FinanceAsia's Best Private Bank write-ups

Following the announcement of FinanceAsia's Best Private Bank award winners earlier this month, our judges make their case.

We are pleased to publish the winners of FinanceAsia's Best Private Bank award, one of the most hotly contested categories in our 2015 Country Awards programme.

The rapid growth of high-net-worth individuals in Asia has made the region a magnet for private bankers.

The competition among rival domestic private banks and international players has compelled the entire sector to lift its game.

The best of the field were able to stood out for the size and scope of their business. On the following pages we explain why these and other factors set the winning banks apart.

Click here to view guidelines for the 2015 Country Awards programme.

Congratulations to the winners.




CHINA

ICBC


The world’s largest lender by assets retains the award it won last year as it continues to offer products and services to satisfy the growing demands of high-net-worth clients in terms of asset liquidity, security and profitability. Its core services include asset management, discretionary portfolio services, alternative investment and cross-border financial services.

In terms of assets under management, ICBC's private banking business grew to Rmb785 billion ($126 billion) as of the first quarter of this year, a 24% year-on-year growth compared to Rmb632 billion last March. The bank had about 47,600 clients with financial assets of at least Rmb8 million ($1.3 million) in March, up from 37,000 one year ago.

As the first of the big-four state-backed Chinese financial institutions to set up the private banking business in 2008, ICBC has established 36 private banking centers and 400 service centers, covering a range of urban centres in China.

Meanwhile, the bank is steadily expanding globally, offering private banking services in 20 countries and regions, such as the US, Australia and France.

Most recently, ICBC initiated new services that tailor special accounts for ultra high-net worth investors, helping them diversify, preserve and increase their onshore and offshore asset.

The bank is now providing PB clients with investment opportunities in the Middle East, notably in Dubai, because of the local client-friendly tax and regulatory environment.

The bank is known for cultivating and nurturing close ties with clients -- an important quality in Chinese culture. Its willingness to hand-hold private banking clients, taking small groups on overseas “investment inspection trips” and conducting thorough risk due diligence to assuage concerns, have impressed their conservative clients. In the period under review, the bank organised about 12 such trips, often showing clients projects oversea which it finances and manages.

Last December, ICBC's private banking arm won approval from Luxembourg’s financial regulator to launch a SICAV-SIF, becoming the first mainland Chinese bank to offer access to this customisable investment fund platform, a move aimed at helping customers diversify overseas investment portfolios. 

 

 

HONG KONG

HSBC

 

Hong Kong has benefitted as a private banking hub from the growing wealth of Chinese entrepreneurs.

The city recorded the fastest growth rate in net new assets for private banks in the world between 2009 and 2014 according to consultancy Deloitte.

HSBC’s private bank has been able to leverage its commercial banking arm’s extensive network across China as an entry into the inner circle for many of those entrepreneurs. 

HSBC private bank grew net new money in the areas it had targeted for growth by $14 billion globally in 2014. Of this amount $10 billion resulted from closer collaboration with other HSBC business lines.

In one instance, a family-owned business client wanted to expand globally. HSBC’s private bank in Hong Kong enlisted support from colleagues in commercial banking to help with overseas banking, payments and cash management. This was in addition to referring the client to asset management and trustee advisory experts for family succession planning.

Private banking in Hong Kong’s profit for 2014 fell to $146 million from $211 million in 2013.

HSBC did focus among other things on tightening portfolio management controls on relative macro overweight and under-weights. The British-headquartered bank now offers its private bank clients coverage of nearly 360 stocks. 

 

INDIA

KOTAK WEALTH MANAGEMENT

 

Kotak Wealth Management is far ahead of its peers in terms of its onshore private banking presence in India. The firm has more than 15 years of experience within the wealth management space in India and its expertise is well regarded within the industry.

While its total amount of assets under management are quite similar to HDFC Private Bank, industry players say that the latter’s AUM is skewed more towards the lower end of wealth management.

The bank advises about $8.2 billion of high net worth wealth and its clients range from high net worth individuals to entrepreneurs and wealthy families. The firm has a broad client base of about 2,000 families with over 3,500 accounts. Kotak has been a pioneer in offering very wealthy clients institutional family office services. It has a dedicated family office team as well as dedicated estate planning and structured products desks.

Kotak Wealth Management is also able to bring to bear other parts of the Kotak Mahindra group, offering clients access to equity, debt, private equity, real estate funds, structured products, insurance, quasi private equity and mutual funds.

