Tan Su Shan joined DBS last year as group head of wealth management from Morgan Stanley, where she headed private wealth management for Southeast Asia. We talk to her about what markets she is focusing on and why DBS is well-placed after the financial crisis.
Which country in your portfolio has shown the highest growth in new wealth creation last year?
In terms of AUM [assets under management] inflow, Indonesia and China are our strongest growth markets. This is partly because of the massive creation of wealth in the two markets, and our expansion of teams covering the two countries. Since the end of 2010, we have invested heavily in our Indonesia team, with the hiring of a new country head of Indonesia and the addition of a new team to cover Indonesia this year. For China, the growth in wealth has been so rapid — data show that 159 millionaires are made every day in China — and we are definitely seeing this firsthand ourselves. To that effect, we have identified and hired a new country head for China too. We also continue to see strong inflows in our home market, Singapore.
What are your focus markets for the near-term and long-term?
We believe that the opportunities of wealth creation over the long term lie in our own backyard, in Asia, and our focus markets are China, Indonesia and the rest of Southeast Asia. We are also looking to expand further in the non-resident Indian (NRI) and Middle East space.
What are the challenges in expanding in the region?
Finding quality talent is always a problem and thus we are focusing more on training and hiring from within.
Are you hiring from outside? What is your current staff strength?
We have always been very selective in our hiring practices and hire only when there is quality talent available in the market. Current staff strength serving high-net-worth-individuals regionally is about 430 employees, of which 160 are relationship managers.
How have clients responded to the financial crisis?
The last global financial crisis taught investors about the risks of leverage. This time, investors are definitely less leveraged than they were and better prepared for any market downturn. They are more focused on asset allocation and on building strong portfolios that can withstand some degree of market turbulence.
Earlier this year, we unveiled the Asia Asset Allocator Fund, which has a higher weightage of asset allocation in Asia ex-Japan equities and Asia fixed income. Unlike the traditional Western-style asset-allocation models that focus on the US and Europe, the AAA Fund caters for a primarily Asian client base who want their assets to be in a market they understand, in a currency they require and can benefit from the longer-term growth in Asia.
We also believe that clients in Asia are looking for a banker who understands their wealth creation process and can value-add to them in this aspect. This includes having an in-depth understanding of the client's business and being able to help him grow his business, while helping him hedge and diversify his risks. This is where universal banks like DBS have an advantage as we work closely with our corporate banking colleagues to ensure that our wealth management services remain relevant to our client and are tailored to his specific needs.
Will the current situation in the eurozone and the US have a cascading effect on private banking in Asia?
In our new brand campaign launched in September, we emphasise DBS’s reputation as a safe and smart bank. With the current situation in the eurozone and the US we are benefiting from a reputation for being “safe” – one which offers peace of mind to customers. DBS’s AA- and Aa1 credit ratings are among the highest in Asia. DBS’s pedigree and our 28% ownership by the Singapore sovereign wealth fund Temasek Holdings have also reinforced the status of DBS as one of the strongest Asian banks in the region.
We are also focused on being known as a bank that offers smart and innovative solutions to provide international clients with exposure to Asia’s growth, be it through investing in offshore renminbi (CNH) or capital markets deal flows, private equity pipelines, new bond issuances in Asian currencies, all of which DBS private bank is in a strong position to provide.
Who do you view as competition?
Some of the global banks with a large Asia footprint or other Asian-centric banks.
Do you expect any consolidation in the industry?
Yes, as cost-to-income ratios reach unsustainable levels, some of the smaller or niche players may have to relook at strategic tie-ups or mergers in order to build a more profitable business. Some of the foreign newcomers into Asia are realising that it is expensive to hire, build and maintain a business through volatile market cycles. Issues for these new players include understanding the local terrain in Asia, which is very diverse across the different countries in Asia, as well as operating in a tougher regulatory framework. At DBS, we already have a substantial presence in various Asian markets onshore and are able to leverage our existing network to service our clients.