Issue 95 Awards Edition January 2016 Full

asian private banker

AWARDS FOR DISTINCTION 2015

LETTER FROM THE EDITOR

The Business of Excellence “Wealth does not bring about excellence, but excellence makes wealth and everything else good for men, both individually and collectively,� said Socrates and he may well have been referring to the winners of the Asian Private Banker Awards for Distinction 2015.

Poised in the face of fickle markets and unyielding regulators, every one of these exceptional institutions has proven committed to this aphorism, and in doing so, to their clients and their people.

By all accounts, 2015 was a year of two distinct halves - market momentum at the start of the year made the divergence for the remainder of the year that much harder to bear. But I am happy to report, that during my conversations with the leaders of these pre-eminent organisations, I found that they had all tempered their desire for profitability with prudence; focusing on reputation rather than ratios. Without an exception, these industry participants have proven that a reputation built on resilience may be worth a good deal more than one built on short term returns.

In my fifth year as Chairperson of the jury, I continue to be impressed by the intellectual prowess, the sincerity and perhaps most importantly, the strong code of ethics that guide these winners. Consistently, these individuals choose to live and work by a personal moral compass rather than the minimum regulatory requirement. Consequently, their standard operating procedures set the benchmark for industry best practices.

As laudable as the traits common to all our winners are, we at Asian Private Banker are equally devoted to continually catechising the framework by which we judge these awards. Our criteria need to withstand industry trends while still reflecting its raison d’etre. With due humility, I interpret the earnestness with which banks pitch for these awards, as testament to this fine balance that we continue to create and maintain.

This is pertinent because it embodies the all-encompassing pursuit of excellence that the Asian Private Banker Awards for Distinction celebrates.

Until we meet again,

Shruti Advani Editor Asian Private Banker

asian private banker 3

JANUARY 2016

CONTENTS AWARDS

8 Private Banker of the Year

Francesco de Ferrari, Credit Suisse

44 Best Private Bank – Philippines International Bank of Singapore

Best Private Bank – Asia 16 Credit Suisse

45 Best Private Bank – Philippines Domestic

17 Best Private Bank – Hong Kong

46 Best Private Bank – South Korea

18 Best Private Bank – Singapore

47 Best Private Bank – Taiwan International

19 Best Private Bank – Pure Play

48 Best Private Bank – Taiwan Domestic

20 Best Private Bank – Employer of the Year

49 Best Private Bank – Thailand International

21 Best Private Bank – Diversity

50 Best Private Bank – Thailand Domestic

22 Best Private Bank – Australia

51 Best Private Bank – Trust & Advisory Services

23 Best Private Bank – China International

54 Best Private Bank – Fund Advisory Services

UBS Wealth Management

DBS Private Bank EFG Bank

Goldman Sachs

Goldman Sachs

Credit Suisse

UBS Wealth Management

30 Best Private Bank – China Domestic China Merchants Bank

31 Best International Private Bank – India Citi Private Bank

Best Domestic Private Bank – India

32 IIFL Private Wealth Management

33 Best Private Bank – NRI Services

Deutsche Bank Wealth Management

BDO Private Bank

KEB Hana Bank

UBS Wealth Management

UBS Wealth Management Credit Suisse

Siam Commercial Bank HSBC Private Bank

Julius Baer

55 Best Private Bank – Alternative Investments Deutsche Bank Wealth Management

56 Best Private Bank – Philanthropic Services UBS Wealth Management

57 Best Private Bank – External Asset Manager’s Choice Julius Baer

34 Best Private Bank – Indonesia International

58 Best Private Bank – Discretionary Portfolio Services

35 Best Private Bank – Malaysia International

59 Best Private Bank – UHNW Services

36 Best Private Bank – Malaysia Domestic

60 Best Private Bank – Digital Innovations

37 Best Private Bank – Middle East

61 Best Private Bank – Family Office Services

Deutsche Bank Wealth Management Credit Suisse

Maybank Private Wealth Barclays

4 asian private banker

UBS Wealth Management Goldman Sachs Credit Suisse Credit Suisse

Deutsche Bank Wealth Management

Global strength, regional presence, personal touch.

Experience a world of lasting value right at your fingertips.

Best Private Bank – Alternative Investments Best Private Bank – NRI (non-resident Indian) Services Best Private Bank – Indonesia Asian Private Banker 2015

Please get in touch with us at +852 2203 7788 (Hong Kong) or +65 6423 6450 (Singapore).

This advertisement has been approved and/or communicated by Deutsche Bank AG and appears as a matter of record only. The services described in this advertisement are provided

by Deutsche Bank AG or by its subsidiaries and/or affiliates in accordance with appropriate local legislation and regulation. Copyright © 2016 Deutsche Bank AG.

JANUARY 2016

CONTENTS EDITORIAL 3

Letter from the Editor The Business of Excellence

10

The Final Word

24

Straight Talk: Jürg Zeltner, president, Wealth Management, UBS AG

25

Crow’s Nest: Asian gatekeepers doing well, but face resource issues

28

Top 10 private banking moments in Asia

38

COOLC 2015: Front focus

41

Crow’s Nest: Will consolidation pick up in 2016?

52

Keeping it in the family

62

Cracking the compliance conundrum

CHIEF EXECUTIVE OFFICER Andrew Shale

MANAGING DIRECTOR Paris Shepherd

DIGITAL DIRECTOR Tristan Watkins

EDITOR Shruti Advani

OPERATIONS Benjamin Yang, Sam Chan

DESIGN Simon Kay

ASSOCIATE EDITOR Vince Chong

BUSINESS DEVELOPMENT Madhuri Chatterjee, Sonia Lam, Michael Chan

PRODUCTION DG3

EDITORIAL Richard Otsuki, Priyanka Boghani, Tom Wan

PUBLISHED BY KEY POSITIONING LIMITED 1205 The Dominion Centre, 43-49 Queen’s Road East, Wanchai, Hong Kong Tel: +852 2529 5577 Fax: +852 3013 9984 Email: info@asianprivatebanker.com

6 asian private banker

ISSN NO. 2076-5320

AWARDS

Private Banker of the Year Francesco de Ferrari, Credit Suisse

A

cross the spectrum of financial services, private banks are unique in the direct relationship between the calibre of the bank’s talent and its ability to meet fiduciary duties as well as client needs. Against this backdrop, the quest for Asian Private Banker’s Private Banker of the Year assumes particular import. It is a quest that leads unfailingly to exceptional men and women – the best of the best – who have earned the respect of their peers, the trust of their clients and the loyalty of those whom they lead.

It has also led to candid yet comprehensive conversations with private bankers, product providers, veteran bankers, and clients.

In 2015, these conversations lead invariably to talk of Francesco de Ferrari’s stewardship of the Asian private banking franchise of Credit Suisse. In particular, the constancy of his strategy and its considered implementation have earned Credit Suisse’s Asia Pacific private banking head the unequivocal admiration of the industry.

Having won the award for Best Private Bank – Asia twice since de Ferrari took the helm, Credit Suisse has consistently demonstrated best-in-class productivity and efficiency ratios.

8 asian private banker

Outstanding performance on these quantitative metrics is augmented by delivering across a number of qualitative measures.

It is perhaps indicative of his singular focus on clients, that de Ferrari ranks client satisfaction as the most important of these metrics. Some 4,000 questionnaires sent out to clients showed that overall client satisfaction in Hong Kong and Singapore has risen from 90% in 2012 to 95% in 2014. Client satisfaction in Australia, where the bank runs a no-conflict advisory fee model, is at 100%; in Japan, where the bank acquired HSBC’s onshore private banking business, client satisfaction is at 95% three years after the purchase.

Poignant as client and industry recognition is, de Ferrari’s effectiveness stems in large part from his credence with Credit Suisse’s most senior leaders in Zurich. Their decision to widen his responsibilities in 2015, to encompass the entire franchise in South Asia – not only the private bank – is testimony to this.

In equal measure a strategist and a banker, but always a leader, Francesco de Ferrari is the deserving winner of the Private Banker of the Year Award 2015.

AWARDS

Francesco de Ferrari, Head, Private Banking Asia Pacific, Credit Suisse

asian private banker 9

EDITORIAL

The Final Word Top private banking heads talk to Asian Private Banker about 2015 and 2016.

Standard Chartered Private Bank - Michael Benz, global head (who has since stepped down from the role effective 18 Dec 2015) (MB, SC) Union Bancaire Privée - Michel Longhini, executive managing director, Private Banking (ML, UBP) BNP Paribas Wealth Management - Mignonne Cheng, chairman and CEO, Asia Pacific (MC, BNP) Citi Private Bank - Bassam Salem, CEO, Asia Pacific (BS, Citi) Deutsche Asset & Wealth Management - Ravi Raju, head, APAC (RR, DAWM) EFG - Albert Chiu, CEO Asia (AC, EFG) Goldman Sachs - Ronald Lee, head, Private Wealth Management, Asia Pacific (RL, GS) Hang Seng - Alan Luk, head, Private Banking and Trust Services (AL, HS) HSBC Private Bank - Bernard Rennell, regional head, Asia Pacific, and global head, Family Governance and Family Enterprise Succession (BR, HSBC) Morgan Stanley - Vincent Chui, head, Asia Institutional Equity Distribution & Private Wealth Management (VC, MS) (see also page 16) Pictet - Claude Haberer, CEO Asia (CH, PT) Vontobel Wealth Management - Alex Fung, CEO Asia (AF, VWM) Julius Baer - Luigi Vignola, head, Investment Solutions Group, Asia (LV, JB)

ON 2016, COMING OFF A 2015 MARKED BY MARKET VOLATILITY AND ECONOMIC UNCERTAINTY IN THE LATTER HALF OF THE YEAR

MB, SC: 2015 saw the weakening of many Southeast Asian markets and their currencies, which has to some degree resulted in a challenging year for many Asian HNWIs whose businesses or portfolios were substantially exposed to commodities and Asian currencies.

On a brighter note, we are seeing an increasing recognition of the importance of “unconstrained” strategies and alternatives for diversification and return enhancement among our clients.

They are now also more willing to commit to longer investment horizons and accept illiquidity if provided with access to suitable product platforms.

ML, UBP: One major thing to look out for is the change of trends in interest rates. Some people try to tell you it’s a non-event when the Fed (US Federal Reserve) is moving rates. It’s not true. When the Fed is moving rates, it’s a major event because it has major impact on many things like on the debt of some countries, asset allocations, global trends, and volatility.

We still favour equities, where valuations, in developed counMichael Benz, tries, have never been so good.

Standard Chartered Private Bank

10 asian private banker

More specifically, there are sectors growing fast, like technology; this time around, the companies emerging in the IT sector are true businesses with millions of customers. It is not like in 2000 (before the dotcom bust).

MC, BNP: The key drivers (of revenue)… will continue to come Michel Longhini, from transactional volumes…we Union Bancaire Privée have ambitious goals for Discretionary Portfolio Management and other managed assets, credit revenue, as well as fees from collaborations with different parts of the bank.

BS, Citi: We continue to see growth across the franchise in both North and South Asia. In particular China and India will continue to outpace the more developed markets. From a product perspective, investment management will be a key driver as we continue to both attract and develop the discretionary mandates of our clients’ share of wallet.

One of the main and ongoing discussions we do have with all our clients is about diversification as a proactive rather than a reactive exercise.

RR, DAWM: In 2016, we seek to continue to grow our UHNW client segment with a key focus on Asian tycoons in Greater China, Singapore and Indonesia.

EFG Bank Building in Singapore

asian private banker

AWARDS FOR DISTINCTION 2015 Best Private Bank - Pure Play

瑞士盈豐銀行

Hong Kong: 18 th Floor, International Commerce Centre, Kowloon Tel +852 2298 3000 Singapore: 25 North Bridge Road, #07-00 EFG Bank Building Tel +65 6595 4888 Shanghai: Unit 10, 65th Floor, Shanghai World Financial Center, Pudong Tel +86 21 6168 0518 Jakarta: Wisma 46 Kota BNI, 31st Floor, Suite 31.06, Jalan Jend. Sudirman Kav 1, Jakarta 10220, Tel +6221 579 00123.

EDITORIAL

Mignonne Cheng, BNP Paribas Wealth Management

Bassam Salem, Citi Private Bank

Mainland Chinese A-share equities have gone from a technical bull market (April/May 2015) to bear (summer months) and back to a bull market – highlighting the volatility of a relatively less institutionalised equity market.

Going forward, we believe that the percentage of institutional/ retail participants should be more balanced as the domestic market becomes more available as an asset class through MSCI EM and MSCI China inclusion and stock connect initiatives.

However, valuations for A-shares may keep investors less attracted, despite relatively better A-share access. We therefore believe global investors focused on fundamentals will find more attractive valuations in H-shares, with less volatility.

RL, GS: We are focused on Greater China, which is consistent with the opportunities in the region and also with the firm’s strategy. The clients that we target tend to have interests that are of relevance to the other parts of the firm, and we connect them with people in other divisions when appropriate.

AL, HS: Looking at a global level, the performance of A shares and the devaluation of the renminbi over the past year have taken some investors by surprise. With respect to the year ahead, given the uncertainty… clients are advised to assess their asset allocation strategy and, if necessary, increase the geographical diversity of their portfolio by shifting some of their investment to equities and foreign exchange around the globe.

BR, HSBC: With regard to investments, to help clients achieve appropriate diversification, we have adopted a portfolio-based approach to allow us to have a more holistic view of clients’ wealth based on their objectives and key investment criteria, including risk strategy, maximum level of investment risk, asset allocation, investment time horizon and liquidity needs.

VC, MS: Given our very strong institutional platform on flow products particularly equity and FX, I think we will continue to have well over half of our revenues coming from the flow business while we continue to expand the fees business.

2015 has been a very challenging. Even balanced funds, which by definition are lower risk, mostly lost money. Investor

12 asian private banker

Ravi Raju, Deutsche Asset & Wealth Management

Albert Chiu, EFG

conviction is low. Principal preservation is a priority for many clients. Given this, discretionary mandates on lower risk portfolios and products focusing on sustainable returns are in vogue.

