FinanceAsia is pleased to announce the winners of our Best Private Bank awards, decided by considering pitches from banks presented with a scenario involving a fictional client.
The ultimate winner of FinanceAsia’s best global private bank in Asia was Goldman Sachs while DBS Bank once again won the award for best Asian private bank.
In the coming days, we announce our Achievement Awards for best deals in individual countries, best deals in each asset class, and the best banks in a variety of areas. We will host an awards ceremony to celebrate Asia’s best and brightest in February.
FinanceAsia’s private bank awards are a little different to those of some of our peers. Instead of looking at which banks have the biggest assets under management, the most impressive trust businesses, or the lowest margin lending rates, we looked at only one thing — how well banks made a pitch to us.
For the global private banking pitch, we created a fictional client asked banks to pitch ideas to him. Ren Huandu is the founder of Guohua Rongyao, and has a net worth of around $6.2 billion. His company is a rather messy conglomerate, his wealth is tied up almost entirely in his shares, and his three children make the issue of succession a hot topic. It was intriguing to hear the different ideas banks in the region had for Chairman Ren.
Goldman Sachs stood out from the crowd on how much it put on reorganising GR’s business and unlocking value before considering the right way to manage Ren’s money. The bank took a unique approach, offering what was in essence a two-part pitch — one on helping our fictional tycoon realise some of his net worth, the other on suggesting what he could do with it.
That was an impressive approach to us, and dealt directly with what we considered one of Ren’s biggest risk factors: how much his wealth was tied up in his business.
The bank suggested a mix of spin-offs and stake sales, and showed some areas of the business — in particular property and wealth management — where GRI could make better use of technology.
Once that was achieved, Goldman offered impressive advice on succession planning, including a unique suggestion to set aside an entrepreneurial fund for the client’s children. This helped address one of our key concerns when addressing the question of succession — how to make sure the children are ready to take over the business in future.
The bank, like others, also suggested a multi-trust structure to separate core assets from the charitable projects, as well as suggesting the creation of a family office. Finally, Goldman Sachs provided specific investment advice, both for Ren’s dividends and the proceeds he would get from future stake sales.
DBS also made corporate-level suggestions that could unlock some of Chairman Ren’s net worth. The bank responded to a similar pitch that was sent out for the Asian awards, although some of the names were changed.
They suggested finding a strategic investor for the healthcare and pharmaceutical business, spinning some of the company’s portfolio off into a Reit, and the sale of some of the retail and jewellery businesses.
Like Goldman Sachs, DBS also suggested a partial stake sale, potentially reducing the family's stake in GRI from 71% to 51%.
These suggestions provided the bedrock for the Singaporean bank’s wealth solutions division to bring its skills to bear. DBS suggested a dual-trust structure, but also advocated the creation of a personal investment company — a tax efficient way for our client to play the markets. But this need not be reserved for stocks and bonds: DBS’s PE Club can give access to some alternatives, for instance.
The trust structure was important for ensuring a clear succession plan, DBS advised. The bank suggested the children could be named as directors in good time, but until then he could rely on key advisers to run the trust.
Both Goldman Sachs, our best global private bank in Asia, and DBS, our best Asian private bank, identified the crucial concerns driving our fictional client. But it was quite how they addressed those concerns that made them clear winners.
We thank all the private banks that took part in a pitch that required more work than many awards.
You can download the Global Private Bank Award case study here.