FinanceAsia is pleased to reveal the rationale for the winners of its annual Best Private Bank awards for countries across Asia.
The competition was extremely tight this year, with numerous financial institutions proving their resilience in a difficult regulatory and banking environment.
The write-ups will also appear in the next print edition of FinanceAsia.
CMB PRIVATE BANKING
China Merchants Bank has rapidly developed its wealth management arm since launching the business in 2007. It is distinguished by a clearly defined, disciplined portfolio management approach, a commitment to personal service that includes family offices offering trust and succession advice, and access to external financial products — albeit within the limits of China’s capital controls.
The bank’s model is geared towards the richest segment of the client base: those with investible assets of at least Rmb10 million ($1.5 million). That allows CMB Private Banking to cater for more than 49,000 clients, holding assets of around Rmb1.2 trillion.
The bank would not win any prizes for its catchphrases. It adopts a so-called “1+N investment consultancy service” (a relationship manager plus a support team) and implements a “4-Step Spiral Lifting Working Method” (where the advisor: listens, advises, implements and follows up). But these two models — while obvious — represent a disciplined system that goes beyond a simple and short-term transactional approach.
CMB Private Bank has invested resources in training staff so they can offer professional advice on all financial instruments, including private equity and overseas markets. Its family office service, launched four years ago, provides the usual tax planning and legal consulting, but a key feature is now its discretionary management capability.
Overall, CMB Private Bank’s model and focus most closely resembles those of the long-established international wealth managers. That is impressive in itself. It is all the more impressive that the bank has achieved this level of competence in less than a decade.
HSBC PRIVATE BANK
Although still headquartered in London, HSBC has been in Hong Kong for more than 150 years. The bank was integral to the territory’s commercial history under UK colonial rule, and since 1997 has been an essential conduit for China’s open financial dealings with the world. As such, it would be perverse not to consider it a Hong Kong bank, although its global size means that compared with the other Hong Kong wealth managers it is a Brobdingnagian among Lilliputians.
HSBC Private Bank earned around 70% of its Asia-Pacific pre-tax profits in Hong Kong, and 32% — or $112 billion — of its global client assets are held there. It attracted $14 billion of net new money last year, mainly through group-referred clients and through collaboration with other business lines.
Each client is served by a team of relationship managers, credit advisors, investment counsellors and wealth planners, who apply a portfolio-based-approach when advising clients on investors, something that is bolstered by their access to institutional-style investment products.
The private bank is also contributing to other areas of the business, offering the sort of symbiosis all bank executives say they aim for. A special unit within the private bank provides consultation services for ultra-wealthy clients who operate a businesses, which links up with the group’s global banking and markets division to help with corporate finance needs such capital-raising, divestments, M&As and strategic partnerships.
In recent years, a major focus has been on succession planning and estate management, building on a 70-year trust business, and in providing expert advice on philanthropy through the recruitment of professionals from the developmental aid and social work sectors.
KOTAK WEALTH MANAGEMENT
A division of Kotak Mahindra Group, one of India’s leading financial conglomerates, Kotak Wealth Management has 16 years’ experience catering to the investment needs of the country’s richest individuals. It advises on around $9.648 billion worth of assets held by about 2,000 families with more than 3,500 accounts. Indeed, according to the Forbes Rich List in 2015, it provides financial advice and wealth management services to over 40% of India’s 100 wealthiest families.
Although it has access to the parent group’s banking and capital markets platform, Kotak Wealth Management implements an ‘open architecture system’, meaning clients can diversify into international securities, hedge funds and private equity and gain the best price and execution on offer, even if that means dealing with third-parties. A dedicated asset advisory team helps clients construct appropriate portfolios and the private bank’s increasing use of external asset managers has helped improve performance.
Kotak Wealth Management is not resting on its laurels. It has enthusiastically embraced digital technology through a new banking app that allows clients to make payments and transfers, as well as improving its online reporting platform. The firm has also continued to develop its succession planning capabilities through its dedicated family office and estate planning services, and last year offered a series of teaching programmes for clients.
Simply put, Kotak remains well ahead of domestic competitors in the range of its products and services, as well as the scale of its operations.
MANDIRI WEALTH MANAGEMENT
Established in 2002, Mandiri Wealth Management — locally known as Mandiri Prioritas — is the fastest-growing private bank in Indonesia, serving more than 43,000 customers and managing more than Rp146 trillion ($14 billion) in assets. Part of Indonesia’s largest lender, Bank Mandiri, the private bank recently introduced a minimum requirement of Rp1 billion of investible assets, up from Rp500 million.
This policy reduced the number of clients, but revenue rose 17% between 2014 and 2015 due to a focus on cutting costs and earning more fee-based income. Mandiri now segregates its wealthy clients into priority and private banking categories, offering both access to the parent group’s full range of banking and securities products. But like some of its rivals across Asia, Mandiri is placing special emphasis on growing and improving the service for its richest clients, those with investible assets of at least $2 million. Last year, it inaugurated “Mandiri Private”, which employs 12 relationship managers covering 1,400 clients.
Mandiri Prioritas, meanwhile, offers a full range of capital market securities, mutual funds, savings schemes and financial advice to affluent clients via 58 priority outlets across the archipelago, up from just five in 2002. These accounts are managed by more than 200 relationship managers.
Mandiri plans to continue its expansion next year, adding outlets, recruiting more staff and extending its coverage to next-generation clients.
Maybank operates the biggest private banking franchise in Malaysia and has become a serious player throughout Southeast Asia and beyond. It helps that its parent bank has a well-stablished global presence, with an international network of more than 2,400 branches and offices in 20 countries.
Last year, the private banking arm recorded double-digit growth for assets (13%), the number of high-net-worth clients (10%), revenues (19%) and profit (16%). The figures vindicate Maybank’s five-year plan to develop its wealth management service in the face of strong domestic and regional competition, especially from Singapore’s DBS and local rival CIMB.
The high-net-worth segment now accounts for 18.2% of the group’s retail business revenue and 33.8% of its profits. It has increased returns from both fee and fund management earnings and reduced its cost-income ratio to juts 18.3% — spectacular compared with the Singapore and Hong Kong average of 70-80% for private banks.
The bank provides comprehensive portfolio and estate planning and offers clients access to a full range of financial products and services through an open architecture platform. It inaugurated a Lombard loan facility in 2015 — offering clients a loan secured against some of the securities they hold with the bank — and continued to maintain its leading position in shariah-compliant finance.
The bank is not just playing the numbers game. Last year, Maybank focused on softer services to attract the rich, opening new and exclusive suites and lounges throughout the country.
Check back tomorrow for explanations of the winners from the Philippines, Singapore, South Korea, Taiwan and Thailand.