CH, PT: We continue to focus on our strengths in discretionary, family offices services, asset servicing and wealth planning.

We also expect hedge funds and private equity to maintain an attractive proposition for clients in the region.

Clients have now learnt that assets, including their own currencies, don’t always go up. This has shown them the need for risk assessment and diversification into international assets.

LV, JB: As there are still varying degrees of uncertainty with regards to China slow down, CNY depreciation, financial industry probes, among others, most clients have been kept sidelined for now. I reckon the most likely outcome, or rather our optimism, would be that investors might be more willing to entrust their funds with professional money managers after this heart wrenching ride.

ON COMPLIANCE

MB, SC: The cost of non-compliance is higher than ever before.

The bar on compliance continues to rise with increasing regulatory changes and expectations in the areas of client due diligence (CDD)/money laundering, tax compliance, common reporting standards and investment suitability. We strongly believe that compliance should not just be seen as a cost centre but rather, use it as an additional way to deepen your knowledge about clients and improve your ability to deliver bespoke advice. To that end, we have been investing significantly in our CDD platforms, as well as in our people.

ML, UBP: Suitability is the next milestone. You don’t really have a choice: you just need to comply.

MC, BNP: We are strengthening our control and monitoring units… For example, we have put in place a new Business Risk Management team this year to monitor risk related issues concerning our front office teams.

EDITORIAL

Ronald Lee, Goldman Sachs

Alan Luk, Hang Seng

BS, Citi: For us the cost of compliance is very much part of BAU (business as usual). We don’t have these additional costs. However I can imagine that those who do have big and/or serious compliance issues will undoubtedly “throw” money at the problem so that they can remain open for business.

RR, DAWM: Owing to extraterritoriality guidelines, global regulatory adherence come into play over and above regional regulations, which also pose additional challenges including from a competitive landscape perspective.

Going forward further streamlining in AI (accredited investors) regime by MAS (Monetary Authority of Singapore) would also be a key change that would need to be appropriately implemented from a consistency standpoint by the industry. With Common Reporting Standards and EOI (Exchange of Information) also coming, starting 2016, the industry is also gearing up in handling the changes in procedures & documentation, associated with the subject.

Having said this, it is equally critical not to let down the focus on the key areas like KYC, AML and Suitability, on which the industry has come a long way, post the 2008 financial crisis.

We continue to accord the highest priority on these areas, specifically on regulatory changes, in terms of not just increased technology spend towards solutions but also senior management time and efforts in our efforts to ensure that these are understood by our frontline for effective implementation and execution.

VC, MS: In this regulatory environment we have very little control on costs related to compliance, anti-money laundering and risk control. So our focus is to invest in our platform per regulatory requirement but spend as much time on exploring revenue opportunities.

CH, PT: There are constantly “interesting developments” in regulations. The selling process and suitability are permanent priorities.

ON HIRING

MC, BNP: Talent scarcity is pronounced in the wealth management industry. This challenge is wide ranging from front

Bernard Rennell, HSBC Private Bank

Vincent Chui, Morgan Stanley

office to compliance, risk management and middle office functions. To bridge the talent gap, training and development has evolved beyond sales skills related training to include reinforcing a “risk based culture” in our bank. In fact, the majority of training programs and initiatives these days are heavily focused on raising compliance and risk awareness.

BS, Citi: Many banks set up shop out in Asia based on some of the consultancy reports that cite the explosive growth of “millionaires” in Asia. As a result, some, whose growth at home has slowed or is not as exciting as the numbers they are reading about Asia, decide to expand out here and what they find in reality are high costs in setting up and maintaining shop. A large part of those costs can be attributed to hiring from a thin talent pool. I would say many overpay for what they are getting and then face the problem of turnover as another bank poaches from them by bidding up the price for that talent.

This doesn’t bode well for a client who typically wants continuity in their relationships. One of the trends is to “grow your own” which means looking within your own organization to develop and train your talent. And as a large organization, we have that advantage of drawing from a large pool of potential candidates.

RR, DAWM: The industry does face talent pool constraints and this is a challenge for further growth. Deutsche Bank has focused on the quality of our talent pool rather than the quantity. This is reflected by the fact that our relationship manager numbers are slightly down over six years, whereas the average revenue per relationship manager is up nearly 200%.

We continue to hire selectively with a focus on experienced talent with large books in the UHNW client segment, this segment currently being best suited to our platform. We are putting into place platform enhancements which will enable us to scale up in the high net worth client segment and associated RMs. AC, EFG: As of now, we have 108 RMs (relationship managers) in the region and are looking to have around 115 RMs by the end of this year. We continue to see very strong pipeline of senior RM candidates and are confident to grow our numbers of senior bankers in the region.

asian private banker 13

EDITORIAL

RL, GS: We have a different approach to selecting bankers. The traditional way is to look at their books and how much they can bring over. We look at that only as a metric that the banker was able to do it at another bank. But we assume that the banker is coming over with zero, and from that we ask if the person has the skills to build the business on our platform, with our approach.

In Asia, our new hires are currently about 60% lateral and 40% from schools. Over the next five years that will reverse to 30-40% from other firms, and 60-70% from schools.

Claude Haberer, Pictet

AL, HS: The private banking industry as a whole is growing at an unprecedented speed and top talent is in high demand. Our approach is to focus on nurturing a strong pool of inhouse talent and ensure we provide attractive training and promotion opportunities for high achievers.

CH, PT: Hiring is difficult. The uncertain market environment and ever heavier regulations lead many to carefully ponder a move. On the other hand, the fast changing business models with a move by many into broking (under the guise of so-called “cross-selling”) and heavier pressure on revenue generation lead senior bankers to look for different working environments where they can develop their clientele and remain worthy of the trust their clients place in them.

AF, VWM: As a boutique player, we have 20 staff and six RMs in Hong Kong. When it comes to hiring, we focus on seasoned bankers in Asia with a lot of experience.

ON CLIENT SOPHISTICATION, TRENDS AND NEEDS

MB, SC: An area of change (in 2015) is in wealth transfer and succession planning. Specifically in Asia where more than 50% of family enterprises are controlled by the founder and the majority of this passing of wealth is happening for the first time, ensuring the successful transfer of intergenerational wealth becomes even more important.

Alex Fung, Vontobel Wealth Management

ML, UBP: A big subject in Asia has been the volatility in Chinese equities. But there’s still lots of interest to invest in market leaders in China, like Alibaba – even if it is not on a worldwide scale, these are of a worldwide size. That’s a fundamental change in opportunities

in China. Combined with the potential further opening up of its market, it’s very positive for China and indirectly for the whole region.

RR, DAWM: There continues to be a propensity to wish to control the investment process, while at the same time within this process there is a growing adjustment to longer term views and increased holdings of managed products. Discretionary portfolio management remains stable in relative terms while in absolute terms the number continues to grow well, and their continues to be a growing allocation to other managed solutions including mutual funds, hedge funds and private equity funds.

RL, GS: We continue to advise and educate clients on two things.

The first is risk budgeting, meaning how they assess their appetite for risk, because once they can establish that, everything comes easier. The second is in-source versus out-source. This can be in many different forms, EAM (external asset management) and FO (family offices) is one axis, picking your own stocks versus buying a fund is another.

BR, HSBC: In Asia, a high proportion of wealth is still concentrated in the first or second generations and focused on wealth creation instead of preservation. As such, Luigi Vignola, many entrepreneurs still have one Julius Baer third to half their wealth in their business and another third in property investments.

The traditional approach to succession planning is to focus on how wealth will be distributed after the wealth creator’s lifetime.

While appropriate in most situations, this is not sufficient in the context of substantial wealth involving assets, such as family businesses, that are expected to remain in the hands of different family branches over time.

CH, PT: There is wariness toward investments in general, search for variety in advice and banks with specific expertise (“how are you different from the other banks?” is a basic yet key question) and desperate search for the elusive yield.

AF, VWM: We are seeing a change from the transaction model to the advisory where clients are happier with the quality of advice.

LV, JB: Amid a backdrop where clients continue to favor product simplicity and high liquidity as prerequisites, it’s a challenge to position products with longer investment horizons in client portfolios. While funds, equities and fixed income and shorter tenor structured investments saw increased flows, we did see interest in private equity opportunities, as well as in discretionary mandates.

This article first appeared in Issue 94 of Asian Private Banker’s monthly print magazine, published in the first week of December 2015.

14 asian private banker

Am I a good father?

Do I spend too much time at work?

Can I have it all?

We understand that dedicating more time to the ones you love can feel like you’re compromising the work you’re passionate about.

Striking the right balance isn’t easy. But it is possible.

We can offer wealth management guidance to help you plan for the future and provide the life you want for your loved ones.

So you can have the best of both worlds.

For some of life’s questions, you’re not alone.

Together we can find an answer.

The value of investments can fall as well as rise. You may not get back the amount originally invested. © UBS 2016. All rights reserved.

ubs.com /goodfather

AWARDS

Best Private Bank – Asia Credit Suisse

O

ver the last decade, Asia has moved from the fringes of the global private banking industry to becoming the cornerstone of any credible global private banking footprint. Secondhome to some of the most pedigreed wealth managers in the world, Asia has proved its potential as the world’s most exciting market for wealth management services.

Indeed, Asian clients continue to set the bar high and their bankers must fight hard to meet their expectations of absolute returns, service quality and growth.

The fight to meet these expectations – by providing cutting edge products and service against a dynamic regulatory environment – is a fierce one. It is especially complex in Asia because of the region’s particular mix of cost considerations. While all banks in the region, then, are endeavouring to deliver on these expectations by finding that magical balance between cost and income, a handful of them are also committed to spending considerable resources toward infusing value into every aspect of their client relationships. A few banks, in particular, are focused on excellence – in their people, processes, service offering and, ultimately, client experience – emerging as worthy contenders for Asian Private Banker’s Best Private Bank – Asia Award for 2015.

Credit Suisse has distinguished itself even among this most eminent of peers, emerging as the deserved winner of this award for the second time.

Size, as denoted by assets under management (AUM) is neither the sole nor the most important criterion Asian Private Banker uses for adjudging the winner of this award. However, the bank’s US$154 billion in assets in Asia represents one of the highest organic growth in assets among institutions on Asian Private Banker’s AUM league table.

For the purpose of these awards, and one would hope, the continuing vigour of the industry – growth without cost/income efficiency is a manifestation merely of organisational energy. Not of excellence. A quarter-on-quarter relationship manager (RM) productivity comparison with the most relevant peer group, put Credit Suisse in pole position. Based on Asian Private Banker’s estimates,

16 asian private banker

Francesco de Ferrari, Head, Private Banking Asia Pacific, Credit Suisse

although AUM/RM were similar in the given quarter, NNA/RM (net new assets per relationship manager) were six times higher, while profitability of the business has also grown more than fivefold since 2011.

A recent change in global management and strategy has redoubled the bank’s commitment both to wealth management as well as Asia, giving it the sweep and the wherewithal to continue prodigious plans for both.

AWARDS

Best Private Bank – Hong Kong UBS Wealth Management

H

ong Kong is a veritable battlefield for private banks and home to some of the finest talent and ideas in the industry. To succeed in Hong Kong – arguably the crown jewel among wealth management markets in the region – a private bank must offer globally-accepted best practices, cutting-edge innovation in product and services, and a solid understanding of the specificities of doing business here.

The winner of the award for Best Private Bank – Hong Kong for four consecutive years, UBS Wealth Management has demonstrated time and again that not only does it possess deep understanding of the wealth management business in Hong Kong, it has also very successfully transitioned this into an enviable client base. Outside of Switzerland, the bank’s highest penetration rate lies in Hong Kong – about 10% of the market in the relevant wealth segment. Hong Kong is without doubt the engine driving this impetus.

UBS was the first Swiss bank to establish its Asian hub in Hong Kong in 1964. At the time of submissions for this award, it employed some 1,000 wealth management staff in Hong Kong.

Over the last five years that the bank has pitched for the award, Hong Kong contributed over half of net new money in any given year for the region. This trend has continued unabated in 2015, when, despite weak markets, assets in Hong Kong grew almost by double-digits, no doubt driven by a deep and stable bench of senior management led by Jean-Claude Humair, regional market manager for Hong Kong since 2011.

Not resting on its laurels, considerable as they may be, the bank continues to promote its brand in Hong Kong with plans to open a Kowloon office by the end of the first quarter of 2016. It plans to have six desk heads and 35 client advisers have already been picked for this new office; they will work with Kowloon office head Adeline Chien.

This demonstrable dedication to – and dominance of – the wealth management industry in Hong Kong confirms UBS Wealth Management as the deserved winner of the Award for Best Private Bank – Hong Kong 2015.

Jean-Claude Humair, Regional Market Manager, Hong Kong, UBS Wealth Management

asian private banker 17

AWARDS

Best Private Bank – Singapore DBS Private Bank

W

ith its soaring ambitions to be the private banking capital of Asia, the demonstrable commitment of its sovereign government to nurture the industry as well as the highest concentration of high net worth individuals relative to population in Asia, Singapore is a vital destination for private banks large and small.

As a booking centre for the world’s wealthy, Singapore’s inherent appeal as a private banking hub has also made it one of the most fiercely contested wealth management markets in Asia.To be an industry leader in such an environment, a private bank must marry a deep and relevant local network – bankers, entrepreneurs and providers – with global reach.

DBS Private Bank has demonstrated its ability to do just that and much more. The highest ranked Asia-headquartered private bank in the world, DBS’ “Aa-” and “Aa1” credit ratings are among the best in the region. It has also reiterated its commitment to private banking with its 2014 acquisition of Societe Generale’s Asian private banking business.

Apart from the obvious benefits of a deeper product shelf and greater organisational orientation towards wealth management, the Societe Generale partnership has also led to a broadened global coverage of 484 European stocks and 104 Japanese stocks – a significant advantage for Asian clients looking for diversification.

