Today, FinanceAsia begins setting out why we made the choices we did in our annual Achievement Awards this year.
In deciding the private banking awards, FinanceAsia asked banks to devise a solution for two fictional cases studies.
The global award revolved around an Chinese auto parts billionaire we called He Dengxin and the Asian award around a similar entrepreneur based in the country the respective bank operates in.
Best Global Private Bank: Goldman Sachs
The bank’s solution stood out from its peers for two reasons. Firstly, it understood the chairman’s strong emotional attachment to the company he founded and, secondly, it articulated a compelling solution to unlock some of his wealth and prepare for his eventual succession.
The founder’s attempts to transition out by selling shares had previously spooked investors so Goldman suggested there was plenty of financial headroom to increase the company’s leverage and finance a special dividend instead.
It also suggested forming a separate electric vehicles division, which his eldest son might view as an interesting management proposition over the legacy auto parts business he had continually shunned.
Other suggestions included: spinning off UK assets; facilitating the management buyout of a North Korean JV, which did not appear to be in compliance with UN sanctions; setting up a charity foundation along the lines of the Li Ka Shing Foundation to be run by his daughter; and establishing an offshore trust to hold the Hong Kong-listed shares and other offshore investments.
Best Asian Private Bank: DBS
Singapore-based DBS proposed a three-trust structure to solve the entrepreneur’s complicated business and family arrangements.
Where the company was concerned, the bank suggested he should unlock the hidden value of the company’s non-disclosed UK property assets by spinning them off into a real estate investment trust and bringing in a professional Reit manager.
It also honed in on his new-found desire to boost his philanthropic credentials by suggesting he pivot away from his sunset industry (auto parts) into a sunrise one (electric vehicles) and bring in a strategic Chinese partner, which would enhance business operations and enable him to sell a stake without spooking investors.
It proposed: one trust for his business assets, which would be managed by a private trust company with a number of family members on the board; a second trust for his personal assets with spendthrift provisions to cover his wayward second son; and a third trust for charitable giving, nominating cancer research as a worthy recipient in honour of his late wife.