The bank has also been growing its broader footprint through M&A – which offers it greater opportunity to grow its private wealth client base. In April 2015, ING Vysya Bank merged with Kotak Mahindra Bank giving the latter a bigger footprint in India.

 

INDONESIA

BANK MANDIRI

 

Private banking is a new and evolving business in Indonesia, and Bank Mandiri has been at the forefront among Indonesian providers. It has a five-year track record in private and wealth management, far more than its competitors, and is in the process of carving out a specialist business just for its wealthiest customers, those with $2 million or more in personal assets held with the bank. These are currently served under the brand ‘Mandiri Prioritas’.

The business is growing quickly, having doubled in the past three years. In 2012, the bank had 700 Prioritas customers. Today it has 1,300 high-net-worth customers, among about 40,000 wealthy individuals in its broader wealth-management offering. (In fact the bank has reduced the overall number of wealth-management clients by increasing the minimum asset threshold, in order to offer a better service: the number was 55,500 just three years ago.)

Similarly, the assets under management for the premium segment of wealthy clients have risen from $2.1 billion to $4.2 billion over the past three years.

The challenge today is for Bank Mandiri to differentiate its offering to the upper tier of clients. The bank recognises its strength is a long-term relationship with many families.

But now it is incorporating services from its securities and asset-management affiliates in order to help families and their businesses with more complicated matters. For example, bank relationship managers are being given the tools to give customers sharper and more comprehensive advice, from how to take a business to the capital markets, to helping plan for transitioning wealth to the next generation. The Prioritas business also provides a raft of savings products, both in rupiah and foreign currency; investment products; and insurance.

 

MALAYSIA

MAYBANK


 

Maybank has provided private banking to Malaysians since 1990 and was the first commercial bank to create a private-banking offering in the country. It continues to differentiate itself thanks to its commercial-banking background; its rivals are born from investment-banking backgrounds. This has added a sense of stability to Maybank’s offering, as clients are mainly interested in preserving wealth for the long haul.

By taking a longer-term view, the bank has performed well in terms of growing customers, and growing their assets. The customer base has grown over the past three years by double digits, from about 75,000 people in 2012 to nearly 90,000 today. Assets under management have grown by a higher proportion, from Rm62 billion ($15.7 billion) in 2012 to Rm82 billion ($21 billion) today, a 32% increase over three years.

The bank has thereby recorded similarly rates of growth in the profitability of its wealth-management business, and success in cross-selling products. The bank offers an array of products and services to clients, with some differentiation among tiers (ie private-wealth clients versus a broader number of wealth-management customers). These include treasury products, cash and liquidity offerings, insurance, trusts, wealth planning, mortgages (including ones abroad), and a comprehensive range of investment products and portfolio advice.

In addition to comprehensive services, two areas of growth help Maybank stand out. First is Islamic solutions for private clients. In 2014, Islamic investment products saw assets grow by 39% year on year, to Rm22.3 billion. Growth rates across Islamic products are very high, including investments, takaful (insurance), deposits and financing.

Finally, Maybank stands out for an integrated private-banking service across the region, with capabilities housed in eight other Southeast Asian markets (with a large presence in Singapore, and large offices in Indonesia and the Philippines), as well as in Hong Kong and the UK. Indeed, now 15% of the clients it serves in other Southeast Asian countries are locals, as opposed to expatriated Malaysians.

 

THE PHILIPPINES

BDO PRIVATE BANK

BDO Private Bank continues to be the go-to bank for wealthy clients in the Philippines. The bank grew assets under management by 15% last year to P279 billion ($6.2 billion) and added another 3% to this total in the first quarter of 2015. It now provides advice and services to over 7,050 high net worth individuals, a year-on-year increase of 8%. Following on from this, BDO Private Bank has now enjoyed 14 years of unbroken growth in both assets under management and customer numbers. The bank is in the fortunate position of not having to seek out clients as many are already using the BDO group’s commercial and investment banking arms. More than half of its customers are business owners, while 15% are professionals and another 11% have inherited their wealth. 

One of the biggest changes to BDO Private Bank’s business in the past two years has been a jump in the number of discretionary accounts it manages. Discretionary mandates jumped to 184 from 97 between 2013 and 2014 and are now worth more than P6.8 billion. The bank has also hired more staff, increasing the size of its relationship management team by 10% and boosting its wealth advisory and trust team by another 10%.