Although size is not the single or most important award criterion, DBS is the dominant local private bank in Singapore by asset size, based on the 2014 Asian Private Banker League Table. Indeed, having adjudged their offering for several years, Asian Private Banker is convinced that 2015 is a tipping point for DBS – it has achieved critical mass (S$99 billion, or about US$70 billion, in assets under management as of September 2015); demonstrated the sustainability of its model by keeping costs at 55% and impressed the jury with the calibrated and consistent pace of its growth (CAGR of 20% since 2012).

18 asian private banker

Tan Su Shan, Group Head, Consumer Banking and Wealth Management, DBS

Finally, the bank’s deep and demonstrable commitment to innovation – its partnership with IBM made it the first private bank in the world to use artificial intelligence to service clients – connotes an agility that will carry it well into the future. For 2015, DBS has amply demonstrated why it is the winner of the Asian Private Banker Best Private Bank – Singapore Award.

AWARDS

Best Private Bank – Pure Play EFG Bank

I

n a year riddled with rampant market volatility, pure play private banks’ proposition of independent wealth management were severely put to the test. Among other things, 2015 proved a critical year to showcase truly open architecture platforms and a commitment to the preservation and protection of wealth.

EFG Bank’s accolades in 2015 did the family of pure play private banks proud after making laudable strides toward growing its fee-based business in both funds and discretionary portfolio management, signifying strengthening relationships in the region.

This is in addition to its already established transactional business which continued to deliver timely and significant solutions in a trying year.

Perhaps most impressive was the efficiency in which EFG made its achievements in Asia in 2015. Amid an industry that is swelling its expense column due to a growing list of costs in product specialists, compliance staff, IT developments and more, EFG maintained a notably low cost-income ratio while sustaining high productivity.

This was made possible by a roster of seasoned veterans whose retention has been made the forefront of all priorities. The

Albert Chiu, Chief Executive Officer, Asia, EFG Bank

bank’s efforts in this area did not go unnoticed as it saw a negligible number of relationship managers leave over the last two years.

EFG Bank has proven its mettle for the above reasons and more and is deservedly the winner of the Asian Private Banker 2015 Best Private Bank – Pure Play Award.

asian private banker 19

AWARDS

Best Private Bank – Employer of the Year Goldman Sachs

I

n light of the still voluminous turnover in Asia’s private banking industry which continues to be marred by a limited talent pool across various functions, the acquisition, grooming and retention of employees is more critical than ever for businesses with ambitions to grow sustainably.

While assets under management at private banks in the region have continued to grow at an annual double-digit rate over the past three years, banker headcount in the same period has climbed by less than 8%, illustrating greater productivity but also the risks of overcapacity going forward. This is in addition to the growing demand to hire for roles in products, compliance and more.

For all these reasons, Asian Private Banker has launched for the first time in 2015 its Best Private Banker – Employer of the Year Award. This goes to Goldman Sachs for its hefty raft of initiatives designed to ensure employee development and wellness – including a number of which specifically target its Asia private wealth business – which put the bank ahead of the competition.

Through its internal education and leadership development initiatives, Pine Street and Goldman Sachs University, the firm creates and delivers programmes aimed at the professional and leadership development of its employees. Be it new joiners to the private wealth industry, up-and-coming stars, or established leaders, the bank provides an expansive series of Asia-specific learning curricula that covers technical topics such as markets and investment products as well as issues concerning building client relationships and integrating new staff. In addition, Gold-

20 asian private banker

Florence Kui (far left), Chief Operating Officer, Asia Pacific, Goldman Sachs Private Wealth Management, at a university recruiting event

man’s continued focus on diversity ensures that it is able to attract and retain talent from multiple backgrounds and perspectives.

Further, the bank’s flurry of highly attractive benefits includes access to external world class health solutions and a series of policies covering flexible working arrangements.

Such efforts have been very well rewarded. Goldman Sachs now has the highest number of wealth advisers in Asia since the start of the business, while maintaining low average annual turnover. The average tenures of its Asia private wealth management managing directors and vice presidents stand at a stellar 14 and six years, respectively. Asian Private Banker is proud to name Goldman Sachs the 2015 winner of the first-ever Asian Private Banker Best Private Bank – Employer of the Year Award.

AWARDS

Best Private Bank – Diversity Goldman Sachs

I

ssues relating to Diversity – recognising, accepting and respecting that each individual is unique – were not very high on the industry’s priority list when the Asian Private Banker Awards for Distinction first began in 2011. Since then, much has changed – and much still needs to change.

The impetus for change has come from many fronts, albeit without much regulatory thrust. Primarily, with the fight to attract and retain talent intensifying, private banks are realising that being diverse, at the very least, makes good business sense. Increasing recognition for organisations that invest in creating such an environment, whether from awards or otherwise, is another. A third, and perhaps most important, motive is the need for private banks to keep up with the high bar set by their competitors, specifically the industry leaders.

Goldman Sachs, the deserved winner of the Best Private Bank – Diversity Award for 2015 – making it three wins in five years – is one such leader. It has created a blueprint for inclusion that is referred to widely as the gold standard in Asia. In particular, the bank’s private wealth management (PWM) business in Asia has led the charge from the frontline, spearheading many of its diversity initiatives. Ron Lee, head of PWM Asia Pacific, is also the firm’s co-chair for Diversity in the region.

Other Diversity leaders include Nick Yim, head of the PWM Greater China business who is on the board of advisers of the firm’s Hong Kong Women’s Network (HKWN); the board offers mentoring, coaching and guidance to HKWN leadership so as to maximise its contribution and visibility. Mary Anne Choo, a managing director for PWM, sits on the Asia Pacific Diversity Committee. She and Jason Moo, Regional Manager for PWM in Southeast Asia and Australia, are advocates of LGBT inclusion within the firm. Moo is also a male champion with the Financial Women’s Association in Singapore, and Choo is actively involved in philanthropy.

Ronald Lee, Head, Private Wealth Management, Asia Pacific, Goldman Sachs

Not surprisingly then, Goldman Sachs’ vice chair, chief operating officer and head of compliance for PWM in Asia are women.

This dedication to diversity most certainly percolates from the firm’s most senior leaders. Chairman and CEO Lloyd Blankfein has advocated for marriage equality legislation and is quoted both internally and externally: “Diversity is at the very core of our ability to serve our clients well and to maximise return for our shareholders. Diversity supports and strengthens the firm’s culture, and it reinforces our reputation as the employer of choice in our industry and beyond”.

Of particular interest to Asian Private Banker is the institutionalisation of inclusion at the bank, which has been created by a consistent and concerted commitment to making diversity part of its corporate DNA. Tellingly, an excerpt from its Business Principles, which the firm claims is the foundation of its culture, reads: “Being diverse is not optional; it is what we must be.”

asian private banker 21

AWARDS

Best Private Bank – Australia Credit Suisse

A

consistent force in the private wealth management market Down Under, this is Credit Suisse Private Banking’s second straight win in this segment, and its third since the Awards for Distinction were inaugurated in 2011.

This is no mean feat in a mature industry where competition from other established players is as relentless as ever from year to year. Credit Suisse as a group has maintained a strong presence in Australia for over 40 years; it set up its private banking arm in 2007 and has not looked back since, with revenues growing significantly strongly in the past year alone.

Among its strength, unsurprisingly, is not just an impressive global footprint that provides worldwide execution capability across a broad range of products and services, but also comprehensive offerings to meet local clients’ needs, such as total corporate solutions for mid-market corporates and UHNW (purchase disposal, financing/leverage, hedging or M&A, flexible multi-currency lending capabilities etc.

Credit Suisse Private Banking Australia had also in 2015 notched up material cross-pollination deals between the private banking and investment banking businesses. This comes on the back of one, the group’s reputation as a leading investment bank; and two, its strategic positioning as a bank for entrepreneurs.

Together, they offer strength in the form of integrated and sophisticated solutions for both UHNW and HNW clients alike.

This is all the more impressive given that the Australian economy has struggled over the past year amid a fall in mining investment, following an unprecedented boom. The nation’s GDP grew nearly 1% in Q3 2015, while the estimate for Q2 was revised upward from 0.2% to 0.3%. The main drag, analysts note, was a 4% drop in investments, with private investments down by 2.9% and public investment down by 9.2%.

With its wide-ranging strategies and product options – such as its keenly growing discretionary portfolio management offering –

22 asian private banker

Alex Wade, Head, Australia and Asia Pacific Switzerland, Private Banking Asia Pacific, Credit Suisse

Credit Suisse Private Banking Australia has shown that it is more than capable of excelling in any market, up or down. It is without doubt the deserved winner of 2015’s Best Private Bank – Australia Award.

AWARDS

Best Private Bank – China International UBS Wealth Management

I

n 2015, a third quarter plunge in the A-share market wiped out nearly US$4 trillion in value, sending shockwaves through China’s high net worth community, a large proportion of whom hold local equities. Despite the predicament however, UBS Wealth Management not only weathered the storm and but also substantially grew its book of business in the world’s second largest economy.

The bank first launched the China division in the early 2000s with relationship managers spun off from the Hong Kong team. The number has since ballooned to 160, with the division seeing robust CAGR growth of more than 20%, across multiple metrics including invested assets, net revenue and net new money.

The bank has also successfully penetrated 75% of provinces, including the oft-neglected far-flung tier-4 cities. This potent client acquisition capability is owed to a diversified approach to hiring talent.

Sourced from a variety of channels, the business’ client advisers hail from various walks of life including rival private banks, non-financial institutions as well as the bank’s wealth management associate program.

Asset acquisition aside, UBS Wealth Management continues to deliver solutions in China across investment, family and business needs, leveraging from its neighbouring investment banking and asset management arms. Of note in 2015 was its ability to source exclusive private equity deals globally, which resulted in strong inflows particularly in the IT sector.

Marina Lui, Regional Market Manager, China International, UBS Wealth Management

Despite the travails that are bound to occur in China’s equity markets as the country transitions toward a consumption-driven economy, the future looks bright for the Swiss wealth manager as it continues to realise its ambitions, which include growing an onshore presence through its branches in Beijing and Shanghai.

In a competitive space where private banks continue to battle for the assets and trust of wealthy individuals from the Middle Kingdom, UBS Wealth Management has pulled away from the rest and is the deserved winner of the Best Private Bank – China International 2015 Award.

asian private banker 23

EDITORIAL

Straight Talk:

Jürg Zeltner, president, Wealth Management, UBS AG We kick off our first Straight Talk chat of 2016 with a key figure at the world’s largest private bank, Jürg Zeltner, president of Wealth Management at UBS AG. What is your Asia Pacific strategy?

With the recent market volatility in this region, this is the time to show that we are dominant in Asia.

Asia is the largest profit contributor to our global wealth management business with the fastest CAGR. It accounts for 25%30% of global profits. We want the emerging markets to account for 50% of our share.

We are already seeing a seismic shift.

Specifically, how can Asia’s largest private bank also be one of its fastest growing?

What specific AUM or growth targets can you share with us?

“We must grow in double digits in AUMs in Asia but these projections need to take into account the recent market volatility such as the market corrections in China and Southeast Asia. The recent events have certainly shown that we need to focus on strategic asset allocation, allowing for global diversification.

We want to grow two times as fast as the underlying GDP of the country as this makes us correlated to the real world. In this region, average GDP stands at 6-7%.

And wealth trajectory has grown 2-3 times the market. We therefore need to keep pace.

Within the Asian franchise, which areas will attract the heaviest investment over the next five years?

Nearly two-thirds of our global net investments are allocated to Asia. This has

24 asian private banker

been allocated to content, research and asset management solutions and a multi-manager platform where I can source the best ideas. This needs to be for advisory and discretionary portfolios platform.

A significant portion of our budget will go to innovating technology platforms.

We have a large programme ongoing for the next two years to integrate all functions into one single digital platform across the globe. It is crucial to build a platform which will support future growth for our bank.

We will also invest in building out our country coverage where we hope to grow in double digits. Japan and Taiwan are our priorities. We also plan to go large onshore in China, grow double digits in Singapore and Hong Kong domestic, and use the international booking centres to capture foreign investment opportunities.

In addition we will grow client adviser headcounts and offices.

We plan to grow by two-fold in key regional APAC markets due to our scale.

What is the tipping point in terms of cost income – when do you think growth is no longer the best strategic goal?

Jürg Zeltner, UBS AG

We have kept our cost-income ratio at 60% – a healthy ratio given that we have a profit margin of 30-40%.

Specifically, how much net new money (NNM) growth are you expecting from Hong Kong over the next few years?

Globally, we are seeing NNM growth of 3-5%, mirroring the rate at which wealth grows as well. In Asia, we expect NNM to grow double-digit per year.

EDITORIAL

Asian gatekeepers doing well, but face resource issues Stars are aligned and tailwinds present, with fund asset growth at Asia’s private banks expected to spike by as high as 30% in 2015. A comprehensive poll of leading gatekeepers showed that this was achieved with stretched resources, and little is expected to change next year. Here is where asset managers can step up and add value to their services.

D

uring Asian Private Banker’s recent Fund Selection Nexus (FSN) 2015 in Hong Kong and Singapore, an in-house study revealed that 77% of private banking operations in the region achieved growth of more than 10%, with nearly 20% posting a 20-30% upside.

More funds were added on 72% of Asia private banking platforms and of the lot, 12% registered 20% more growth in the number of products.

Further, a high proportion of 83% of respondents claimed to have signed at least one new distribution agreement this year, while 17% signed at least five.

All in all, it was quite a productive year.

More impressively, these were achieved

with pretty much the same resources and pay, which are expected to stay constant in 2016. Of the gatekeepers who polled, 61% indicated that regional headcount for fund selection should remain unchanged going forward, with 41% predicting no change in compensation.

ASSET MANAGERS CAN DO MORE

“We are quite stretched when it comes to capacity and it seems like most resources will continue to be allocated to the front office,” said a Hong Kong-based gatekeeper.

“Perhaps more than ever before, we will need the help of asset managers to offer timely updates and training for relationship managers.”

In a region famed for growing private wealth, this offers asset managers yet more opportunity to get into the action. A robust pipeline with innovative products is de rigueur, particularly with recent market volatility nudging clients toward less risky funds.

After all, private banking gatekeepers assess and evaluate fund managers and going forward, communication skills will be even more crucial in addition to a fund’s investment performance and governance.

