PWM/The Banker Private Banking Awards, 2012: Asia

Best Private Bank in Asia
Best Private Bank in Hong Kong
Winner: UBS

Wealth management is a core business for UBS, and it has built one of the largest multi-lingual wealth management teams in the region. “Levering our integrated bank model, we have captured opportunities that have accompanied the rapid growth of wealth creation in Asia,” says Kathryn Shih, CEO of UBS Wealth Management for the Asia-Pacific region. “Momentum has been particularly strong in Asia because more of the wealthy here are entrepreneurs than in Europe and the US. Their wealth is tied to their businesses and therefore they require not only personal investment advice but also investment banking and asset management services. 

“More specifically, we go to great lengths to deliver our client promise of superior investment advice and solutions. The UBS chief investment office oversees policy and strategy for approximately $1500bn in assets, one of the largest capital pools in the world, and brings together an investment strategy for the entire wealth management group. UBS has 900 analysts globally, helping clients find opportunities even in difficult market conditions.” The wealth management market in Asia is growing rapidly. According to the BCG Global Wealth Report 2012, private wealth in the Asia-Pacific region, excluding Japan, increased by 10.7% in 2011 to $23,700bn. Wealth in the region is expected to continue growing at a double-digit rate, with a projected compound annual growth rate of 11.1%, reaching $40,100bn by the end of 2016. 

“These gains should be driven largely by sustained strong gross domestic product growth in China and India and overall stronger stock market performance,” says Ms Shih. “We believe the domestic onshore businesses will become an increasingly important driver of growth in the region. UBS is well-positioned in this regard. In the Asia-Pacific region, UBS Wealth Management operates from 18 offices across seven countries. In addition to expanding the international business in Singapore and Hong Kong, UBS Wealth Management is investing in organic growth in domestic businesses in China, Japan, Hong Kong, Singapore, Australia, Taiwan and India to tap these onshore markets.”

China represents an important source of new business for UBS. The establishment of UBS Securities in China represents the first time that a foreign entity has been allowed to invest directly into a fully licensed domestic securities firm. UBS Securities has access to secondary market trading and distribution activities in equity and debt markets, and offers domestic wealth management services via trading outlets in Beijing, Shanghai, Guangzhou, Hangzhou and Shenzhen, all located on China’s ‘Gold Coast’. The UBS Beijing branch recently received final approval from the China Banking Regulatory Commission for its conversion into a locally incorporated wholly foreign-owned bank.

As many clients own businesses, the bank also helps with the orderly management and transfer of wealth and businesses across multiple generations, and runs a series of educational programmes for younger people. 

“Our most important challenge will always be to provide superior investment advice and solutions to preserve our clients’ wealth, grow their assets and ensure they have a healthy legacy to pass on to the next generation,” says Ms Shih. “To this end, UBS Wealth Management offers a comprehensive investment house, providing research-based advice, an open architecture and access to the best managers in the world.

“No other bank has the research capabilities geared to private clients that we do, or offers such comprehensive products and services globally, or has the high-quality client advisers who can advise clients through these uncertain times.”

Best Private Bank in China
Winner: China Merchants Bank

Despite increasing competition in the Chinese domestic market,and fast-improving wealth management offerings from key national rivals Bank of China, Agricultural Bank of China and Industrial and Commercial Bank of China, China Merchants Bank (CMB) has held on to the award of Best Private Bank in China.

The increased dynamism of this expanding market is acknowledged by CMB’s chairman Ma Weihua. “All the banks, foreign or domestic, are forming their private banking departments to capture this rapid growth market,” he says. “Now, it is not only the banks that are competing in this sphere. We are now faced with new rivals, in the shape of trust companies, securities companies and general finance houses. Even insurance companies are leaping into this market.”

Besides the major Chinese cities such as Beijing and Shanghai, CMB is also moving into second-tier cities, dubbed “China’s emerging market” by the bank’s management. The regions where local governments are emphasising economic growth are particular targets for private banking.

In the current environment, CMB’s customers are more in favour of fixed-income, rather than equity products, with strong emphasis on liquidity, although a programme which allows the distribution of external, regionally based hedge funds to Chinese clients has also enjoyed some success.

Key twin concerns for most Chinese private clients are the potential economic slowdown and political uncertainty associated with the change of leadership. CMB therefore expects its clients to diversify their assets across a range of products and markets to nullify any specific risks.

While the private banking focus at CMB will be on the under-serviced domestic market, there are efforts to strengthen the offshore platform through the recently purchased Wen Lung bank in Hong Kong. CMB will also be utilising its representative offices in Taiwan, Singapore, New York and London. 

Best Private Bank in India
Winner: Standard Chartered Private Bank

“More international than local banks and more local than international banks.” That is a key driver of Standard Chartered’s success in India, according to Sandeep Das, the bank’s head of private banking in the country. 