 

 

SINGAPORE

DBS PRIVATE BANK

 

DBS Private Bank bags the best private bank award in Singapore for the second consecutive year. To be sure, it was a busy year for the bank, which beefed up its footprint in the region through its acquisition of Société Générale's Asia private banking business.

The bank is shaping up to be a contender in both Singapore and the broader region. It has been bulking up at a time when scale is important. Soc Gen’s Asia private banking business was integrated into DBS Private Bank in October and partly accounted for a near-25% rise in assets under management to S$133 billion ($98.4 billion) as of end-December.

The bank successfully transferred over more than $10 billion of Soc Gen’s assets under management (AUM) or about 90% of its AUMs. While, DBS Private Bank lost a few relationship managers following the integration, the majority of the inherited 300-plus staff joined the Singapore bank.

The acquisition helped fortify DBS’s position in Hong Kong, where it previously lacked scale and also grows the bank’s family offices business. In addition, DBS’s clients will also benefit from a memorandum of understanding, through which they will have access to Soc Gen Private Bank's offerings in Europe.

The bank has also been at the forefront of investing in digital services. DBS partnered up with IBM to introduce Watson, a super computer that trumped contestants on the long-running US TV game show "Jeopardy!" which gives its relationship managers tools to better identify clients' investment needs.

DBS has also been able to leverage off its dominant capital markets expertise, offering its wealthy clients access to equity and bond deals. For example, its wealthy clients have the opportunity to participate as cornerstone and anchor investors in REIT IPOs.

 

TAIWAN

CTBC BANK

CTBC, one of Taiwan’s largest privately-owned banks, has implemented strategic initiatives to cement its position as one of the most internationalised Taiwanese financial firms and to diversify products and services it offers to high-net worth customers.

After raising the minimum requirement for high-net investors from NT$3 million ($96,000) to NT$12 million ($380,000) in April 2014, CTBC still saw its customer base grow by 22% to 24,732 as of this March. Meanwhile, the assets under management increased from $15 billion to $17.5 billion during the same period under review, an impressive 20% year-on-year growth. 

The strong double-digit increases could be largely attributed to the success of the “family membership” scheme, a new wealth management model. Introduced in 2013, the scheme is designated to fulfill customer’s diversified needs and deepen the bank’s ties with customers’ family members, as a way to cope with the increasingly competitive domestic market.

Moreover, the bank widened the breath of served areas beyond Taiwan through a series of acquisitions. For instance, it bought the Japanese commercial lender Tokyo Star Bank for $542 million through a 100% share swap transaction in late 2013 and subsequently gained full control of its Japanese peer.

The takeover allowed CTBC to strengthen regional presence across Northeast Asia and tap both retail and corporate banking opportunities across the region. As of this March, the Taiwanese lender operates 100 overseas outlets and covers 12 offshore markets, which spans from the US, Canada to Myanmar and mainland China.

 

THAILAND

PHATRA WEALTH MANAGEMENT

Phatra Wealth Management continued to hold onto its crown as the best private bank in Thailand despite an increasingly more competitive landscape. The big Thai domestic banks such as Kasikornbank --which has struck a partnership with Lombard Odier in Thailand -- and Siam Commercial Bank have intensified their efforts to grow their private banking business.

However, Phatra continues to stand out for its open architecture platform and global reach. It offers investors access to about 96% of Thailand’s mutual fund products including 1,395 mutual funds covering a wide range of asset classes including equity funds, fixed income and commodity funds. Through a partnership with Bank of America Merrill Lynch, it offers its clients access to global research.

While Phatra doesn’t have as many assets under management (AUM) compared to the commercial banks, its AUMs are investable assets rather than deposits. Still, it managed to grow its AUMs by about 21.9% or Bt55 billion to Bt305 billion ($8.7 billion) as of April 20, 2015. The bank has successfully leveraged off its merger with Kiatnakin Bank to grow its client base. As of March 2015, Kiatnakin Bank had successfully referred 1,444 clients to Phatra with total assets under management of Bt24 billion.

Phatra has also brought new offerings to the industry in Thailand. During the period under review, Phatra was the first among Thai banks to offer the so-called Lombard loan – a type of loan for high net worth individuals that uses customer’s investment funds as collateral. While the loan is a basic product in the global private banking sector, it is a relatively new addition to the Thai market and brings the private wealth industry more in line with that of its international peers.

 

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