The benefits go two ways: many relationship managers in Asia-based private banks are said to lack technical knowledge, preferring instead to refer clients to colleagues on the product desk when necessary. By learning directly from asset managers,

MOST TIME-CONSUMING ACTIVITIES AS A FUND SELECTOR IN ASIA

Participants at FSN 2015

Source: Asian Private Banker Funds Selection Nexus 2015 Poll Results

asian private banker 25

EDITORIAL

PRIORITY LOCATION FOR EXPANSION OF FUND TEAMS IN ASIA No expansion plans

16.67%

22.22%

Hong Kong

16.67% Singapore Both Hong Kong & Singapore

44.44%

Source: Asian Private Banker Funds Selection Nexus 2015 Poll Results

front end staff will be better placed to field questions from clients, who like everyone else in this day of the smartphone prefer to get answers quickly from one source.

GREATER FUND AUTONOMY

And very encouragingly, foreign headquarters are now more willing to delegate in Asia, thanks in no small part to the region’s platform developments. Unlike prior sentiments of Asian gatekeepers who had had to achieve growth with un-Asian platforms and head selectors at home asking them to take it or leave it, experts polled said a greater amount of attention and weight is being given to the region.

Some 17% of respondents now felt that the likelihood for headquarters to successfully execute an Asia-based request to onboard new products was either “high” or “very high.” Another 39% felt the probability for success was “fair.”

“Headquarters used to just pay lip service to supporting private banking businesses in Asia,” one gatekeeper told us during the FSN in Singapore.

“But as the Asia growth story in mutual funds is taking hold, head selectors in Zurich, Geneva, London and other centres are taking the region much more seriously.”

In the upcoming year, Asian gatekeepers are expected to further build upon several

key drivers that have resulted in inflows for the region’s private wealth industry. Firstly, ETFs, which make up 10-30% of 59% of respondents’ platforms, will continue to play an increasingly central role in portfolios whether it is for broad-based market access or cheap trading in discretionary mandates.

Secondly, UCITS III funds or liquid alternatives will be key in helping investors better manage downside risks and generate returns in both volatile and range-bound markets.

This year, 39% of private banks onboarded three or four new hedge funds and half of respondents described sales as “somewhat successful” or “successful.”

FUND TEAMS HEADCOUNT PLAN FOR 2016

27.78%

No change 61.11% to headcount

Add 1-2 personnel

11.11% Add 3 or more personnel

Source: Asian Private Banker Funds Selection Nexus 2015 Poll Results

This article first appeared in Issue 93 of Asian Private Banker’s monthly print magazine, published in the first week of November 2015.

26 asian private banker

EDITORIAL

Top 10 private banking moments in Asia, 2015 IBM WATSON DATA DRIVER

Amid the growing hype of technology buzzword “big data”, DBS Private Bank became the first Asian private bank to officially roll out a data analysis solution called DBS Wealth Advisor for its relationship managers (RMs).

The Singaporean lender partnered with supercomputer IBM Watson and is currently in the process of giving access to all of its 267 RMs in Hong Kong and Singapore.

At the moment, all its Singaporean RMs have access to IBM Watson.

January

FUND MARKET EXPANDS WITH MRF LAUNCH

As part of its ongoing efforts to internationalise its markets, financial regulators in Hong Kong and China jointly launched the Mutual Recognition of Funds (MRF) scheme. While experts have told this publication that the appetite for A-share products is relatively muted after the Shanghai benchmark’s steep slide in the third quarter, asset managers distributing to the mainland are particularly excited by the opportunity to help retail investors in the second largest economy diversify beyond the still limited options due to tight capital controls.

March February

May April

COUTTS SALE

After much teeter-tottering, state-owned Royal Bank of Scotland decided to let go of its international private banking business, selling most of Coutts International to Swiss pure play Union Bancaire Privée. The international business of the 300-year old British wealth manager had 15,000 to 20,000 clients with assets under management (AUM) of some US$30 billion, about half of which lie with its Asia operations (see page 4). Upon completion, the deal will likely lift the Picciotto-owned family business into Asia’s top 20 by AUM based on our research, joining just two other Swiss pure play private banks Julius Baer and EFG.

28 asian private banker

J.P. MORGAN INTEGRATES ITS DUAL-SEGMENT MODEL IN ASIA

After extended speculation about the future of J.P. Morgan’s private banking business in Asia, the US wealth manager decided to integrate its two businesses, one focused on clients with net worth of US$10-30 million and the other on the UHNW segment with net worth of over US$30 million. There had long been speculation about the future of its two-tier business and the two heavyweights spearheading them, Peter Flavel and Andrew Cohen. The sixth largest private bank in Asia by AUMs in 2014, based on our research, then broke its silence mid-year to confirm to this publication that the latter and former head of UHNW clients would inherit the title of Asia head of the newly integrated private bank. Flavel was named its deputy CEO, Asia.

June

EDITORIAL

JULIUS BAER HIRES EXTERNALLY TO REPLACE MEIER

To the surprise of many, Julius Baer went outside to hire a new Asia Pacific head, Jimmy Lee, to replace Thomas Meier in the new year.

Meier will return to Switzerland as the bank’s non-executive vice chairman of wealth management after ten years in the region. Lee was most recently Credit Suisse’s head of Hong Kong after joining it as part of the Clariden Leu acquisition in 2012. After Julius Baer’s successful integration with Merrill Lynch, Lee has been tasked with what CEO Boris Collardi called “the next phase of growth” to take the pure play’s presence in Asia to “the next level.”

July

DEUTSCHE AWM FIRST PRIVATE BANK IN ASIA TO OUTSOURCE BACK OFFICE OPERATIONS

DEUTSCHE BANK SPLITS ASSET AND WEALTH MANAGEMENT – AGAIN

Months after the appointment of John Cryan as Deutsche Bank’s co-CEO, the German lender has once again split its wealth and asset management division after integrating them in 2012. The former head of the division, Michael Faissola, stepped down to give way to Quintin Price and Christian Sewing, who will oversee the asset and wealth management units respectively. The move has left spectators divided on the future of the fund arm, with some believing it will now be free of distractions to engage in growth mode while others believing the restructuring could open options for a sale – something the German lender attempted but failed to do three years ago.

September August

STRUCTURED PRODUCTS CONSORTIUM GOES LIVE, ADDS PRIVATE BANK

Multi-issuer platform and messaging network Contineo, backed

by HSBC, BNP Paribas, Goldman Sachs, JP Morgan, Barclays and Societe Generale, launched at the start of the year to automate the distribution of structured products to private banks in Asia. This marked a shift in the distribution of structured products to private banks as they turn to technology for faster and more efficient price discovery. In June, Contineo announced the first private bank to join its buy-side roster: Julius Baer.

Fourteen months after signing with Avaloq Sourcing Asia Pacific, Deutsche Asset & Wealth Management (AWM) went live with the business process outsourcing centre in Hong Kong and Singapore. The project involved Avaloq Sourcing Asia Pacific supplying back office services for the wealth management business of Deutsche AWM in Singapore, including administration processes. It had been in the works for over a year, due to its sheer scale and duty to be compliant with local requirements. The innovation, new to the private banking industry in Asia, evolved as a result of financial institutions looking at ways to free themselves of processes and operations that are not regarded as differentiating, but are subject to volume efficiencies. Deutsche AWM’s move to carve out its back-office completely is the litmus test for this new approach.

November October

December

SHIH PASSES THE TORCH CHINA’S MALAISE DRIVE FLAT-FEE REVENUE IN ASIA

As markets felt the shock of an over 40% wipeout of the A-share benchmark, coupled with China’s unexpected decision to weaken the yuan, a flurry of Asian HNWIs decided to reduce their share of actively traded assets and test private banks’ discretionary offerings instead. The industry is uniformly expanding these capabilities to cope with the increased willingness to delegate, and as the global outlook continues to be driven by less than optimistic economic forecasts and compressed return expectations, the trend is expected to continue.

29 years after joining UBS, 13 of them as its Asia Pacific head of wealth management (WM), Kathryn Shih will in the new year step up to the group’s regional president role. She will also be promoted to the Group Executive Board, the firm’s most senior management body. Edmund Koh, the current WM head of Southeast Asia and Asia Pacific hub, is set to take over as the unit’s regional head (see page 14). Shih will succeed Chi-Won Yoon, who will take a planned sabbatical.

This article first appeared in Issue 94 of Asian Private Banker’s monthly print magazine, published in the first week of December 2015. asian private banker 29

AWARDS

Best Private Bank – China Domestic China Merchants Bank

W

ith the lion’s share of China’s US$4.8 trillion in high net worth wealth still residing on the mainland, the onshore private banking opportunity in Asia’s largest economy has long been coveted by both global and local houses attempting to gain market share from a blossoming industry.

But constraints with accessing foreign markets, a relatively financially-inexperienced client base and a limited talent pool all pose high barriers to entry even for China’s gargantuan domestic lenders. Despite the hurdles however, China Merchants Bank has outshone its ambitious rivals in a highly-competitive playing field with its dominant presence, a growing stable of offerings and a commitment to deepening client relationships through a plethora of ideas.

China Merchants Bank first launched its private banking arm in 2007 with an eye on capturing a share of wallet of China’s high net worth individuals, which the bank defines as those with investible assets beyond RMB10 million (US$1.5 million). Fast forward eight years later and the unit has established 39 centres in 28 key cities in China, posting along the way phenomenal growth figures including over US$180 billion in assets under management invested across trusts, discretionary mandates while providing over 2,000 products.

In addition to the high net worth millionaires, China Merchants Bank has also developed its ultra high net worth business that has nimbly launched new targeted offerings. Since 2012, the bank continued to retain its pioneering status in the industry, rolling out offerings for family office services, wealth inheritance and discretionary portfolio management which have all resulted in significant volumes of business.

In its bid to engineer a truly dynamic investment process, the bank has also developed a global asset allocation system (GAAS) by leveraging from some the world’s leading theories in VAR (value at risk)-based risk management, portfolio investment and asset allocation. Through this, China Merchants Bank has

30 asian private banker

Wang Jing, General Manager, Private Banking, China Merchants Bank

constructed tailor-made portfolios complete with systematic performance reports, while being able to test historical returns and simulate future earnings.

This commitment to excellence and an ambition to pioneer China’s domestic wealth management market makes China Merchants Bank the deserving 2015 winner of the inaugural Asian Private Banker Best Private Bank - China Domestic Award.

AWARDS

Best International Private Bank – India Citi Private Bank

I

n a nation of over one billion people, home to 156,000 high net worth individuals (HNWIs) and US$612 billion of HNWI wealth, India has proven to be a lucrative opportunity for private banks in Asia. Pegged on the economic success and promise seen from last year’s newly-elected government, Indians are returning home to explore sectors of the market such as venture capital space, hence creating a deep pool of talent for the private wealth industry.

One of its leading markets and growth engines for its Asia operations, Citi Private Bank’s India unit has distinguished itself from competitors eying the segment through its commitment to building a sustainable onshore platform in India. In so doing, it has built a formidable private banking business in a fiercely competitive space.

With offices in Mumbai, Delhi and Bangalore, India has contributed to a 45% growth in Citi Private Bank’s Asia assets under management (AUM). The bank prides itself in possessing a strong platform that allows it to leverage not just its dedicated team of private banking specialists but also its multi-asset class solutions that has managed to keep what is regionally relevant within core asset classes.

In addition to providing strong navigation through the capital markets, Citi Private Bank has also differentiated itself when catering to ultra HWN Indians with its investment platform. These include art advisory to help clients with personalised acquisition strategies, private aircraft financing with in-house specialists dedicated to evaluating client travel needs and sports finance with both debt offerings and advisory services.

Citi Private Bank’s longstanding history with India, coupled with its robust global investment platform and advisory offerings, makes it the deserving 2015 winner of the Best International Private Bank – India Award.

Bassam Salem, Chief Executive Officer, Asia Pacific, Citi Private Bank

asian private banker 31

AWARDS

Best Domestic Private Bank – India IIFL Private Wealth Management

A

n improving e c o n o m i c outlook, better industrial output and a growing number of Indian entrepreneurs all suggest that the wealth management sector in India is poised to grow exponentially.

In 2014, the market grew 27.5% to INR257.4 trillion (US$4.1 trillion), on the back of INR122.7 trillion (up 52.3%) in physical assets. Other assets grew 37.7% to INR134.7 trillion.

The opportunity is sizeable, particularly with similarly stellar growth expected in 2015.

With a vast number of foreign banks making notable exits over the last few years, the India onshore market remains lucrative for domestic firms. IIFL Private Wealth Management has successfully capitalised on the historical electoral mandate delivered in India, weaving its strategies around it and thereby reaping the benefits through its investments.

By following a client-centric approach, IIFL Private Wealth Management has excelled at delivering disciplined investments backed by rigorous due diligence processes and critical analysis of portfolio performances. With 22 offices across major countries and Indian cities, the domestic wealth manager has amassed US$12 billion in assets under advice, distribution and custody – among the fastest growing firms of its kind in recent years. It has also created a stellar product suite, launching an array of innovative products tailored to the Indian palette such as the NDA

32 asian private banker

IIFL Private Wealth co-founders (from left): Amit Shah, Managing Partner; Karan Bhagat, Chief Executive Officer; and Yatin Shah, Managing Partner

Fund post the new NDA government and the AIF, Seeds Venture Fund 1 to cater to the growing interest in the young venture capital space in India.

To align itself with a high number of emerging entrepreneurs in the nation, IIFL Private Wealth Management has rolled out a number of technology initiatives and multi-digital channels such mobile apps, social media campaigns, advanced analytics and cloud-based computing.

It is for these reasons and many more that IIFL Private Wealth Management takes the Best Domestic Private Bank – India 2015 Award.

AWARDS

Best Private Bank – NRI Services Deutsche Bank Wealth Management

T

he increasingly moneyed diaspora of non-resident Indians (NRIs) has made it difficult for private banks in Asia to ignore this client segment. Following a year of the Indian government’s political clout to push through long-promised reforms, which has seen an unrelenting rally at the nation’s stock exchange, NRIs have responded with astute investments. Not surprisingly, more private wealth managers are widening their networks and offerings to cater to this universe of notoriously price-sensitive but sophisticated investors.