Much of its strength derives from its ability to provide a holistic approach to existing clients. “They appreciate our ability to deliver the whole bank to them – lending, mortgages, direct equities, bespoke investment products, and corporate banking. This is particularly well received as a majority of Asian clients [over 63%] are entrepreneurs whose personal and business wealth is often inter-linked.” 

Mr Das adds: “The fast-changing needs of Asia’s high-net-worth individuals is creating intense pressure on the ‘people’ strategy in Asia’s wealth management firms.” The bank places a strong focus on nurturing talent to ensure longevity and to avoid high turnover. 

As Asia gears up for a big transfer of wealth, Standard Chartered is also working with clients to shape the future of their next generation through a variety of educational programmes, such as a six-week long strategy masterclass where a select group of young adults work with executives and strategy teams to learn business management. It also works with Liverpool Football Club to provide global soccer clinics for the children of clients, and provides similar cricket academies in India.

“By providing a variety of educational programmes we are working with our clients to shape the future for their children, including sensitivity to themes such as sustainability, networking, lifestyle and personal branding,” says Mr Das.

Best Private Bank in Singapore
Winner: DBS Bank

Although DBS Bank has wonthe award of Best Private Bank in Singapore,it is the Chinese market that is the fastest growing in terms of sources of new asset flows for the partially state-owned institution.

“China is definitely a major growth market for us,” says Su Shan Tan, group head of wealth management at DBS.

With most wealthy Chinese people having earned their wealth through business activity rather than inheritance, their demands are predominantly for services such as corporate banking, trade finance and capital markets expertise across the Asian region.

“Our relationship managers actively help clients to expand their network regionally and internationally, introducing clients to their peers in the same industry and providing value-added linkages between clients,” says Ms Tan, who has, for example, referred clients between China and Indonesia for commodity investments. 

“We also linked a European family based in Singapore, which was interested in technology investments with a Shanghai client based in Singapore, to discuss potential business opportunities.”

Included among the investment opportunities highlighted by DBS’s chief investment officer, Lim Say Boon, have been landmark deals in Singapore and the rest of the region in the Asian bond arena. The bank also claims to have had some “very accurate and precise foreign exchange calls on tactical trading” in the Asian currency space, capturing volatility in both Australian and Singapore dollars. Overweight positions in commodities and a preference for US over emerging ex-Asia equities have also benefited DBS clients.

One interesting point about DBS’s business model is that it is the wealth management line which leads the direction of consumer banking, not the other way round. This holds both in core markets of Singapore and Hong Kong, and also the “onshore emerging markets of China, India and Indonesia”, says Ms Tan. “Singapore has been our focal point so far, but this does not detract from our ambitions to widen our footprint throughout Asia.”

As well as regional Asian customers, DBS is keen to boost its book of international, non-Asian clients looking to diversify their portfolios in Asia, with growing Asian currency markets, in particular the international renminbi space, proving popular among investors. DBS claims to be the first private bank to offer products in this area. 

Best Private Bank in Malaysia
Winner: CIMB Private Banking

Established in 2002,CIMB Private Banking has successfully integrated CIMB Group’s investment, commercial and retail banking services through its ‘One Bank’ proposition, and transformed itself into a holistic wealth management partner for CIMB clients.

Its client acquisition and retention strategy implemented in 2010 focuses on the selective acquisition and deepening of existing client relationships and has continued to reap results: the average assets under management per client has increased by another 25% from RM3.1m ($1.02m) in May 2011 to RM3.9m as of May 2012. 

To improve service levels and ensure all clients get the attention they need, it has also boosted the number of its private bankers by 20% since 2010. The average client relationship has extended from five years in 2010 to 5.2 years – a testament to customer loyalty.

“As we go from strength to strength, our focus will continue to lie in client centricity, and the sustainability of both our business and talents,” says Carolyn Leng, head and director of CIMB Private Banking in Malaysia. 

“We expect the onshore wealth management landscape to change rapidly in the coming years, as we foresee more consolidation among the local players, while local authorities work on liberalising the financial market. This means that we have to be more agile to adapt to changing trends, without compromising on our value proposition.”

Best Private Bank in Taiwan
Winner: Chinatrust Commercial Bank

“As a point of differentiation from the product-driven business model,where most of our competitors are, Chinatrust has the largest and most experienced advisory team with the widest breadth of advisory services compared with other banks in Taiwan,” says Su Kuo Huang, CEO of global retail banking at Chinatrust Commercial Bank. One plank of Chinatrust’s success is the development of a client segmentation model to recognise different customer needs more precisely. This year it also extended its advisory offering with real estate planning, while the next development is a total balance sheet advisory service.

More than 14% of the Taiwanese population will be over 65 within this decade, and by 2025 more than 20% will fall into this category, explains Mr Huang. Financial planning for cross-generation asset transfer is expected to bring the next wave of innovation. Chinatrust has already built family relationship with almost 40% of its high-net-worth clients, and plans to launch a family membership composed of interchangeable family benefits, and comprehensive advisory services fulfilling different family needs.

