Today we announce our Private Bank Country Awards for Achievement for 2011.
We will publish our awards for the best private banks in each country in our upcoming September issue of FinanceAsia magazine together with our annual rich list, which ranks Asia's 100 wealthiest families based on dividend income.
ICBC Private Banking
ICBC Private Banking wins our Best Private Bank award for 2011. Its private banking service was authorised by the China Banking Regulatory Commission in March 2008 and by the end of the same month this year the bank had a client base of around 22,000 with more than Rmb418 billion ($64.9 billion) assets under management. It offers financial and asset management, consulting and cross-border finance services to its wealthy clients, of which more than 60% are private entrepreneurs, who have at least Rmb8 million to invest.
During the period under review, ICBC centralised its private banking business model by creating a direct reporting line from its ten branches to its private banking headquarters. It also began offering integrated solutions such as equity beneficiary financing for large enterprises to its high net-worth clients. The solutions are not just provided for the individual but extended to their families and companies.
As China’s commercial banks evolve and become one shop stops for financial services, ICBC is in an ideal position as the country’s largest bank by market capitalisation, to take advantage of the rapidly growing domestic affluent population.
Kotak Wealth Management
Kotak Mahindra Bank has got its strategy spot on in some areas and private banking is one of these. Foreign banks that are competing for assets under management (AUM) speak admiringly of Kotak’s hold on its existing wealth management clients and ability to attract business from new clients.
Kotak’s target clients have an investable surplus of more than $1 million. The Kotak client base ranges from entrepreneurs to business families and also includes employed professionals. Kotak provides financial advice and manages wealth for 30% of India’s top 300 families with offices spread across all major cities in India.
Kotak was early to realise the need to have a dedicated family office division to meet the needs of ultra high net-worth investors (UHNWIs). Kotak offers family offices a “personal chief financial officer” who will work alongside the family office to ensure the family office gets the best products and services from all its banking relationships including Kotak.
In June, Kotak co-authored along with credit rating agency, Crisil a report which analysed the earnings, investment and spending patterns of UHNWIs, a first-ever initiative in the wealth management industry in India. Kotak identified three distinct profiles of UHNWIs in India – the inheritor, the self-made and the professional. The report is intended to be published annually and help Kotak better define and understand its target clients.
HSBC Private Bank
HSBC dominates retail banking in Hong Kong and when it comes to private banking it is the only domestic player that is truly competing with the international banks, making it an obvious choice for Hong Kong residents as their wealth grows. Indeed, it is one of the biggest private banks in the world, with around 1,800 employees in Asia alone. Its global branch network offers a real understanding of other local markets as well as international connections that are crucial for private banking customers in a small economy like Hong Kong. At the same time, HSBC continues to develop services and products specifically for the Hong Kong market and it was one of the first private banks to launch renminbi-denominated structured products after the Chinese government relaxed its guidelines in July last year. Its renminbi offerings also include deposits, foreign exchange and fixed-income products. The bank is also very active in succession planning and the management of family wealth, which is an important business in Hong Kong where so many companies are still family-owned.
Hong Kong is one of HSBC’s two private banking hubs in Asia and in 2010 it grew its assets under management here by 14%, which was in line with its overall growth in the region. At the end of last year it managed $139 billion of assets for its clients in Asia.
It has been tough year for Indonesia’s wealth management industry, with questions asked about its competence, its internal standards and the qualifications and abilities of its employees. In May, the country’s central bank banned Indonesian commercial banks from signing up new premium clients for a month — only lifting the ban after receiving assurances that risk management systems and training schemes will be improved. The suspension came after a customer relations manager at Citibank was suspected of embezzling about Rp20 billion ($2.3 million) from the bank’s wealthy customers. Bank Indonesia has since blocked Citibank from acquiring new priority banking clients for one year.
Bank Mandiri has proven itself to have one of the better organised and professional wealth management units. It is the largest bank in Indonesia in terms of assets and is majority-owned by the state. However, its size and government shareholding has not restricted its drive to incorporate the most modern and efficient management techniques, systems and technologies. Mandiri has split its operations into organisational functions to improve its dedicated private banking service, upgraded its information technology and infrastructure, and has maintained high standards for its staff through intensive and regular training programmes. The bank is well-placed to attract more funds as Indonesia’s increasing middle class becomes wealthier, and indeed it is targeting a 15% increase in its wealth management business this year.
Samsung Securities Private Bank
Samsung Securities Private Bank maintained its dominant position in the Korean wealth management market, despite increased competition from both domestic and overseas players. Its products and services are comprehensive, covering standardised offerings as well as customised solutions in a structured platform staffed by highly respected professional bankers. Samsung consistently tops polls for its wealth management service.
However, rather than rest on its laurels, Samsung continues to innovate and look for further ways in which it can differentiate itself from the pack, and target new market segments. Last year, it set up a prestige private bank service called Special Noble and Intelligent for the super-rich — those with total financial assets of more than W10 billion ($9.2 billion) and more than W3 billion of investible assets. The size of assets managed by the bank’s four branches in Seoul doubled during the past year, and Samsung expects to open a fifth branch later in 2011. Meanwhile, it has courted some controversy by snapping up experienced bankers from its competitors. Samsung is able to leverage its securities expertise by offering its affluent customers a broader range of financial instruments with growth potential than its commercial bank rivals.