Deutsche Bank Wealth Management has managed to stay ahead of its competitors in this sector with its extensive product and solution capabilities, and strong business momentum. For the fourth year in a row, the firm is the winner of the award for Best Private Bank – NRI Services.

There have been many changes in the NRI private banking landscape over the last two years, marked by large team moves in Asia, major restructuring of such specialist teams or even well-publicised withdrawals from the space. Through this all, Deutsche Bank Wealth Management has retained a robust offering, anchored within with a strong core team of 75 professionals located in five international centres including London, Geneva, Dubai, Singapore and Hong Kong. Furthermore, the private bank plans to make significant new hires – testament to the bank’s commitment to this market.

The bank continues to reap the benefits of a stellar offering stable, constantly innovating and structuring products tailored to the NRI investor palette. From wrapper structures, FCNR and NRE deposits to structured lending solutions including aircraft financing, estate succession planning and masala bonds, Deutsche Bank Wealth Management has proven impressive in this regard.

As the political and economic transformation in India continues, investment opportunities will continue to open up for NRIs, a

Amrit Singh, Head, Wealth Management Coverage, Global South Asia, Deutsche Bank Wealth Management

market that the bank continues to serve with distinction. Deutsche Bank Wealth Management is without a doubt 2015’s deserved Best Private Bank – NRI Services Award winner.

asian private banker 33

AWARDS

Best Private Bank – Indonesia International Deutsche Bank Wealth Management

I

n a year when oil prices, the rupiah and the Jakarta index all tumbled, Deutsche Bank Wealth Management’s strong global platform, experience and healthy balance sheet allowed it to further diversify its business lines to offer Indonesian high net worth individuals solutions to protect and grow its wealth in a turbulent period.

A rapidly growing fee-based business across its funds and discretionary solutions reflects both deepening relationships among its Indonesian clients and a sustainable proposition for their assets. This is in addition to strong and steady pipelines of structured financing, FX, money markets and both flow and non-flow structured products solutions in a year that proved especially demanding for wealth within an energy-heavy economy.

Portfolio management aside, Deutsche Bank Wealth Management’s Indonesian team adeptly leveraged the bank’s diversified platform to sustain delivery of global real estate and wealth planning solutions. This comes at a critical market juncture where central bank policies are diverging, old wealth is ageing and various global economies are attempting to make material reforms. Indeed, estimates show that Indonesian high net worth individuals may have seen nearly 20% of their wealth erased by poor market performance in 2015.

In spite of these, the bank excelled in this highly competitive offshore market by pairing its vast experience in global distribution with unique, tailor-made solutions, particularly for the Indonesian ultra high net worth segment.

This certainly puts Deutsche Bank Wealth Management in good stead, with the Southeast Asia nation’s wealth market expected to swell to more than US$200 billion over the next few years, on the back of an established ultra high net worth market where business is tied to both global economic conditions and

34 asian private banker

Kwong Kin-Mun, Head, Wealth Management Coverage, Southeast Asia, Deutsche Bank Wealth Management

deep personal passions. Its proven ability to satisfy such needs makes Deutsche Bank Wealth Management the deserved winner of the Asian Private Banker 2015 Best Private Bank – Indonesia International Award.

AWARDS

Best Private Bank – Malaysia International Credit Suisse

M

alaysia’s multi-pronged economic dip last year spread well into the US$174 billion pool of local high net worth wealth, whose total value declined by nearly 11% in 2015. A plunge in the Kuala Lumpur Composite Index – one that touched a five-year low – and the upward trend in the US Federal Exchange’s interest rate cycle has made global diversification and world-class risk management even more crucial than ever.

In spite of such adversity however, Credit Suisse’s adeptness at sourcing global investment solutions for Malaysian clients saw them excel in a tumultuous year.

The bank’s efforts to reduce the Malaysian high net worth segment’s concentrated single-stock exposure in home markets continue to see steady progress, as the bank increasingly engages clients in serious dialogue about asset allocation and risk. Its success has led to robust inflows into US and European equity dividends, discretionary portfolio solutions and other defensive strategies to mitigate risks, especially in light of the raft of midcap stocks linked to oil that had lost more than half of their value in 2015.

One standout highlight for Credit Suisse’s Malaysia wealth management business was the bank’s completion of a discretionary hedge fund mandate – the first deal of its kind in the history of its Asia Pacific franchise.

The bank’s local presence, which includes a leading investment bank and equity trading platform and a 20-year representative office, played no small part in expanding its reach to clients in even the secondary cities. The bank’s strong integrated private banking and investment banking platform also enables it to provide corporate and financing solutions for Malaysian entrepreneurs. Such efforts have served the bank well, as reflected in a 14% CAGR growth of assets under management between 2011 and 2014.

Marcus Slöör, Market Group Head, Malaysia, Private Banking Asia Pacific, Credit Suisse

A stellar portfolio of clients, a strong pipeline of new prospects and talent, and a successful year of gaining materially diversifying assets means Credit Suisse is undisputedly the winner of the 2015 Best Private Bank – Malaysia International Award.

asian private banker 35

AWARDS

Best Private Bank – Malaysia Domestic Maybank Private Wealth

A

gainst the backdrop of a challenging economy in Malaysia and globally, one private bank continued its storied rise to private banking excellence in the Southeast Asian nation.

Maybank Private Wealth furthered its expansion in 2015 to become the private bank of choice for wealthy Malaysians. After launching its second private wealth centre in Kuching, Sarawak last year, Maybank’s reach in the nation of 67,000 high net worth individuals expanded to include 35 wealth centres across the country. Its diversified asset acquisition engine extends across the entire Southeast Asia region to the likes of even Myanmar. In fact, Maybank is the only bank with an existing presence in all ten ASEAN countries.

These efforts subsequently materialised into rapid asset growth and a fast growing book of clients in Malaysia and across the region. Testament to its commitment to a local clientele, whose Islamic roots dominate more than 60% of the local population, Maybank has dedicated significant resources to developing its Shariah-compliant offerings. Coupled with its investment banking arm’s established track record of leading sukuk bond issuances, Maybank Private Wealth leverages from its strong affiliation with Maybank Islamic Bank to offer its clientele access to a diverse range of Shariah compliant products and services.

Maybank’s private banking offering was launched in late 2013 and has in the short time, grown its assets under management significantly in their domestic market and cemented itself as a premium wealth manager, coupled with an already established brand. Building on strong growth over the past two years, Maybank Private Wealth has emerged from the competition to win 2015’s Asian Private Banker Best Private Bank – Malaysia Domestic Award.

36 asian private banker

Alvin Lee, Head, Regional Private Wealth, Maybank

AWARDS

Best Private Bank – Middle East Barclays

T

his is Barclays Wealth & Investment Management (WIM) second successive win in this segment, which underlines its commitment, competency and consistency in a region where private wealth is set to hit US$7.2 trillion by 2018.

This cements the Middle East’s position as a hub for international private wealth, with some 220,000 Middle Eastern millionaires expected to be minted by 2020. By all accounts, Barclays WIM is well poised to capitalise on the growth in both its targeted HNW and UHNW segments in the region, having posted significant cost-to-income improvement, revenues per banker as well as healthy growth in assets under management in 2015.

Indeed, nine of the top ten individuals on the Forbes Middle Eastern rich list are clients of Barclays WIM. “Through our ‘Go To’ model, clients can have a dedicated investment adviser in addition to the private banker servicing their account,” the firm says of its UHNW proposition.

“We also have in place a Key Client framework which ensures clients have their portfolios reviewed regularly, with input from the banker, the investment team, and senior management leading to enhanced and bespoke solutions, pro-active advice and access to a much broader spectrum of investment ideas.”

In addition, among other services, such clients will also be provided with a dedicated Investment Management Proposition that harnesses the experience and expertise of over 130 professionals across nine strategic hubs.

On a broader level, the combined strength of Barclays WIM’s global investment teams and their subsequent output is “filtered down through regular Investment Committee meetings globally and on-the-ground in Dubai.”

All these have found valuable traction among clients, with reports highlighting service quality as a key driver behind customer satisfaction.

Cedric Lizin, Head of Middle East and North Africa and Head of Business, Japan, Barclays Wealth & Investment Management

With plans to continue expanding the frontline private banking team in the Middle East, the private wealth manager is not resting on its laurels. For all the above reasons, Barclays WIM is undoubtedly the winner of 2015’s Best Private Bank – Middle East Award.

asian private banker 37

EDITORIAL

COOLC 2015: Front focus Asian Private Banker’s inaugural Chief Operating Officers Leaders Conversation (COOLC) 2015 brought together 19 COOs from 15 private banks for a morning of informal peer sharing and networking around the most dynamic and challenging area of responsibility: technology and digital strategy.

H

eld at The Fullerton Hotel in Singapore on 17 November, the intimate, off-the-record roundtable conversation focused on four key themes plaguing the private banking technology industry. These were namely front office client engagement, big data analytics, concerns on data security and cybercrime, and overarching strategies on budget allocation and technology headcount.

From conversations and anonymous polls, it was clear that the industry’s focus for the next wave of technology investments will be centred around the front office.

COOs and heads of IT and technology at private banks debated the effectiveness of rolling out mobile and tablet applications to appease their end-clients, as well as ways to increase the productivity of relationship managers through predictive analytics that harness big and small data sitting in the warehouses of banks. Given the sensitivity of client information, cybercrime was also outlined as a key concern as COOs analysed different ways to combat it through antimoney laundering technology.

The bottomline for many, however, was projecting the return on investment (ROI) on such technology investments. With 40% of respondents revealing that the private banks’ technology budgets have increased from 6-10% over the

38 asian private banker

last two years and 33% expecting 10% ROI on their investments, private banks in Asia are clearly in an experimental stage, trying and testing out new technologies as they emerge.

TECHNOLOGY

FRONT FOCUS

Private banks in Asia will most likely devote its next technology investment to reinforcing client engagement and RM productivity, say 73% of COOs and IT heads polled at Asian Private Banker’s recent COOLC conference.

FINANCIAL FRAUD FEARS

With cybercrime becoming an increasing concern – 82% of respondents labelled this at a “serious level” – there has been a rise in demand for anti-money laundering solutions, with 64% polled saying that technology risk management platforms will best address this issue. This is particularly true in Asia, where multiple jurisdictions come into play requiring private banks to gain access to more data and documentation from their clients.

Source of data: Asian Private Banker COOLC 2015

This article first appeared in Issue 94 of Asian Private Banker’s monthly print magazine, published in the first week of December 2015.

40 asian private banker

EDITORIAL

Will consolidation pick up in 2016?

As private banks in the region face cost and revenue pressures from rising compliance requirements and the threat of online investment options – one private banking head reckons robo-advisers could gradually chip away at private wealth models that target the US$1-3 million client segment – consolidation and scale-building have been two large buzzwords in the industry.

T

he latest on the acquisition trail is Union Bancaire Privée (UBP), which is aiming to finish its Asian integration of Coutts by Q1 next year. And over the past decade there have been many other acquisitions, with diverse results.

Private banking acquisitions are about growing big quickly, because if there is one industry where organic growth benefits, this is it. Build a complete set up and it makes it easier to attract big whale bankers who bring with them billion dollar books. However, the other extreme speaks true too: when a platform is not adequate enough for competent bankers to do more for their clients in terms of product and investment variety, for example, the bank will find it difficult to grow.

In such a case, acquiring might be a better option especially now, with rising IT and compliance costs ratcheting up the pressure to deliver revenue.

As 2015 approaches its end, many private banking heads tell us that the new year will bring more mergers. We shall come back to them in a year’s time and see if they got it right. For now, let us take a look at how recent buys have panned out:

RBS – ABN AMRO

In 2007, the botched acquisition of ABN Amro launched by a consortium of RBS, Fortis and Santander bank cost the group nearly US$100 billion, and a loss of £24.1 billion (US$37 billion) for RBS in 2008 – the biggest corporate loss in the UK. The then-ABN Amro board actually favoured Barclays to win the bid, praising it for being “consistent with ABN Amro’s…

strategic vision”, even though the RBS-led consortium offered more than Barclays’ US$ 91.2 billion. Under the agreement, RBS took ABN Amro’s Asia business and wholesale businesses, while Fortis took the Dutch and Belgian operations. Banco Santander absorbed the Brazil and Italy businesses.

In 2010, ABN Amro’s international private banking business was hived off into ABN Amro Bank NV. This came after the acquisition created large debts for RBS and Fortis, depleting their reserves right before the Global Financial Crisis hit in 2007/08. With the credit well already drying up with global debt levels climbing to 269% of global GDP in Q4 2007, making the biggest bank acquisition then was, on hindsight, not exactly the wisest choice. RBS and ABN Amro were both eventually bailed out by their respective governments.

In Asia, ABN Amro Private Bank now appears unscathed from recent history; as at end-2014, it managed some US$20 billion in assets, based on Asian Private Banker’s Asia AUM (assets under management) League Table. This was a 5% growth from 2013 numbers, and up from US$17.3 billion in 2012.

OCBC – ING

The salvaging of ING’s Asia private banking business was perhaps one of the shrewdest moves made by OCBC, despite what was seen as a high bid. The latter paid 5.8% of the target’s AUM of US$16 billion, or US$1.5 billion.

A retention deal was signed with senior ING staff and the two banks merged to become the Bank of Singapore (BOS), with former ING private banking head Renato de Guzman at the helm until his retirement

in May 2015. Former OCBC private bank head Olivier Denis is still serving as global marketing head, Singapore and International Market. BOS has since grown from US$23 billion immediately after the merger to US$51 billion in 2014, when it ranked number 11 in AUM among Asian private banks, based on our League Table.