As the market leader in retail banking and credit cards, Chinatrust has a tremendous client base of more than 6 million. “With strong data mining and segmentation abilities, Chinatrust manages to identify indicators that discover untapped potentials hidden in lower segments, and with corresponding marketing approaches, effectively migrates clients toward the private banking segment,” says Mr Huang. “As of August, the number of high-net-worth clients and size of assets under management both achieved a year-to-date growth rate of 9%.”

Best Private Bank in South Korea
Winner: Hana Bank

The ability to develop a close relationship with a client is as important as portfolio management, according to Huyng-II Lee, head of the private banking business division at Hana Bank. “Korean wealthy clients expect caring services from their bank and private banker and that’s why we focus heavily on upgrading our total life care service,” says Mr Lee. 

Hana Bank, which has won the award for Best Private Bank in South Korea for the second year in a row, has further enhanced its programme tagged “from the cradle to the grave” by developing new services targeting the second generation of high-net-worth clients. The bank claims it was the first to introduce a ‘golden age service’ for senior citizens in South Korea, believing that a superior service for the elderly will become the key competitive factor in the private banking industry, as the country’s population continues to age. Late last year, the bank opened an advisory centre offering professional advice on transferring assets to the next generation.

Since its launch in 1995, Hana Bank’s assets and clients grew by an average of 10% annually to reach Won23,900bn ($21.5bn) last year, enjoying an 8.7% growth rate year on year, versus the average of 3.3% in South Korea, according to Hana Bank. “We were able to achieve this growth performance through active asset management for existing clients and by strengthening our services and marketing to attract new clients,” according to Mr Lee. 

Wealthy clients in South Korea rarely switch from a major bank to another and this makes it difficult to expand a business. This issue can be overcome by reinforcing the brand, and enhancing private bankers’ capability, investment products and services, believes Mr Lee. 

On the investment side, to meet client demand, Hana Bank focused on a range of mid-risk/return products pursuing time deposit plus alpha returns, and at the same time strengthening its due diligence and risk management process. The bank sold Won5bn of customised investments products, which drove a profit rise of more than 7% per client.

The bank greatly improved its digital and mobile communications – with the launch, for example, of a mobile application through a smartphone which is exclusive to high-net-worth individuals, providing real-time information on investments and market trends – and social network site channels to interact with clients. The bank also provided its private bankers with tablet PCs and installed video conference systems to provide remote consulting to clients.

During 2011, Hana Financial Holdings acquired the majority of Korean Exchange Bank’s shares. The KEB brand will be kept for five years as a new unit of Hana Financial, with the practical merger between KEB and Hana Bank expected to take place after 2016. “The main benefit of the acquisition will be the broadening of the client base, with KEB having the industry’s most extensive overseas business and branch networks,” says Mr Lee. “This will help expand our global presence in private banking.”

Geographically, one of Hana Bank’s goals is to expand the private banking business in the Chinese market, after establishing a strategic alliance with China’s Jilin Bank. “We have been working long and hard towards our goal of becoming a global top 50 financial institution by 2015 and we hope our private banking business will be the driving force for achieving our goal,” says Mr Lee.

Best Private Bank in Thailand
Winner: Kasikornbankgroup Private Banking

Since its launch in 2006, Kasikornbankgroup Private Banking has seen its business grow at a double-digit rate to reach about $8bn in assets under management. 

This dedicated private banking department within the Thai retail bank offers wealthy clients a variety of both onshore and offshore investments. To cater to clients’ financial needs, it leverages on all of Kasikornbankgroup’s resources, including the securities and asset management arms as well as the investment banking and capital market business divisions. The bank also works with a handful of third-party asset management firms and 10 third-party providers to structure investment solutions. 

The institution is particularly proud of its research capabilities, which have been recently strengthened by the partnership with the Macquarie Group, established in preparation for the Asean Economic Community, which is slated for 2015. 

Clients must have a minimum account size of Bt50m ($1.6m) with Kasikornbankgroup to become private banking customers. This threshold is set “to ensure that the service level and exclusivity are up to the international standard and beat local competitors”. 

The bank, which currently captures about a third of the country’s total high-net-worth market, has expansion plans beyond Bangkok and the city’s surrounding areas.

“We have started to expand our customer base to other strategic provinces as we see big growth opportunities in this emerging market,” says Nattharin Talthong, head of private banking at Kasikornbankgroup. 

“We believe high-net-worth individuals are used to day-to-day transactions but are still new to wealth management. Therefore, we are leveraging our existing retail banking networks to identify new opportunities and enhance existing relationships.”

The private bank offers inheritance, succession planning and tax guidance services, which are particularly in demand, as well as philanthropy and other lifestyle services.