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Thursday 15 October 2009
Private bank clients still cautious: CS
Many private banking clients are still cautious, but the stash of cash built up during the financial crisis is gradually returning to financial markets, according to senior private bankers at Credit Suisse.
Customers remain reluctant to tie up cash in longer-term investments
By CONRAD TAN 14 October 2009
Many private banking clients are still cautious, but the stash of cash built up during the financial crisis is gradually returning to financial markets, according to senior private bankers at Credit Suisse.
Most customers, however, are still reluctant to make investments that tie up their money for too long, they said.
Worldwide, ‘in general, the private banking client is still very cautious’, Walter Berchtold, chief executive of private banking at Credit Suisse told BT on a visit to Singapore last week. ‘There is still a pretty large amount of his wealth in cash.’
At the height of the crisis, more than half the wealth of the bank’s rich clients was in cash, he said.
Since then, ‘the very high cash position has been reduced by about 8 per cent and gone back into the market’, said Marcel Kreis, the bank’s Asia-Pacific head of private banking.
Demand for some types of structured products has returned in the past two or three months, mainly related to the fixed-income, credit and commodity markets, said Mr. Berchtold.
He was in Singapore to host an event for the bank’s clients from around the world, with Minister Mentor Lee Kuan Yew as guest speaker. Former British prime minister John Major, who is a senior advisor to Credit Suisse, was a guest moderator at the event.
In Asia, in particular, ‘we see a gradual interest again in selectively using credit to enhance their investments’, Mr. Kreis said.
‘Even accumulators are making a comeback - nowhere in the magnitudes as before - but it’s a viable instrument if your general outlook on equities is a positive one, and that’s certainly been the case,’ he added.
With stock accumulators, a type of structured product popular before the financial crisis, investors agree to buy a stock at a fixed price at regular intervals, thus accumulating a large position in the stock over time. When asset prices slumped in the crisis, many investors found themselves adding to their losses because they were obliged to keep paying the fixed price for the stocks even as the market prices plummeted.
But with equity and other asset prices soaring again, some interest in accumulators has returned.
Still, it is ‘very difficult to convince clients today to make investments that require a longer term investment outlook and a longer term commitment’, said Mr. Kreis.
‘We do see a gradual interest again in structured products as equity markets continue to defy gravity and massive rebalancing has taken place from very oversold markets in the first quarter.’
In the longer term, ‘I’m very optimistic’ about the future of the private banking industry, Mr. Berchtold said. ‘Wealth creation has already come back.’
But ‘there’s still a lot of structural issues that we need to overcome which might have an impact in the short run on markets,’ he added. ‘Short term, I’m a little bit cautious.’
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Private bank clients still cautious: CS
Customers remain reluctant to tie up cash in longer-term investments
By CONRAD TAN
14 October 2009
Many private banking clients are still cautious, but the stash of cash built up during the financial crisis is gradually returning to financial markets, according to senior private bankers at Credit Suisse.
Most customers, however, are still reluctant to make investments that tie up their money for too long, they said.
Worldwide, ‘in general, the private banking client is still very cautious’, Walter Berchtold, chief executive of private banking at Credit Suisse told BT on a visit to Singapore last week. ‘There is still a pretty large amount of his wealth in cash.’
At the height of the crisis, more than half the wealth of the bank’s rich clients was in cash, he said.
Since then, ‘the very high cash position has been reduced by about 8 per cent and gone back into the market’, said Marcel Kreis, the bank’s Asia-Pacific head of private banking.
Demand for some types of structured products has returned in the past two or three months, mainly related to the fixed-income, credit and commodity markets, said Mr. Berchtold.
He was in Singapore to host an event for the bank’s clients from around the world, with Minister Mentor Lee Kuan Yew as guest speaker. Former British prime minister John Major, who is a senior advisor to Credit Suisse, was a guest moderator at the event.
In Asia, in particular, ‘we see a gradual interest again in selectively using credit to enhance their investments’, Mr. Kreis said.
‘Even accumulators are making a comeback - nowhere in the magnitudes as before - but it’s a viable instrument if your general outlook on equities is a positive one, and that’s certainly been the case,’ he added.
With stock accumulators, a type of structured product popular before the financial crisis, investors agree to buy a stock at a fixed price at regular intervals, thus accumulating a large position in the stock over time. When asset prices slumped in the crisis, many investors found themselves adding to their losses because they were obliged to keep paying the fixed price for the stocks even as the market prices plummeted.
But with equity and other asset prices soaring again, some interest in accumulators has returned.
Still, it is ‘very difficult to convince clients today to make investments that require a longer term investment outlook and a longer term commitment’, said Mr. Kreis.
‘We do see a gradual interest again in structured products as equity markets continue to defy gravity and massive rebalancing has taken place from very oversold markets in the first quarter.’
In the longer term, ‘I’m very optimistic’ about the future of the private banking industry, Mr. Berchtold said. ‘Wealth creation has already come back.’
But ‘there’s still a lot of structural issues that we need to overcome which might have an impact in the short run on markets,’ he added. ‘Short term, I’m a little bit cautious.’
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