DBS – SOCIÉTÉ GÉNÉRALE (SOCGEN)

DBS’ acquisition of SocGen SA’s Asian private banking business in March 2014 is seen as a success for both parties; not only has the private banking AUM of DBS grown more than 20% following the acquisition, it is also notable that the sale helped “to have a positive impact on (SocGen) Group net income and on the Basel 3 Common Equity Tier 1 ratio”, the French lender said. Olivier Gougeon, then-CEO of SocGen’s Asian private banking operation, remains with the majority of the staff. He is now DBS Private Bank’s International head. Many have also spoke of DBS buying over a strong products team. The Singapore lender paid 1.75%, or US$220 million, of SocGen’s US$12.6 billion AUM. DBS’ private banking growth has accelerated since, with its relationship manager (RM) headcount growing to 267 at end-2014 following the merger, from 215, based on our Asia RM research numbers. Its AUM has also exceeded US$100 billion as of July this year.

JULIUS BAER – MERRILL LYNCH

In 2012, the Swiss pure play transformed itself from a boutique to a major private wealth player via the acquisition of Merrill Lynch’s

asian private banker 41

EDITORIAL

International Wealth Management Unit in 2012. Originally salvaged in 2008 by Bank of America (BOA) for what was seen as a high US$50 billion – on the day before Lehman Brothers filed for bankruptcy – BOA subsequently sold all non-US businesses to Julius Baer.

The latter paid roughly 1.2% of the target’s US$84 billion AUM, or US$880 million, and in that same year grew in Asia from just 100 RMs to 239, based on our research. Its AUM in the region also expanded from US$43 billion to US$72 billion. Julius Baer has soared from boutique to bulge bracket competitor, backed by a safe level of capital and scale, and has carved out a top ten spot on our League Table.

EFG – FALCON

Falcon Private Bank’s exit from Hong Kong showed how big a challenge it was for smaller pure plays even in favourable market conditions. In early 2014, the pure play was forced to exit a market that it had been established

in for 25 years, citing increasing costs; indeed, this year alone, private banking experts say regulatory expenses in terms of upgrading IT platforms and hiring experienced staff have risen at least 30-50%. Falcon then sold all of its assets in Hong Kong to another Swiss private bank EFG International, so that it can focus elsewhere.

EFG has reportedly completed the transfer of 80% of the assets originally held by Falcon, which totalled US$883 million. It was a positive move for EFG, with the pure play expanding its RM headcount aggressively in 2015, with a target of 115 before the year closes.

UBP – COUTTS

UBP bought the international arm of private bank Coutts from the RBS group in a bid to revive its fortunes after struggling in its home market. The EMEA portion of the integration was completed successfully last month, with the Asia leg aiming to finish by Q1 of the new

year. The deal is significant as an embodiment of survival by scale – both banks have been in legal trouble lately, with UBP making a settlement worth up to US$500 million in relation to Madoff-linked investments. Coutts meanwhile, set aside £100 million (US$151 million) in 2014 to compensate thousands of customers who may have been sold unsuitable investments, among other things.

Although Coutts held US$15 billion of assets in Asia in 2014 and had even grown its RM team by five, based on our research, it was the only private bank on our League Table, which features the top 20 banks in Asia by AUM, to see a reduction in AUM between 2013 and 2014. With the purchase of the Coutts’ international arm – that is, a complete set up of operations in Singapore, Hong Kong, Switzerland, Monaco, and the Middle East worth some CHF30 billion (US$29.7 billion) in AUM – UBP should have a stronger foothold in Asia even if it remains relatively smallish in the region.

Selected banks

Tier 1 capital adequacy ratio*

Credit ratings (Moody's, unless otherwise stated)

Asia wealth management AUM 2014 (US$ billion)**

Head of private wealth management, Asia Pacific/ Asia-based global

Tenure of head of private wealth management, Asia Pacific/ Asia-based global (years )

UBS Group

14.3%

Long Term - BBB+ Short Term - A-2 (Standard & Poor’s)

272

Kathryn Shih (to be UBS group president Asia Paci c, e ective Jan 2016)

13+

Citigroup

11.6%

Long Term - Baa1 Short Term - P-2

255

Bassam Salem

4+

Credit Suisse Group

14%

Long Term - Baa2

154

Francesco de Ferrari

3+

HSBC Holdings

11.8%

Long Term - A1 Short Term - P-1

112

Bernard Rennell

2+

Deutsche Bank

11.5%

Long Term - A3 Short Term - P-2

105

Ravi Raju

8+

J.P. Morgan Chase & Co

11.4%

Long Term - A3 Short Term- P-2

90

Andrew Cohen

5+

Julius Baer

18.4%

Long Term - A3

78.7

Thomas Meier (to be Julius Baer Wealth Management vice chairman, based in Switzerland, e ective Jan )

10+

DBS Group

12.9%

Long Term - Aa2 Short Term - P-1

73.2

Tan Su Shan

5+

Morgan Stanley

13.9%

Long Term - A3 Short Term - P-2

70

Vincent Chui

3+

BNP Paribas

10.7%

Long Term - A1 Short Term - P-1

59.3

Mignonne Cheng

5+

OCBC Group (Bank of Singapore)

14.5%

Long Term - Aa1 Short Term - P-1

51

Bahren Shaari

nearly 1

Goldman Sachs Group

12.7%

Long Term - A3 Short Term - P-2

50

Ronald Lee

4+

Standard Chartered

11.4%

Long Term - Aa3

45

Michael Benz (who has since stepped down from the role e ective ec )

1+

*As of 30 Sept 2015

**Based on Asian Private Banker Asia AUM League Table 2014

This article first appeared in Issue 94 of Asian Private Banker’s monthly print magazine, published in the first week of December 2015.

42 asian private banker

EVERY FLOW HAS A STORY

FOLLOW IT FROM CALL TO TRADE

Truly understanding the architecture of a private bank or an asset manager can be as difficult as winning an allocation from Asia’s demanding HNWIs. Join APB Mandate as we take you on a journey featuring the entire value chain of managed solutions, from the communication of a private bank’s house view, all the way to when a trade is executed (or not). Sign up now on www.apbmandate.com

LAUNCH PARTNERS:

AWARDS

Best Private Bank – Philippines International Bank of Singapore

B

ank of Singapore has gone from strength to strength since it leapt onto the regional private banking stage in recent years, fully grasping opportunities presented by one of Asia’s fastest growing economies, the Philippines.

The Southeast Asian nation grew 6% in the third quarter of the year, the third fastest growing economy in the region behind only China’s 6.9% and Vietnam’s 6.8%. It also saw household consumption grow by 6.4% in Q3 2015, while capital formation rose to 8.9%. reflecting strong public and private sector investments.

Tapping valuable synergy within the OCBC Group, Bank of Singapore has taken this bull by its horns and provided its private wealth clients in the Philippines greater access across geographies, segments and products as an international wealth manager.

This includes matching “under-served” wealthy business owners in Asia with a large SME coverage in the four core markets of Singapore, Malaysia, Indonesia and Greater China. It has also continued to match its discerning clientele with a wide ranging suite of personal and commercial services and products through its parent bank OCBC Bank, which has a regional network coverage of over 620 branches and offices including funds, loans and mutual business interests. Certainly, such connectivity has been boosted by OCBC’s acquisition of Hong Kong’s Wing Hang Bank in 2014.

Consequently, the Singapore private bank has significantly expanded its assets under management over the past 12 months in the Philippines in 2015, while keeping to a relatively lean structure.

Where the Philippines is concerned, the nation is certainly pushing ahead with growth plans; for one, it is showing keen interest in joining the Trans-Pacific Partnership (TPP) agreement as a sign of “commitment” to pursuing economic reform measures. It also hosted the prestigious Asia Pacific Economic Cooperation conference this year, and no doubt intends – like Bank of Singapore – to be a bigger player on the world stage in the years ahead.

44 asian private banker

Bahren Shaari, Chief Executive Officer, Bank of Singapore

The TPP, currently comprising 12 countries, is expected to generate an additional US$225 billion to the world economy by 2025; it is a landmark agreement that promotes well-rounded growth by marrying elements like tariff elimination or reduction with high governance standards and environmental protection.

Against such stellar backdrop, Bank of Singapore has demonstrated verve and persistence to deservedly emerge among strong competition to win – for the second year running – 2015’s Best Private Bank – Philippines International Award.

AWARDS

Best Private Bank – Philippines Domestic BDO Private Bank

A

targeted aim to expand the investment universe that allows clients to invest through direct participation, ETFs/funds or derivatives, among other things, means that BDO Private Bank is well on top of what its clients need in the Philippine market.

A pioneer in local private wealth management, BDO Private Bank has seen its assets under management soar by over-40-fold since the turn of the millennium, while similarly demonstrating excellence in other areas such as trust and succession planning initiatives.

These are built on an onshore model that serves the market’s emerging wealthy all the way through to the UHNW segment; indeed, its services have been compared to that of its bigger global counterparts.

The bank is well placed to grasp opportunities presented by one of Asia’s fastest growing economies.

In the third quarter of the year, the Philippines grew 6%, the third fastest growing economy in the region behind only China’s 6.9% and Vietnam’s 6.8%. It also saw household consumption grow by 6.4% in Q3 2015, while capital formation rose to 8.9%. reflecting strong public and private sector investments.

Going forward, the nation is showing keen interest in joining the Trans-Pacific Partnership (TPP) agreement as a sign of “commitment” to pursuing economic reform measures. It also hosted the prestigious Asia Pacific Economic Cooperation conference this year, and will no doubt be a bigger player on the world stage in the years ahead.

The TPP, currently comprising 12 countries, is expected to generate an additional US$225 billion to the world economy by 2025; it is a landmark agreement that promotes well-rounded growth by marrying elements like tariff elimination or reduction with high governance standards and environmental protection.

“Filipino high net worth and emerging wealthy individuals are seeking services comparable to offshore private banks and wealth managers; with needs more focused on their domestic wealth, personal and family objectives,” says BDO Private Bank.

Josefina Tan, President, BDO Private Bank

“A specific niche in the domestic market is underserved by the current priority banking services and the offshore private banking services. The BDO Group through BDO Private Bank sought to address the gap, and brought comparable wealth management services to this niche market.”

In what is an extremely competitively onshore Philippine private wealth management market, BDO Private Bank has demonstrated a clear winning strategy and is the deserved winner of 2015’s inaugural Best Private Bank – Philippines Domestic Award.

asian private banker 45

AWARDS

Best Private Bank – South Korea KEB Hana Bank

S

outh Korea’s economic slump persisted in 2015 with an estimated low 2.7% uptick, while 2016 kickstarted with the nation revising downward its forecast for the year.

While the KOSPI fared better than most benchmarks in the region closing out 2015, the nation’s 189,000 high net worth individuals’ wealth was not left unscathed, as evidenced by the asset pool’s estimated 11.8% shrinkage. Yet despite the pessimistic backdrop, one bank emerged triumphant.

Despite being largely occupied by a mid-year acquisition of Korea Exchange Bank (KEB), the newly-branded KEB Hana continued to expand its private banking business. In addition to new inflows from the acquisition, the bank furthered the growth of its assets under management by building on its existing status as South Korea’s leading recipient of high net worth deposits.

A continued focus on generating non-banking income also made steady progress, as clients leveraged the bank’s platform for investment solutions to both generate yield and capitalise on market opportunities headlined by heightened volatility and new risks.

46 asian private banker

Testament to the group’s persistent commitment to the private banking business, KEB Hana Bank announced its ambitions to bolster its market share in Korea via investments in a new wealth centre, just months after the completion of its merger. The centre’s emphasis will be placed on acquiring new non-Korean clients in South Korea, including high net worth individuals from China, Japan and Russia.

A firmly resolute commitment to excellence and innovation, coupled with unyielding expansion plans, mean that KEB Hana Bank is, for the third straight year in 2015, the winner of the Asian Private Banker Best Private Bank – South Korea Award.

AWARDS

Best Private Bank – Taiwan International UBS Wealth Management

I

t helps to have been established for more than three decades now when serving the interests of a US$331 billion high net worth market in Taiwan, which is expected to swell to US$533 billion by 2020.

This is certainly the case for UBS Wealth Management, whose market leading position in Taiwan’s offshore wealth management sector derived from its book of deep relationships and track record for navigating through the city’s financial, corporate, family and geopolitical risks.

The bank’s seasoned ability to leverage from its global platform aside, having the dual presence of a leading onshore unit has assured a pipeline of of relevant city-specific talent for cross-pollination, coupled with a budding raft of programmes aiming to grow organically. Its steady 12% CAGR growth in frontline staff is not at the cost of quality either. Even at its scale, more than 70% of its relationship managers have spent over a decade in the banking industry, which includes a now rapidly-growing presence in Singapore.

Against the backdrop of a year that saw more than a quarter of Taiwan’s weighted index value wiped out, the bank’s diversified portfolio of business lines, whose 2015 accolades reach into global real estate, mergers and acquisitions, public issuances and institutional asset management, ensured continued growth.

This came while the bank continued to manage the global assets of Taiwanese clients that required strategies that factored in strong geographical biases, concentrated equity holdings and intensive advisory needs. UBS Wealth Management’s deepseeded commitment to this market’s multi-geographic needs and innovative prowess to grow deservedly makes it the winner of 2015’s Asian Private Banker Best Private Bank – Taiwan International Award.

David Man, Regional Market Manager, Taiwan, UBS Wealth Management

asian private banker 47

AWARDS

Best Private Bank – Taiwan Domestic UBS Wealth Management

W

hile Taiwan’s onshore private banking market poses a substantial opportunity, especially with Taiwan’s continuing liberalisation of its financial markets as it bids to join Hong Kong and Singapore as one of Asia’s wealth management hubs, there are still regulatory barriers of entry for players wishing to offer a fully-fledged global offering.

This has not proven to be an obstacle to UBS Wealth Management, which has more than amply shown its mettle toward pioneering onshore private banking innovation in Taiwan.

In 2015, UBS first launched in Taiwan a new flagship offering, UBS Advice, a systematic advisory platform that seamlessly matches the bank’s product and market research with a client’s investor profile. It was impressive as much for its ability to merge investment and technological know-how to leverage from economies of scale, and distribute advice across its army of client advisers, as for the manner in which it was launched. Typically, a bank would make an application to regulators and then wait for approval. Such was UBS’ commitment and ambition however, that it made its application and drove discussions with Taiwan’s regulatory Financial Supervisory Commission (FSC) on not just the platform’s approval process, but also how UBS Advice could be tweaked to work better in and for Taiwan’s financial markets.

