Bank of China
Until recently, private banking was something that only happened offshore — it was literally a foreign concept in China. As such, it is perhaps not surprising that, today, the Chinese bank with the biggest international operation has learned the most about building a private banking business.
Thanks to this worldwide network, Bank of China has absorbed some of the management and marketing techniques used by the industry’s global leaders, successfully implanting these ideas into its own domestic and overseas private banking platform.
It has recently taken this a stage further, agreeing in July to a cooperation agreement with Julius Baer, under which the Swiss private bank will offer international products and services to Bank of China’s clients.
In the domestic market, Bank of China benefits from its parent group's position as one of the country’s big four banks, which gives it valuable insight, as well as the fast-growing demand for private banking services in the country. It has taken advantage of the growth in wealth and expanded its offering rapidly. The bank now has private banking branches in around 18 cities nationwide and a vast client network of 28,000. In total, it manages Rmb330 billion of client money — not the biggest private banking book in China, but clearly the best range of products and services.
When it comes to private banking, HSBC 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 as well as a natural option for the city’s many ex-pats. Together with Singapore, Hong Kong is also one of HSBC’s two private banking hubs in Asia and Hong Kong is the most significant contributor to HSBC Private Bank’s assets under management in Asia.
The bank is also very active in succession planning, with close to 700 employees globally focusing solely on helping clients to navigate an increasingly complex regulatory and tax environment across multiple jurisdictions. This is a particularly important business in Hong Kong, and the rest of Asia, where so many companies are still family-owned, and a key complement to the bank’s private wealth solutions business.
But in addition to such “core” services, the bank also continues to launch new products and services to enable its clients to make the most of the ever-changing market environment. One example is the Fixed Income Plus programme that was set up last year. It is a fee-based service that provides expert advice, close monitoring and ideas for clients’ fixed income investments, while still allowing them full autonomy when it comes to managing their bond holdings. Having been one of the first private banks to launch offshore renminbi-denominated structured products after the Chinese government relaxed its rules, it was also one of the first to trade yield-enhancement strategies denominated in offshore renminbi such as Alpha Plus in the FX space and equity-linked notes in the equity space. Alpha Plus has become one of the most popular products with investors and the volume increased by more than 16 times last year.
Kotak Wealth Management
Kotak Wealth Management is the undeniable leader in managing high-net-worth individuals’ wealth. It has one of the widest ranges of wealth management solutions, servicing more than 1,900 high-net-worth accounts individuals ranging from entrepreneurs to business families, as well as professionals.
Kotak is not just the go-to adviser for the growing affluent, it provides advice and manages the wealth of more than 30% of India’s top 100 families. A unit of Kotak Mahindra Bank, the Kotak Wealth Management business offers customised solutions and, indeed, was the pioneer in providing a dedicated structured products desk, a dedicated estate-planning desk and closed-ended portfolio management structures in India through Kotak Mahindra group companies.
It also operates a family office for its ultra-high-net-worth clients, providing solutions for building, preserving and transferring family wealth.
Kotak Mahindra has more than 20,000 employees and offices in New York, California, Dubai, Abu Dhabi, Bahrain, Singapore and Mauritius, as well as representative offices and satellite offices in 525 cities and towns in India, and is well positioned to serve India’s residents and diaspora.
Bank Mandiri regularly receives domestic plaudits for its all-round customer service. Its product offerings and professionalism in its wealth management unit are also highly regarded, and make it a realistic alternative for the savings of affluent Indonesians to the foreign private banks operating in Jakarta and in regional financial centres.
The risk management failures and skills deficit throughout the sector exposed last year by the embezzlement case at Citi led to action by the central bank and a general recognition that more staff training and tighter control systems were necessary. Mandiri already had a reputation for a leadership role in both areas, and has continued to strengthen its position.
The bank is in the process of upgrading its business intelligence infrastructure in a project that includes consulting, analytics, software development and reporting automation. It extends to wealth management as well as mass banking and e-banking, and should eventually align all three functions.
Staff training remains a priority for the wealth management division, as does the ability to offer the range of services provided by the firm’s international competitors. It can leverage its usual retail, consumer banking business to channel its increasingly affluent customers to its private banking operation. Mandiri has strong brand recognition and a solid franchise, and as a result successfully offers itself as a partner to the country’s growing middle class.
Samsung Securities Private Bank
Samsung Securities Private Bank continues to lead its domestic rivals, providing a full range of wealth management products and staffed by highly trained bankers. Its processed-centred customised asset management services offer bespoke portfolio investment strategies based on expert planning through its platform of private banking systems. Samsung also offers the very affluent a market-leading programme that provides specialist consulting services and global investment opportunities through its Total Life Care offering. In addition, the firm has further enhanced its prestige banking service — called Special Noble and Intelligent — for the super-rich, attracting more clients and assets.
Its investment and management options are greatly assisted by access to superior macro, strategic and company research from Samsung’s team of analysts in its brokerage unit. Over the years, it has also clearly established a strong franchise and a reputation for security and reliability.
A key reason for that perception is the firm’s emphasis on staff training and expertise. About 30% of Samsung’s private bankers possess the certified financial planner (CFP) qualification, known in the financial industry as the “professional private banker certificate”. It plans to increase the number of CFP holders from just over 300 to 500 by 2013 and, indeed, more than half of successful candidates in the most recent exams are working at Samsung.
The bank is facing increasing competition, not only from other domestic firms, but also from well-established international banks. Samsung clearly recognises that it needs to provide innovative but secure services managed by highly qualified staff to maintain its edge.
