PWM/The Banker Private Banking Awards 2013: Asia-Pacific

Best Private Bank in Asia: UBS Wealth Management

UBS Wealth Management has turned its operation around, shaken off much of its post-crisis bad publicity and returned to the upper echelons of the private banking industry in 2012.

After outflows in 2010, it enjoyed healthy net new money in 2012 and managed to cut expenses, while boosting its share of Asian clients to 25% in asset terms. UBS posted inflows of $22bn in 2012, up $8bn from the previous year, showing a renewed faith among private clients, most of whom typically shuffle their portfolios between four or five trusted partners, according to which one is in the ascendancy. 

Despite being based in Europe, the bank’s strongest inflows come from the Asia-Pacific region, and developing markets in general. There is a strong focus on Hong Kong and Singapore, with increasing resources being allocated to developing a presence in Japan, Taiwan and mainland China. Other developing markets such as Brazil, Mexico, Israel, Turkey, Russia and Saudi Arabia are also being prioritised.

Structural changes mean that wherever a client resides, a house view can now be implemented in every portfolio. Senior management has been striving to impose more central control over rogue relationship managers since clients were caught in Madoff losses, which also coincided with bad news from the bank coming from the global crisis soon after 2008. About 15,000 investment funds are now screened by a central verification team, which has also introduced new asset classes including US corporate high-yield and emerging market bonds to help boost returns.

The one market UBS has yet to fully recover in is Switzerland, where critics at rival banks still blame the global giant for catapulting the industry into disarray for not only recruiting excessive numbers of US tax-payers, but then negotiating ineptly with US tax authorities, thus affecting the Swiss industry.

In order to boost engagement in its traditional homeland, the bank introduced a new advisory model, UBS Advice, during 2012, aimed at clients who want to make their own investment decisions. It plans to roll out this concept internationally. Bank strategists claim that within one week of a relevant market event happening, they guarantee that relationship managers will contact clients with a solution. This service attracts a new flat-rate advisory fee, a charging model that the bank expects will eventually become the industry norm.

After many Swiss banks pressed the panic button several years back, shocked at the increasing market imprint of multi-family offices staffed by dissatisfied executives from larger banks, UBS has invested significantly in its ultra-high-net-worth segment, offering new initiatives such as Impact Investing, combining philanthropic objectives of making positive social and environmental contributions, while also achieving good financial returns. 

The bank’s global family offices group functions as a joint venture between the wealth management unit and the investment bank, to target the needs of the world’s largest 250 family offices.

Many of these changes have been brought in by wealth management boss Jürg Zeltner. While he took the flak and had to apologise to clients for problems and mis-sold products soon after the crisis, he is now reaping the rewards of a rise in form and fortune. Currently, at least, his star is rising.

Best Private Bank in India: Standard Chartered Private Bank

The Middle East has been a strategic region for Standard Chartered Private Bank for almost a century, enabling the bank to forge deep ties with its clients in the Middle East who are often second-generation business owners facing the challenges of balancing the need for capital and the family desire for liquidity, as well as issues of leadership transition and asset transfer between generations. The bank’s key client solutions team, based in the United Arab Emirates, is a specialist in family advisory and supports the regional managers, as well as directly handling a small number of institutional-sized clients.

The bank has also made inroads into the fast-growing Muslim market in the Middle East through its Islamic banking offering, which was rolled out in the Dubai Advisory Centre in 2012. 

In India’s fragmented private banking landscape, Standard Chartered Private Bank ranks highly in delivering its ‘One Bank’ value proposition. Clients include 77 of the top 100 richest Indians on the Forbes Rich List. The bank is also heavily involved in India’s communities, recently raising funds for a Seeing is Believing project in Kolkata that has sponsored 8592 cataract surgeries and screening for 122,790 people. 

The acquisition of Morgan Stanley’s Indian wealth management unit also adds material scale.