But being a pioneer in Taiwan’s onshore market is no unfamiliar feat for the bank. In 2013, UBS became the first player to launch non-trust discretionary mandates. The bank continues to roll out new discretionary offerings locally while simultaneously leveraging on ongoing loosening of constraints to access foreign markets and distribute a greater diversity of products.

The bank’s tendency to constantly be on the fringe of private banking innovations in Taiwan and ambitions to raise the local bar has helped it further acquire new assets – UBS doubled its assets under management there between 2011 and 2014 by 30% CAGR. This significantly outpaced the growth of bankers (12% CAGR in the same period), which reflected strong frontline productivity.

48 asian private banker

Dennis Chen, Head, Wealth Management, UBS Taiwan

UBS Wealth Management’s pioneering status in Taiwan, coupled with a proven track record toward quality expansion, means that it is most deservedly the winner of 2015’s Asian Private Banker Best Private Bank – Taiwan Domestic Award.

AWARDS

Best Private Bank – Thailand International Credit Suisse

D

espite Thailand’s evident US$272 billion high net worth opportunity, the segment’s tendency to retain as much as ten times of its wealth onshore compared to offshore makes unlocking such wealth no easy task.

That said, a combination of seasoned expertise in specifically servicing the segment, combined with synergistic collaborations, has helped Credit Suisse advance its standing among the nation’s more than 91,000 high net worth individuals.

While others may scramble to deliver offshore solutions from the same pool of markets and products to Thai clients, Credit Suisse has managed to successfully leverage its local licenses to deepen relationships domestically. And it helps that its investment bank is among the leading equity houses for institutional clients in the region.

The bank’s ability to offer sell-side research and capabilities in stock financing, primary and secondary financing, and the close partnership that it enjoys with the private bank, help create liquid wealth for clients.

Still, products and platforms alone are not sufficient. The bank’s high net worth drive in Thailand is spearheaded by a team of private bankers alongside investment and wealth planning specialists whose average experience exceeds a decade and 15 years respectively. The bank continues to actively hire and retain Thai talent, most notably by offering lateral opportunities to move back onshore or vice-versa and the initiative has been widely received.

The proof is indeed in the pudding. Although the wealth of Thai high net worth individuals contracted slightly by 3.7%, Credit Suisse’s asset acquisition exercise did not slow in 2015, with such assets under management growing 45% year on year.

With its veteran front office experience, and stellar collaborative track record across businesses within the bank, marking it a

Christian Senn, Market Group Head, Thailand-Vietnam, Private Banking Asia Pacific, Credit Suisse

notch ahead of offshore competitors in Thailand, Credit Suisse is deservedly the winner of the Best Private Bank – Thailand International 2015 Award.

asian private banker 49

AWARDS

Best Private Bank – Thailand Domestic Siam Commercial Bank

N

ot unlike its neighboring states, Thailand’s local benchmark suffered material losses (14%) in 2015 and its economic outlook is markedly gloomy, as seen by its central bank’s recent downwards revision of GDP growth to 3.5%. Coupled with a wave of regulatory reforms that have led to shrinking allocations to deposits and a weakening baht, the nation’s over 90,000 high net worth individuals faced significant onshore portfolio decisions throughout 2015.

In light of these, Siam Commercial Bank (SCB) Private Banking outshone the onshore competition to nimbly transition its business toward a revitalised focus on fee-based advice, as well as a deeper leveraging of its open architecture platform to tap into global markets. This subsequently resulted in significant shifts in portfolio allocations and robust growth in the bank’s overall productivity.

The century-plus-old banking group’s unmatched scale locally also allowed it to capitalise on synergies across its different business lines to further expand while still flexibly innovating.

Such initiatives range from client-focused research initiatives and technology roll-outs to international training programmes and continual development, which provides its wealth managers with ample skill and wherewithal to grow SCB Private Banking’s share of the high net worth market.

50 asian private banker

Lalitphat Toranavikrai, Head, Private Banking, Siam Commercial Bank

The unrelenting growth of its business and persistent retrospection in its client interfacing approaches, despite the hurdles of adapting to transforming regulations and navigating through turbulent markets, makes SCB Private Banking the deserved winner of the Asian Private Banker 2015 Best Private Bank – Thailand Domestic Award.

AWARDS

Best Private Bank – Trust & Advisory Services HSBC Private Bank

A

s Asian HNWIs and UHNWIs transition their businesses to the next generation, succession planning becomes an increasingly pressing issue, with particular trust structures gaining popularity. Never before have such services been as important a differentiator for private banks in Asia, as they are likely to be over the next decade.

HSBC Private Bank has distinguished itself in a fiercely competitive space with its ability to demonstrate tailored, bespoke yet structured approaches that leverages its longstanding relationship across multiple jurisdictions in Asia. The group’s legacy in the region gives it an undeniable advantage with over 70 years of experience in serving generations of families with their wealth planning needs. Indeed, some of its Hong Kong and Singapore-incorporated trust companies date back to the late 1940s, an indicator that it was almost always the prime option for clients looking to establish trusts in the region.

Continuously investing in its trust business, HSBC Private Bank has US$160 million in assets under administration and over 500 professional staff in 16 locations globally. Indeed, though the private bank has impeccable pedigree, it does not rest on its laurels.

Instead, it continues to leverage on its strong platform, breadth of capabilities and professional expertise in order to provide clients comprehensive solutions across multiple asset classes.

The bank also prides itself on being independent and autonomous through its open architecture approach and constant interaction with non-HSBC investment managers and advisors.

Most importantly, its trustee companies operate as separate legal entities which translates to decisions made independent of the banking and investment divisions.

The ability to innovate in a space that is closely bound by regulatory and tax compliance is also imperative and HSBC Private Bank

Christopher Marquis Managing Director, Global Head of Private Wealth Solutions, HSBC Private Bank

has managed to do exactly this through its close governance and on-going review of their solutions. It is this commitment, integrity and reach that makes it the worthy winner of 2015’s Best Private Bank – Trust & Advisory Services Award.

asian private banker 51

EDITORIAL

Keeping it in the family While the first goal of traditional family offices is to preserve wealth, rather than chase returns, this equation remains more balanced in Asia. This is understandable given that the bulk of family wealth here comes still from first generation principles very much in control of business decisions that contribute to this wealth. But as Asian Private Banker learns from both single and multi family offices (SFOs/MFOs) in the region, this is slowly but surely changing.

F

or many SFOs in APAC, investments in operating businesses remain key. This is contrary to more traditional family office arenas in North America or Europe, where FOs invest mostly in safer instruments such as hedge funds and have made, for generations, preservation of family wealth a focal point.

Matthew Egerton-Warburton, a corporate partner at law firm Withers Hong Kong, believes that it takes “five, ten, fifteen” years after the core business has made money, for families to think about wealth management like “setting up property structures and thinking of moving wealth into offshore trusts.”

“In Asia, you’re still dealing with the first and second generation, who still has the instinct to run a business,” says the solicitor whose firm focuses on family planning and wealth management.

“So even if they put their money in a family office to manage, they still have contacts out there that they want to keep working at… for example to do direct deals or investments with business partners or friends that are parents of their children’s friends.”

This is different from traditional offices in the US and Europe where management lies often in the “third, fourth, fifth generation… people not responsible for creating the wealth.”

Another private wealth lawyer glimpses signs of maturity. “(There has been) a drop in the number of aggressively tax-driven enquiries and perhaps an increase in demand for trusts to achieve long term succession planning and asset preservation,” notes Kevin Lee, a senior partner at Zhong Lun.

ASSET ALLOCATIONS

Single offices in Asia typically hold around 45% in illiquid assets such as private equity and real estate, our research shows. Some,

52 asian private banker

bespoke to their needs, hold more, and in more unique fashion. (see page 12).

These are not surprising observations, with property featuring highly on traditional Asian investment mindsets. Peter Churchouse, managing director of MFO Portwood Capital, notes further that many regional UHNW families here invest in overseas properties for diversification.

The FO space in Asia is at a point where UHNW FOs are increasingly acting more like institutional investors, he adds, while those managing smaller amounts of US$50-100 million in assets number “in the thousands… and growing fast.”

“A great many UHNW family offices in Hong Kong control or have large holdings in listed real estate companies and many more control private real estate vehicles,” he says.

“The big HK families that control all the large listed companies in HK will have north of 50% of their total wealth in real estate related assets. HNW families who are more focused on other businesses for their core operations, such as manufacturing, infrastructure, technology, retail, trading etc, normally still have a lot of real estate but not as much as the real estate focused listed company families.”

EDITORIAL

Churchouse sees too an emergence of mainland Chinese FOs but these, “at this point lack depth of offshore investment experience and track record.”

Portwood Capital itself puts “roughly 60-70% of our portfolio in real estate (spanning jurisdictions like the UK, US, Hong Kong and New Zealand), as it is our specialty.”

“The rest is spread between our equities and fixed-income portfolio, property funds, and a few operating businesses, such as self-storage and a financial newsletter business,” Churchouse adds.

Another MFO director, who manages more than US$500 million in assets, adds that real estate is used to hedge risks as much as “commodities such as gold.”

“On average globally, FOs with AUMs (assets under management) below US$250 million – which is most FOs in APAC – have around 25% in direct real estate investments,” he notes, declining to be named.

Meanwhile, following the market slump in the third quarter, Veco Invest Asia trimmed down a 60% equities portfolio by converting 10% of it into cash.

“Afterward we see that Chinese equities are being oversold, so we bought in H-shares,” says the MFO’s managing director Peter Lee. “Currently we allocate our asset as thus: 55% equities, 27% bonds, 4% cash, 4% commodities and 10% alternative investments: a more neutral stance.”

The office also uses structured products to hedge against volatility, he adds, but “we cap it at 10% in our discretionary portfolio.”

European bonds have been another major risk management theme for Veco, with Lee forecasting that “with low inflation and lower oil price down the road, also a better credit environment overall, (there) will (be) better upside.”

with the growth in “smallish” family offices that manage US$50100 million in AUMs. As Campden Wealth CEO Dominic Samuelson noted at a recent briefing, higher operating costs in Asia usually stem from “four causes: increased staff, new branches, new locations and increased regulatory concerns.”

Withers’ Egerton-Warburton says that regional clients anchored in the family office or business typically manage over US$400 million in assets.

Single offices in Asia typically hold around 45% in illiquid assets such as private equity and real estate

“There are studies that have shown that if you manage less than that, you might as well not set up (a family) office,” he notes.

In one aspect at least, the industry appears to be evolving toward a more stable regime.

As Zhong Lun’s Lee says, FOs are “quite interested in discussing fiscal reporting and compliance matters with us these days.”

“We always stress that trusts must be tax compliant, and we find that these days more clients are receptive to our recommendations to obtain tax advice from jurisdictions relevant to settlors, beneficiaries, protectors or underlying trust assets and income,” he notes.

MATURING, DESPITE COST PRESSURES

On the flip side, APAC family offices pay the most in operating costs, due partly to the growth of smaller sized family offices that typically seek high returns, as well as increasingly strict regulatory pressure.

FOs in the region take as average operating costs 93 basis points of AUM - higher than those in either Europe (82 bp) or Emerging Markets (58 bp), notes a recent joint UBS and Campden Wealth poll. This more aggressive stance, FO executives say, coincides This article first appeared in Issue 93 of Asian Private Banker’s monthly print magazine, published in the first week of November 2015. asian private banker 53

AWARDS

Best Private Bank – Fund Advisory Services Julius Baer

2

015 proved to be a volatile year across markets, with no asset class insulated from global risks. Uncertainty still looms, headlined by the close monitoring of the US Federal Reserve’s rate hike trajectory, China’s transition to consumption-driven economy, and a series of loosening monetary policies and economic reforms across the world’s largest economies.

The lack of market directionality signifies conditions unconducive to self-directed trading, and Asia’s high net worth individuals responded accordingly by further increasing their share of delegated assets, especially through actively managed funds. In recognition of this growing trend, and the valiant efforts of the industry’s product gatekeepers, Asian Private Banker decided to launch in 2015 the inaugural Best Private Bank – Fund Advisory Services Award. Its first-ever winner? Julius Baer.

In addition to a strong existing fund asset base, the bank’s Asia drive to grow share of assets in its preferred funds led to stellar results, as evidenced by material shifts in assets that show strengthened client trust. Julius Baer’s after-sales efforts also shows a steady lengthening of its average fund holding period an issue that typically plagues Asia’s short-termist high net worth investors. Further, for investors seeking to minimise volatility, the bank continues to adeptly leverage from its secondary fund trading platform to lock in prices even after market hours.

Comprising banking veterans with decades of experience behind them, Julius Baer’s fund advisory team frequently engages in holdings-based analyses of individual books in Asia, and tailors each subsequent communication as such. This takes place despite a now-sizable regional business, which reflects a staunch commitment to its motto: “Big enough to matter yet small enough to care.”

For these reasons and more, Julius Baer is deservedly the winner of the 2015 Best Private Bank – Fund Advisory Services Award.

54 asian private banker

John Cappetta, Head, Managed Solutions Advisory for Singapore, Julius Baer

AWARDS

Best Private Bank – Alternative Investments Deutsche Bank Wealth Management

C

onsistently challenging markets and the ability to customise investment vehicles quickly and economically, have made alternative investments – once the exclusive purview of institutional investors – a priority for all investors searching for alpha.

As a result, private banks in the region use alternative investments not only as a means to attract investor interest in a low rate environment but also to differentiate their own product suites.

The best providers of alternative investments however, are those that are capable of going beyond mere reporting and monitoring to ensuring that client interests are always protected.

Deutsche Bank Wealth Management, in particular, has distinguished itself across several criteria in 2015, be it the breadth of its alternatives platform in the number of asset classes on offer, or the depth – coverage – of this offering.