CIMB Private Banking
A decade ago, CIMB became the first Malaysian financial institution to set up a private banking and wealth management unit. After 10 years in business it now manages M$11 billion of client money, having almost doubled its assets under management since the start of 2010.
Much of this new wealth has come from a wave of big Malaysian initial public offerings during the past 18 months. The financial crisis has also given a perverse boost to domestic institutions, as the demand for simpler products and strategies (combined with the withdrawal of some European institutions) has played to the strengths of local banks.
CIMB’s early start in the private banking sector has put it in prime position to win a big share of this new wealth, and as Malaysians get richer, it has also been able to focus on bigger accounts. After adding hundreds of new clients during 2009, it is no longer seeking outright expansion of its client base and has instead doubled its minimum wallet size to M$2 million and referred some existing clients to its premium banking platform, which has helped it to increase its average account size by 25% to about $1.3 million.
What attracts customers to CIMB is the breadth of products it offers compared to other onshore private banks, including global equities, fixed-income solutions, multi-currency products, structured products, alternative investments and private equity, as well as financing and credit solutions. The bank’s commercial and retail banking operations are also a big driver of business, as are its Islamic and investment banking units.
If Malaysia’s IPO pipeline continues to generate new wealth and the government comes through with promised efforts to develop the industry, the outlook will remain positive for the country’s onshore private banks. Expect CIMB to be at the fore.
BDO Private Bank
With a focus on high-net-worth individuals as well as the mass affluent market, BDO Private Bank wins our Best Private Bank in the Philippines award for another year. From December 2010 to March this year, the bank increased its assets under management from $3.1 billion to $4.1 billion, and grew its customer base from 5,200 clients to 5,800 clients. Its average customer portfolio now stands at Ps35 million and these accounts are held by some of the country’s most influential entrepreneurs and heads of family corporations.
The bank increased the number of relationship managers it employs from 40 in 2011 to 48 as of March 2012, and the size of its wealth advisory team grew from 32 to 39 in the same period. This growth in staff has been matched by an increase in fee-based income from wealth management activities, which climbed by nearly 19% from year-end 2010 to year-end 2011.
In terms of revenue ratios, BDO Private Bank is a consistent achiever, improving its performance on all metrics including contribution margin, operating expenses and personnel costs. The bank’s key products include financial planning, investment advisory and execution, and tax and estate advisory services with the primary goal of consolidating and protecting wealth.
Bank of Singapore
Bank of Singapore bags the best private banking award in Singapore once again. Different private banks have different models and, in the case of Bank of Singapore, it continues to be managed independently from OCBC Bank, yet supported by its parent’s rock solid credit rating and reputation.
Being managed independently has meant that the bank faces less dilution in identity from the parent’s retail business, both in terms of branding and product offering. This approach to the business has worked in its favour — Bank of Singapore is well regarded within the market and it has continued to steadily grow its international client base, inherited from the acquisition of ING Asia Private Bank.
The bank also has an open-architecture platform — much more so, many say, than its rival DBS Private Bank — and a strong focus on the ultra high-net-worth segment of the market.
Bank of Singapore also stands out for the quality of its research, from economics, global fixed income and equities to foreign exchange. In terms of bench strength, the bank has more than 850 staff, of which 260 are relationship managers.
Chinatrust Commercial Bank
Already the country’s leading private bank when it comes to clients with more than NT$3 million ($100,000) under management — the measure most broadly used to define high-net-worth individuals in Taiwan — Chinatrust continued to grow its business in 2011, adding 10% more clients and 8% in terms of the value of assets under management (AUM). As of April this year, it had a 20% market share of the AUM in this segment and it continues to rank ahead of the domestic competition in key fee-paying areas like the sale of mutual funds and insurance products.
But it is the bank’s ongoing efforts to improve its customer offerings through ever more individually targeted advisory services and the fact that it offers private banking services to less wealthy clients as well, with the aim of migrating them to the top segment as they grow their assets, that again puts it ahead of Fubon Private Bank. The latter focuses more exclusively on clients with an AUM of at least $1 million.
In April this year Chinatrust opened a private banking booking centre in Singapore and a marketing centre in Hong Kong to catch the multitude of Taiwanese entrepreneurs who manages their businesses in and around Hong Kong, but prefer to book their private assets in Singapore. Having spotted a gap — and opportunity — in the market, Chinatrust is the first Taiwanese private bank to cater to the broad financial needs of this healthy and loyal client base. The initial focus will be on clients with up to $50 million of AUM, but as the business becomes more established it will go after even richer customers as well.
Phatra Private Wealth
Phatra Private Wealth stands out for having a wealth management business that is closest to what a true private bank should be. The concept is still new in Thailand and private banking often operates under the retail platform for many of the country’s domestic banks. Phatra Private Wealth does not have hundreds of branches (it operates with only one office in Bangkok) or scores of relationship managers, but it trumps its competitors with its focused private banking business. It has a dedicated private wealth team of 85 staff, including 42 financial consultants, 21 client service assistants and five private wealth research analysts.
It also has a more open platform compared to the Thai universal banks, offering its clients access to more than 1,000 funds. It provides asset allocation advisory and its product range encompasses equity, fixed income, commodity and foreign investment funds.
Another area in which Phatra stands out is its quality research and investment strategies — as well as access to global markets through its partnership with Bank of America Merrill Lynch. The private wealth arm is also able to leverage on Phatra’s strong investment banking franchise in Thailand, enabling it to offer its clients access to IPOs and follow-on offerings.