“India and the Middle East are key contributors to our private banking business,” says Stephen Richards Evans, head of private banking for the West at Standard Chartered. “Specifically in the Middle East, assets under management and revenues have experienced double-digit growth rates in the past year. Our Indian business continues to see strong growth and we have acquired the wealth management business of Morgan Stanley in India, which further fuels growth prospects and adds some great new talent for the business.

“Our long-standing on-the-ground presence in these and other core markets has enabled us to build deep client relationships based on strong regional affinity and thorough understanding of client needs. With an established footprint across Asia, Africa and the Middle East, we are also positioned superbly to connect clients to people, ideas and opportunities in the world’s fastest growing markets.”

Best Private Bank in China: China Merchants Bank 

The numbers of both clients and relationship managers are rising fast at China Merchants Bank (CMB), based in the booming southern city of Shenzhen. CMB boasts more than 22,000 private clients, serviced by more than 340 relationship managers across 30 private banking centres, where customers are told “your family’s long-term prosperity is our humble duty”.

An advanced back-office compliance system ensures that each product introduced by these relationship managers to private clients is ethically and legally sold, with intensive training for bankers, hired from both China and, increasingly, Taiwan. 

Recently, the bank has been doing its best to elevate its private banking brand with luxury-themed events, with a particular focus on events aimed at women. “We need to look at who controls the money flows,” says CMB’s deputy chairman and head of clients, Ding Wei. “Even though men [typically earn] the money, a lot of the decisions come from their spouses. So a lot of our communication goes through the female partner.”

Clients currently hold assets of about $40bn, with most growth coming from the economically developed regions of the Yangtze River Delta, Pearl River Delta and Bohai Rim.

While CMB has been the first and leading mover in China’s private client market, it is clear others are catching up fast, with Mr Ding fearing ICBC more than others. “It is such a large bank and number one in assets,” he says. “But in private banking, we can do better than it,” he claims.

A key inflection point for the industry is likely to occur in 2014, with a loosening of regulations around financial products and foreign capital flows, which should allow a much greater range of financial products to be sold. With an excellent alternatives platform, allowing access to hedge funds managed by Hong Kong-based groups, CMB is probably better placed than most to exploit these expected changes. 

Best Private Bank in Hong Kong: HSBC Private Bank

The growing wealth of Chinese entrepreneurspresents a big opportunity for the private banking market. Hong Kong, on the doorstep of mainland China, is an important offshore centre for private banking because of its strengths, including well-developed legal, accounting and regulatory systems, large numbers of multilingual professionals, robust equity and foreign exchange markets and its advantage as the largest offshore renminbi centre. HSBC Private Bank is proud of its heritage in the territory since 1865 and does not see Hong Kong in isolation but – like its clients – in the context of the opportunities presented by the city-state being located in Greater China. 

A number of significant developments have recently been made available to clients, including tailor-made credit terms and custody offerings with segregated accounts, securities borrowing and lending for clients out of Hong Kong and Singapore, and a derivatives platform that has attracted a high volume of mandates for interest rate hedging. 

A special consultation unit for ultra-high-net-worth clients who operate a business serves their corporate finance needs, including capital raising, divestments and mergers and acquisitions. HSBC Private Bank’s corporate finance capability increasingly helps local companies access international capital markets for debut debt capital market issues. 

“Our philosophy is to engage and build trust not just with our clients but with their whole family, providing a deeper level of service,” says Peter Boyles, CEO at HSBC Private Bank. “Our wealth and succession planning, philanthropy and family governance services offer a key point of differentiation as there are real concerns among Hong Kong clients about the transfer of their wealth to the next generation.”

“HSBC Private Bank’s ability to connect local companies with the group’s corporate finance capabilities has helped many clients access international capital markets for debut debt capital mandate issues to obtain financing. HSBC Private Bank’s China team in Hong Kong has referred bond issues worth more than $1.8bn in the first half of 2013 for private bank clients, with issue sizes ranging from $200m to $500m. These deals have given HSBC Private Bank clients access to the bond origination teams of HSBC, the leader in the region’s debt capital market.”