CIMB Private Banking
CIMB Private Banking is this year’s winner having grown its assets under management by 19% since June 2010 to more than M$8.5 billion ($2.8 billion), and more than double its AUM of M$4 billion from three years ago. Fixed deposits/cash have risen by 36.4% and equity assets by 25% during the past 12 months, while the bank’s improved operational efficiency, greater focus on client servicing and deeper range of products has helped drive up revenues by more than 60% to round off an impressive year.
The bank has also expanded its product range across all key asset classes, including global equities, innovative fixed income, multi-currency, structured (commodities, currency, equities and fixed income), alternative investments and private equity products. This now gives the bank the widest range of products of any onshore private bank. The bank has also increased its client qualification from M$1 million to M$2 million to deepen relationships with existing clients and increase market share. CIMB Private Banking was also the first to implement a specialist team-based servicing model. In addition to a primary relationship manager, the new model ensures clients of a more continuous service as well as access to a broader range of investment expertise and experience.
BDO Private Bank
BDO Private Bank was established in 2003 when BDO bought the local banking unit of Banco Santander with its commercial, trust and derivatives licences. Since then, BDO Private Bank has enjoyed a steady rise in customer numbers and assets under management, with these figures reaching 5,191 and Ps134 billion, respectively, as of December 2010. The bank targets both high-net-worth individuals (with a minimum investment wallet size of $3 million) and the mass-affluent market (with a minimum wallet size of $100,000). Both of these client segments are growing quickly in the Philippines, with the average customer portfolio of BDO’s private banking clients now standing at Ps30 million. Key products include financial planning, investment advisory and execution, and tax and estate advisory services with the primary goal of consolidating and protecting wealth. These customers mainly invest in deposits, fixed income instruments and equity securities, but they have also started to buy derivative instruments too. The bank services its wealthy customers with a team of 40 relationship managers and 31 dedicated investment and trust professionals, and draws on the transaction capabilities of the BDO group’s treasury and investment banking units. Between 2009 and 2010, BDO group’s fee-based income from wealth management activities increased by 10.24%.
Bank of Singapore
Bank of Singapore wins the best private bank award in Singapore for a second consecutive year thanks to its dedicated focus on private banking clients and strong regional client base. The bank, which was previously ING Asia Private Bank before it was bought by OCBC, continues to maintain its edge over rivals despite the change in ownership.
Asia’s ultra-rich have typically turned to dedicated private banking outfits such as UBS Private Wealth Management and Coutts to manage their wealth, as most Asian commercial banks have not actively wooed them or provided the same level of advisory service. But Bank of Singapore, which is wholly-owned by OCBC, has continued to maintain its unique identity as a dedicated private bank that focuses on providing advisory services to private wealth clients.
The bank has been led by Renato de Guzman for the past 10 years and boasts a strong presence in Asia, particularly Singapore, Malaysia, Indonesia and Greater China. It also has a strong on-the-ground presence with a team of over 220 relationship managers, over 750 employees and over 9,200 customers across Asia, the Middle East and Europe.
Bank of Singapore has a total of more than $29 billion of assets under management and a rock solid credit rating. It is also one of very few Aa1-rated global private banks in the world.
Chinatrust Commercial Bank
The competition for the richest wealth management clients has heated up since Taipei Fubon Commercial Bank set up a private banking division focusing specifically on clients with at least NT$30 million (about $1 million) of assets under management in 2008. In the 12 months to April 2011, the bank has grown its AUM by 36.4% and its number of clients by almost 32% to 4,100.
But Chinatrust’s strategy to also offer private banking services to less wealthy clients with the aim of migrating them to the top segment as they grow their assets, gives it the upper hand in our mind. Its pyramid segmentation of clients is also paying off in the form of fee income: in 2010 the bank’s sales volume of wealth management and lending products increased by 63% and the sales of protection insurance products almost tripled. At the same time, Chinatrust, with its open platform that offers third-party as well as in-house products and an advisory system that monitors the risk of every client portfolio, remains the bank of choice for Taiwan’s wealthiest individuals. The assets managed on behalf of its top segment customers (those with assets exceeding NT$24 million) is almost twice that of its closest rival at $6.9 billion, even though the bank has slightly fewer customers at 3,700. The country’s high-net worth individuals also continue to rank Chinatrust their top choice in various polls and in the 12 months to March, the number of customers in its top private banking segment grew 25%.
Siam Commercial Bank
Siam Commercial Bank wins the best private bank category in Thailand thanks to its strong presence among Thailand’s old-money legacy families and its aggressive bid to grow its market share in what remains a fragmented market.
The bank, which models itself on private wealth manager Coutts, has been actively courting high-net-worth clients and boosting its assets under management. It is also serious about beefing up its franchise, amid talk that it has been trying to hire aggressively, particularly from international investment banks.
In terms of product offering, Siam Commercial Bank offers a full suite of investment products including corporate bond funds, credit-linked notes, currency and commodity funds for its clients. It is able to calibrate its product offering to match different customer risk profiles. The bank also has a strong branch network in Thailand, and is able to take advantage of its extensive 1,000-plus branches to service its existing client base.