South- east Asia’s biggest bank.
DBS and OCBC said private bank clients must have a minimum of US$1 million in assets and that has not changed.
But in Switzerland, private banks including Credit Suisse and Julius Baer recently said they were willing to look at less wealthy clients if they have the potential to multiply their assets. Switzerland’s private banking industry is reeling as it adjusts to a new world where it can no longer promise clients banking secrecy.
Boris Collardi, chief executive officer of Zurich- based Julius Baer Holding AG said the bank will look at clients with 500,000 Swiss francs (S$687,000) if they have the ‘potential’ to multiply their assets.
But not here, it seems.
Her bank accepts clients with average assets of US$3-5 million and this has not changed despite the crisis, said Lim Li Koon, spokeswoman for Bank Julius Baer Singapore.
‘For Singapore, the growth and high concentration of millionaires will present us with lots of untapped opportunities,’ she added.
Julius Baer, which is building Asia as a ‘second home’ market, now has more than 350 staff in the region, making up more than 10 per cent of its global head count.
Opened in 2005, the Singapore office is the Swiss bank’s main centre in Asia. It is the hub for marketing in Southeast Asia, a global booking centre and the product platform and backoffice for Asia.
The bank expects to hire 40-50 relationship managers (RMs) this year, with a significant number to be based in Asia.
Over at BNP Paribas Wealth Management Asia-Pacific, chief executive Serge Forti said: ‘We have been even stricter in applying the US$1 million minimum.’
‘The only difference now is that we are not granting exceptions,’ he added.
The French-owned private bank ‘has very significantly increased its number of clients since October 2008 because of the flight to quality’, said Mr. Forti.
Some new clients have transferred all their assets to BNPP while the bank has also acquired new clients from hiring additional private bankers, he said.
Standard Chartered, which also insists on a minimum of US$1 million from clients, says it has seen a steady flow of new clients.
Rajesh Malkani, regional head, Southeast Asia, The Standard Chartered Private Bank, said the bank is in a strong position and well positioned in dynamic growth markets.
‘In this current environment, we have seen a steady inflow of new-to- bank clients, bringing in new assets under management,’ said Mr. Malkani.
‘There is also an increase in the share of wallet from existing private banking clients,’ he said.
There is no change to the bank’s plan to add about 100 new private bankers globally, to beef up its current 350-strong group, he said.
Standard Chartered Private Bank managed strong growth in a tough environment with assets under management (AUM) up 10 per cent since the second half of 2008, compared to an industry decline of 16 per cent during 2008, Mr. Malkani said.
DBS saw an influx of new money as clients sought to diversify away from international banks.
‘We noticed a trend of clients diversifying out of American and European banks to Asian banks,’ said Mr. Kwong.
‘We noticed new funds coming from other banks at the beginning of 2008 and reaching a peak in the last quarter of the year,’ he added.
There has since been a leakage because of government guarantees on bank deposits and clients shopping for higher interest rates - which is okay, he said.
DBS pays 0.45 per cent for a 12-month fixed deposit for amounts between $1,000 and $999,999.
Being able to attract more clients does not necessarily translate into higher profits, though.
Shell-shocked clients have become extremely risk-averse, said DBS’s Mr. Kwong. ‘Today, we are seeing clients doing the very plain vanilla products and the fear is that these vanilla products carry very low margins,’ he said.
Those who have doubled their money by just buying blue-chip stocks and bonds the last six months have little incentive to invest in exotic products which earn high margins for banks, said Mr. Kwong frankly.
He said it is common for the industry to see a fall in profitability of 30-40 per cent from the record in 2007.
DBS private bank has 110 relationship managers.
Post a Comment