Best Private Bank in Singapore: DBS Bank

DBS Bank,whose private client assets surged from S$47bn ($37.75bn) to S$56bn during 2012, along with a remarkable doubling of operating profits, has launched a new segmentation exercise for its high-net-worth clients.

Those wanting to buy stocks and funds on an advisory basis are directed to the DBS Treasures platform, while clients looking for customised solutions and discretionary portfolios, including access to structured products, private equity and hedge funds, are directed to the DBS private banking service.

Improving service across the board for these clients has been something of an obsession for wealth management head Su Shan Tan, who also runs the consumer banking operation at DBS, which markets itself as ‘Asia’s safest bank’, being partially owned by Temasek, the investment agency of Singapore’s government.

Relationship managers – many of whom were recently dispatched on a customer care course to Changi Airport, together with cabin crew at Singapore Airlines, in order to boost service levels – are told to take the ‘Red’ test, which judges them for being respectful, easy to work with and dependable. This is one of the few banks in the region to make such a public statement of intent.

Ms Tan has also been busy doing the rounds of other Asian banks, particularly in South Korea, to help improve the delivery of products and services to clients through internet channels, with the smartphone being the delivery mode of choice for most private clients.

While reasonably happy with the bank’s improving reputation in her home country of Singapore, Ms Tan has a strong ambition to grow the bank’s imprint in neighbouring Association of South-east Asian Nations members Malaysia and Indonesia. DBS was recently involved in the failed purchase of a local bank in Jakarta, although some analysts believe DBS should not be overly concerned and will find a better opportunity. For DBS, the new private banking battleground is likely to shift from Singapore to neighbouring south-east Asia, China and beyond.

Best Private Bank in Malaysia: CIMB Private Banking

The private banking arm of CIMB,started from scratch by CEO Carolyn Leng 12 years ago, now has offices in six Malaysian cities. While critics of the government’s economic policy claim that the business atmosphere in Kuala Lumpur and regional cities is not conducive to large-scale entrepreneurship, Ms Leng argues just the opposite.

Much of the growth of CIMB’s private banking franchise, now managing more than $4bn, has come from regional entrepreneurs who have millions to invest, but keep a low profile and very much slip under the radar of the country’s business press. These business people have contributed to a steady net new money annual inflow of about $400m, although profits are slightly down.

This could be down to increasing costs and integrating acquisitions, which have given the bank a foothold in both Singapore and Thailand to organise cross-border investments and business financing solutions. These include lending and overseas mortgages to help finance property purchases in Singapore and Australia. Ms Leng’s investment team tends to focus on preservation of wealth and institutional-style asset allocation, while helping clients to unlock liquidity from business or property assets, in order to help build up further investments.

“Clients no longer just view us as an onshore domestic manager, but a gateway to the broader Association of South-east Asian Nations region,” says Ms Leng, well aware of the splash that larger competitor Maybank has made in neighbouring Singapore. Whereas CIMB has had the stronger private banking franchise, it is now keen to make up some ground against Maybank in Islamic investments, where Malaysian banks are experiencing increasing interest from the Middle East.

Best Private Bank in Indonesia: Bank Mandiri Wealth Management

Mandiri Wealth Management Group is now one of the fastest growing priority banking services in Indonesia, serving more than 55,000 customers and with more than $12bn assets under management. Mandiri Prioritas has the widest priority banking network in Indonesia, with 50 priority outlet offices across the country. 

Mandiri Prioritas’ assets under management grew about 30% between 2010 and 2012, aligned with an increase in client-facing staff. The wealth manager’s strategy for growth is based on increased product sales and attracting lower income customers. 

Products range from savings, current accounts and deposits to investment products, provided by seven asset managers in Indonesia with a total of more than 40 mutual fund products to offer. One of the fastest growing social responsibility funds is provided by Mandiri subsidiary Mandiri Investa Keluarga, an open-ended mutual fund with a charitable giving option taken from its return.

In the past year it has also put a lot of effort into its digital communications, such as its ‘SMS Blast’ to registered customers, providing a market outlook, currency rates and product updates.

The key driver for Mandiri’s growth has been economic and market conditions in Indonesia and their influence on customers’ businesses. As most customers are business owners, Mandiri is keen to harness this through appropriate product selection, and has also adopted a focused approach to customers by segmenting them. Clients are currently classified into one of three segments: Rp1bn ($91,000) to Rp3bn, Rp3bn to Rp20bn, and Rp20bn and above.

Best Private Bank in South Korea: Hana Bank

Hana Bank’s ability to develop investment productsto meet client needs and active portfolio management were the main drivers of asset under management growth in 2012, according to Hyung-Il Lee, its head of private banking. 

Last year, assets held by high-net-worth clients – defined as those holding more than Won500m ($466,500) with the bank – increased by about 10% to Won26.2bn, versus an industry average growth rate of about 4% for South Korean high-net-worth individuals, according to Hana’s analysis.

“Hana Bank’s product offering and the professional service delivered by our talented employees has won the hearts of our clients and contributed to us acquiring new clients,” says Mr Lee. 

The bank’s product strategy has had a particular focus on international high-yield bond funds, such as global high-yield and emerging market debt, and multi-asset income funds. In the equity space, opportunities were found in the US, China, and other regions of “relatively healthy growth”. 

The risk management process was significantly improved and manager selection due diligence was strengthened. 

Channels for internal communication were enhanced through a visual communication system in branches and intranet technology. To interact with clients, the bank uses a wide range of online channels and social networks and has recently revamped its mobile private banking app by adding new content and features. A real-time overseas remittance service was introduced through mobile banking to meet the needs of high-net-worth clients with children studying abroad. 

One of the main contributors to Hana’s client retention is the wide range of lifestyle services the bank offers to clients and their families with the aim of serving them from ‘cradle to grave’. The bank has increased its efforts to serve the elderly by making significant investments: it launched a new brand for retirement planning, opened a professional advisory centre offering consulting services in a variety of areas, including asset transfers to the next generation, and rolled out investment products suited to senior clients. Hana also trains its private bankers so they can all obtain a ‘registered financial gerontologist’ certificate.

 “Our efforts have significantly increased the satisfaction levels among elderly clients, which has resulted in an increase in assets,” says Mr Lee.

Global expansion accelerated in 2012. Private bankers were seconded to Hana Bank’s branches in China and Indonesia, where the bank has recently opened a private banking centre. In Hong Kong, Hana is looking to offer private banking services in collaboration with KEB, the South Korean bank it acquired in 2011 that has a significant global network.

Hana also gained a foothold in the US market through the acquisition of BNB Bank, with the aim of targeting affluent expats. 

Best Private Bank in Taiwan: Taipei Fubon Bank

Taipei Fubon Bank, part of the Fubon Financial group,was the first financial services institution in Taiwan to offer private banking and now has T$204bn ($7bn) in assets under management. Net new money in 2012 totalled T$13.1bn as the bank continued to expand its private banking business. New hires have seen the private banking team grow considerably while the marketing budget targeting high-net-worth individuals was also boosted in an attempt to forge closer relationships with clients. 

The bank says a reduction of estate and gift taxes from a maximum of 50% to 10% has sparked a return of funds from overseas, while the low-interest-rate environment has prompted high-net-worth clients to seek investment products with higher returns. Taipei Fubon is expecting to offer more renminbi-denominated products in the future, taking advantage of growing commercial exchanges within Greater China. Fubon can boast the most complete financial services network of any Taiwanese financial operation in the region, and as it further expands its presence in China, it will draw on its parent group’s resources to offer customers the convenience of a one-stop banking experience.

Fubon’s private banking services were originally operated independently through a separate channel rather than through branches. An internal survey found, however, that nearly 50% of Fubon’s high-wealth clients were still in the habit of banking at branches, and this has prompted a change of business model. All of Taipei Fubon Bank’s 127 domestic branches, as well as its four flagship ‘VIP’ centres, now provide private banking services, enabling its high-net-worth clients to enjoy VIP services at their local branches.

Best Private Bank in Thailand: Kasikornbank Private Banking

Launched in 2006, Kasikornbank’s wealth management business has grown by double digits every year since, and currently has 33.9% of Thailand’s high-net-worth segment. In 2012 its ‘up-country’ strategy to acquire clients paid off handsomely, boosting assets under management by 18%. It is currently the only Thai bank to have teams servicing the country’s provincial areas, and it plans to expand these aggressively over the next year.

According to a survey by Nielsen, Kasikornbank has the best digital banking solutions in Thailand, with 4.7 million accessing its online and mobile banking services. Clients who are interested can receive SMS alerts from the research team on major market developments. 

Its banking channel allows clients to review their investments in real time as well as make transactions online for most of the bank’s products. Clients can also attend ‘K Alpha’ research investment seminars, where external experts discuss the economic outlook, which are particularly well attended during bouts of market turbulence, when investment direction is needed quickly. 

In 2012, Kasikornbank had another first in launching its first TV ad campaign for private banking clients, which described its core values as “passing forward the wisdom” and instilling a “fighter’s spirit, creativity and integrity [in] the next generation”.

It is the first private bank in Thailand to offer best-in-class products under open architecture, and says this could be the catalyst to taking market share from independent non-bank fund houses. The platform will be used to launch sophisticated structured products, both on and offshore, to complement its product portfolio. 

For clients with minimum assets under management of $5m, Kasikorn has arranged a raft of appealing privileges, such as a limousine service to and from Bangkok’s Suvarnabhumi airport, fast track check-ins and a ‘meet and greet’ at many of the world’s airports, and medical services from Thailand’s leading hospitals. Clients also receive the Wisdom credit card, which offers a free annual medical check-up, safe deposit box, and car wash services at Bangkok’s top shopping centres. 

“Our dedication to providing comprehensive investment advisory services to our valued clients has brought about our strong reputation and recognition in Thailand’s fast-growing and increasingly sophisticated private banking sector,” says Jirawat Supornpaibul, the head of Kasikornbank’s private banking business. “Synergy within K Bank and K Companies and the bank’s nationwide branch network will accommodate our high-quality services in the years to come.” 

Best Private Bank in New Zealand: BNZ Private Bank

BNZ Private Bank, part of Bank of New Zealand – a subsidiary of National Australia Bank Group – saw assets under management grow by 18% and the number of clients rise by 9% in 2012. 

“One of the key differentiators between BNZ Private Bank and our competitors is that we provide a best-of-breed investment proposition,” says Donna Nicolof, head of BNZ Private Bank. BNZ offers third-party funds from AMP Capital, Tyndall IM, Russell Investments, Schroder IM, Pathfinder AM and iShares. 

“With no financial incentives accepted or retained by BNZ private banking advisers from product providers, customers can have confidence that their investment portfolios are constructed with only their best interests at heart,” says Ms Nicolof. 

The private bank also leverages on a partners model, as it is part of BNZ Partners, which is a fully integrated business and specialist banking division incorporating private banking, agribusiness, corporate, property and business. “Our private banking advisers are part of highly empowered local teams organised around the customer and meeting all of their financial needs,” says Ms Nicolof. 

Referrals from existing private banking clients and other BNZ divisions are a key source of new clients. BNZ Private Bank enjoys an average client tenure of 15 years, with about one-quarter of clients having been with the bank for more than 25 years, inter-generationally. During the past couple of years, the ultra-high-net-worth family office has been BNZ Private Bank’s fastest growing segment, with more than 70% of client growth coming from clients new to the bank. 

In addition to investing in staff development, a key area of focus for BNZ is to further leverage its Australasia-wide wealth management capabilities “to create a competitive edge in this market, by bringing global market insights and more investment opportunities to customers”, says Ms Nicolof.

Also, BNZ prides itself on being the market leader in understanding and supporting the wealth and business requirements of New Zealand’s indigenous Maori population. Last year it established a Maori business sector board, which provides a governance and advisory role to the head of Maori business, and BNZ Private Bank provides a wide range of financial advice for a diverse set of Maori business ventures.