Close to €79 billion (US$85 billion) in assets and over 220 professionals on its Alternatives and Fund Solutions team make Deutsche Bank one of the world’s largest managers of Alternative Investments and one of the few to provide packaged one-stop-shop services for clients in Asia. The bank’s impeccable pedigree – it has a 40-year history as an investment fiduciary and is acknowledged as a pioneer in the alternative investments space – is of great import to clients in Asia who may not be as familiar with such assets.

One of an elite few in the region able to offer the full spectrum of alternative investments, Deutsche Bank provides liquid alternatives, illiquid alternatives, fund-linked products and solutions as well as niche retirement solutions. The liquid alternatives offering – which extends across funded and unfunded hedge funds as well as an advisory service – promises access to 150 managers and 11 key strategies. At the time of submissions for the award, it had US$15.9 billion in assets.

The illiquid alternatives platform – which offers primary, secondary and co-investment strategies across private equity, private debt, infrastructure and real estate – boasts US$13 billion in assets under management by 100 professionals across five locations.

The bank is dominant in both spheres. It is the leading provider of liquid alternative solutions and fiduciary services and has the most comprehensive offering in the industry with a full spectrum

Karim Ghannam, Head, Alternatives & Fund Solutions, Asia Pacific, Deutsche Asset Management

of access routes. It has been investing in private equity and private markets since 1991, and as a result, has developed entrenched relationships with the industry; it has over 450 private market partnerships with 250 fund managers globally.

All these are why, for two straight years now, Deutsche Bank Wealth Management is undisputedly the winner of the 2015 Asian Private Banker Best Private Bank – Alternative Investments Award.

asian private banker 55

AWARDS

Best Private Bank – Philanthropic Services UBS Wealth Management

F

or the third year running, UBS Wealth Management has won the Asian Private Banker’s Best Private Bank – Philanthropic Services Award. The accolade recognises UBS’ unrivaled commitment to helping clients realise their philanthropic goals through its global team of philanthropic experts, innovative philanthropic solutions and thought leadership.

Philanthropy has been growing globally over recent years, and an increasing number of high net worth individuals in Asia are seeking guidance to help them go beyond the boundaries of blank check charity. Herein lies an opportunity for private banks to step up.

And that is why, in 2013, UBS established the UBS Optimus Foundation in Hong Kong. A growing number of UBS clients share the Foundation’s vision of a world where all children are healthy, safe, and educated. The UBS Optimus Foundation connects clients with programs that are otherwise unavailable to them, ones that can change the lives of children in meaningful, lasting ways and give them the chance to realize their full potential.

Since its inception in 1999, the Foundation has funded hundreds of projects around the world benefiting millions of children, with more than US$30 million in donations received in Hong Kong alone. And to meet growing client demand the Foundation also plans to widen its footprint in Asia with the launch of a Singapore branch.

In addition, UBS Wealth Management continues to push the envelope developing products that provide measurable and positive social and environmental benefits. Examples include the development of impact investing – a nascent space in Asia – and sustainable investing. It recently announced a partnership with a bio venture investment firm to support the development of cancer cures and promote academic research and access to cancer care in developing countries. In November 2014, the bank launched a values-based investing desk in Hong Kong, providing its clients with a portfolio sustainability analysis service and helping them to align their investments with their personal values, thereby generating financial returns and positive societal impact.

In July 2015, it launched a philanthropy forum in Singapore to help philanthropists and patriarchs create a family legacy through

56 asian private banker

Christina Tung, Head, Philanthropy & Values-based Investing, Asia Pacific, UBS Wealth Management

innovative philanthropy practices. This was attended by some 200 participants including social entrepreneurs and patriarchs of top business families.

UBS Wealth Management is deservedly 2015’s Best Private Bank – Philanthropic Services winner and it is well placed to meet growing and evolving client needs in this increasingly popular sphere.

AWARDS

Best Private Bank – External Asset Managers’ Choice Julius Baer

S

tability and sincerity mark Julius Baer’s sterling service to external asset managers (EAMs), which is why this particular industry has voted the pure play as their private bank of choice for the fourth year running.

As with previous years, EAMs from Hong Kong and Singapore picked Julius Baer as their number one private banking partner based on the dedicated team’s quality of service. This year, many added that stability has played a big part as well.

“In an industry that is increasingly seeing rounds and rounds of ‘musical chairs’, it is refreshing that Julius Baer’s EAM team has largely stayed put, which enables them to further cement their ties with clients,” the founder of a Hong Kong-based EAM told Asian Private Banker.

“While it is true that EAMs reach out to different private banks for different needs, I think of Julius Baer first when a need arises, even though it might not be their strongest suite. This is no more than a reflection of their service standards.”

The fact that the pure play is one of the few private banks to have its EAM business represented on its global board is another telling feather in its cap.

In an industry that manages more than US$30 billion in assets – and pegged to double in the next five years – EAMs are gaining critical mass in Asia. Hong Kong’s EAM space sits on US$15.5 billion in assets under management and touted to grow to US$32 billion in 2020, according to the latest Julius Baer report on the subject. The city’s first EAM association was also set up in October 2015.

Singapore meanwhile, is home to an EAM market that manages some US$16.9 billion in assets, which is expected to grow to US$34 billion in 2020. Its independent association launched in March 2011. Incidentally, and unsurprisingly, the report is regarded as the EAM fraternity’s benchmark review, and studied by clients, competitors and common journalists alike.

As the EAM market in Asia continues to evolve in size and sophistication, Julius Baer has proven itself more than capable of staying on top. It is without a doubt the industry’s choice for the Best Private Bank – External Asset Managers’ Choice Award in 2015.

David Reymond, Head, Intermediaries, Northern, Eastern Europe & Asia Pacific, Julius Baer

Pamela Phua, Head, Intermediaries, North Asia, Julius Baer

asian private banker 57

AWARDS

Best Private Bank – Discretionary Portfolio Services UBS Wealth Management

A

n industry-wide push to grow discretionary assets, coupled with a global third quarter market slump, meant that private banks faced an uphill battle to acquire delegated assets in Asia last year. Yet despite the headwinds, UBS proved itself a cut above the rest in this segment as it continued to innovate its product offering, enhance client interfacing and, consequently, grow its discretionary asset base.

Leveraging from a 900-strong unit of CIO investment professionals globally, UBS’ capabilities in generating capital market assumptions across asset classes; develop, maintain and enhance investment strategies; and tactically trade markets are matched by few other private banks.

And its commitment to Asia is no less than its global one. Next to a team of no less than 85 specialists focusing on Managed Solutions across Hong Kong and Singapore, the bank has a slew of offerings - in addition to its CIO-aligned mandates - that concisely targets the region’s more than 3.3 million high net worth individuals’ needs. This strength was no less reflected in the fact that it successfully launched an ultra high net worth discretionary offering in 2015 called UIS – Ultra Investment Solutions, with a US$50 million minimum ticket order.

But as many observe, stellar products alone in Asia does not a market make. Through its “transformation through communication” mandate, UBS in the region is making a concerted effort to continuously close the product knowledge gap, intuitively illustrate behaviouralpitfalls and closely guide its clients and private bankers over the full course of investing.

The bank has delivered a large library of videos advising relationship managers on how to handle difficult client conversations; launched seminars attended by an audience that rivals the full headcount of some of its leading rivals; and maintains frequent and timely communication to give investors peace of mind with regard to discretionary portfolios.

58 asian private banker

Patrick Grossholz, Head, Investment Management, UBS Wealth Management

In a region where wealth managers are striving to lead as the discretionary manager of choice – against low penetration rates – UBS once more distinguished itself through its commitment to delivering solutions and services. Asian Private Banker is proud to name UBS Wealth Management, for the second year running, the winner of the Best Private Bank – Discretionary Portfolio Services 2015 Award.

AWARDS

Best Private Bank – UHNW Services Goldman Sachs

T

he winner of the award for Best Private Bank – UHNW Services for two consecutive years, Goldman Sachs, has distinguished itself by its singular focus: Goldman Sachs’ Private Wealth Management business targets only UHNW individuals, which the firm defines as individuals with over US$100 million in net worth. Banking UHNW individuals is not just the cornerstone of its business, it is in fact this private bank’s entire business, with every aspect of its platform designed to fulfill the needs of this segment.

The source of wealth in Asia, especially in the UHNW segment, lends itself naturally to transactions built around monetisation, structuring, access to private deals and best-in-class transaction pricing, among other considerations.

In each of these areas, Goldman Sachs has dedicated resources and developed expertise. For example, a global team of transactional specialists within the wealth management business ensures that the firm can deliver maximum liquidity to clients across all major global trading markets in equities, fixed income, currencies and commodities. Access – to private deals, niche products or other alpha-linked product – is ensured through real and robust cross-divisional collaboration. Possibly, some of this collaboration is facilitated through Ron Lee, the head of the Asia business – Lee was previously head of the firm’s Investment Banking Division in Hong Kong. But the lion’s share comes from what can only be described as an institutional DNA structured around “bringing the entire firm to clients.”

While size is neither the sole nor most important criteria in adjudging this award, 2015 has been a watershed year for the firm’s footprint in Asia. The firm currently has the most number of bankers since the inception of the business, and assets under management have virtually doubled from 2010. There is also the longevity of these revenues to consider – the business mix at the bank has evolved with the fee-based and brokerage portions

Ronald Lee, Head, Private Wealth Management, Asia Pacific, Goldman Sachs

making more equal contributions, compared with a predominantly brokerage-driven model a few years ago.

Moreover, the firm has demonstrated a dedication to diversifying both client portfolios and its own revenue streams – crucial for the survival of both.

For all of these reasons, Goldman Sachs is most deserving of the 2015 Award for Best Private Bank – UHNW Services.

asian private banker 59

AWARDS

Best Private Bank – Digital Innovations Credit Suisse

T

he digitalisation dialogue is very much underway at private banks in Asia, as budgets allocated to technology are pegged to rise at a steady pace, in line with incremental increases over the last two years.

As regulation, technology disruption and client empowerment continue to drive transformation of global private banks’ operating models, Credit Suisse Private Banking has proven to be agile, mobile and relevant in its approach. It is little wonder then that it has taken the award for Best Private Bank – Digital Innovations.

In March 2015, the Swiss lender rolled out its digital private banking initiative, including a digital private banking app for mobile phones and tablet devices that allows clients to oversee portfolio valuations and performances, curate a watchlist to help monitor their selected investment, and access market information sourced by Credit Suisse and third-party providers. It also lets clients trade securities including equities, ETFs, and REITs and spot foreign exchange – a concept still generally novel to private banks in the region, even if the pace of such developments is rising exponentially.

Clients and staff have embraced the new tools, particularly valuing the part technology can play in leading to a richer and more productive dialogue between the client and his or her Credit Suisse team, better decisions for the client and a stronger service relationship between the client and the bank.

The core strategic commitment to digital banking is backed by an “innovation hub” in Singapore, where Credit Suisse houses around 200 in-house and external vendors focused on digitalised solutions.

What also sets this bank apart is its ability to effectively combat rising integration, implementation and compliance costs with the use of technology solutions from both internal and external sources.

Gone are the days when private banks rely on their own legacy systems and Credit Suisse Private Banking’s early recognition of this delicate balance between buying and building technology solutions has enabled it to stay one step ahead of the competition.

Credit Suisse Private Banking clearly set out a roadmap in 2015 for its technological investments, creating a multi-channel platform that allows the bank to push the boundaries of innovation in how insight is delivered to clients, empowering the client to act, and enriching the dialogue with clients, while remaining user-friendly

60 asian private banker

Francois Monnet, Head, Greater China, Private Banking Asia Pacific, Credit Suisse; Sponsor of the Digital Private Banking project in Asia

and personalised. In other words, it has proven itself to be the deserving winner of 2015’s Award for Best Private Bank – Digital Innovations.

AWARDS

Best Private Bank – Family Office Services Credit Suisse

N

ot quite institutional clients or ultra high net worth, the family office clientele demand very specific skills from their private banks. Often, these clients are still in the process of articulating their raison d’etre, and the alliance between family offices and their service providers evolves with it, recasting what family office clients value in the service of a private bank almost on an annual basis. While some family offices rank their providers by execution capability and pricing flexibility, others value access to private deals and sophisticated structuring capability.

Whichever the case, it is every bank’s ambition to be elevated from being a service provider to the family office, to being its trusted advisers and most influential gatekeepers. One bank has made this transition and very successfully cemented its position as the adviser of choice to Asia’s most sophisticated as well as new emerging family offices. Credit Suisse has proven itself as the private bank of choice for Asia’s wealthiest families.

The experience of its family office team is the key differentiator of the bank’s family office platform. Bernard Fung, the bank’s Head of Family Office Services and Philanthropy Advisory, Asia Pacific, spent several years as the Chief Executive of Innotech Advisors, the single family office and investment vehicle of Lord Sainsbury of Turville. Having been a client himself, Fung is able to tailor the bank’s family office service offering so that it is both relevant to, and adds value for, its clients.

The resultant kinship with clients has resulted in a rare alignment of goals between principal and provider, with the bank even acting as a mentor to several single family offices.

Transcending the industry practice of attracting and retaining family office clients by offering competitive prices on execution, Credit Suisse has taken a thoughtful approach to this pioneering role, and contributed to the family office ecosystem consistently and meaningfully.

Over the years, this contribution has taken varied forms. From its much lauded Family Office Hub in Singapore, to hosting innumerable industry fora that foster dialogue rather than deals, to investing in building a platform and capabilities well before they are needed by the industry.

Bernard Fung, Head, Family Office Services and Philanthropy Advisory Asia Pacific, Credit Suisse

For all these and more, Credit Suisse, which has now won this accolade for four of the five years since the awards were inaugurated, is the deserved winner of the Asian Private Banker 2015 Best Private Bank – Family Office Services Award.

asian private banker 61

EDITORIAL

Cracking the compliance conundrum Striking a balance between keeping pace with an evolving regulatory landscape and rising costs borne from staying compliant is increasingly becoming the norm. With many banks facing multi-million dollar fines for non-compliance, they are quickly realising the need to respond fast and in a more strategic manner.

L

aws and regulatory regimes are constantly updated or enforced, keeping private banks on their toes. The next immediate regulatory event to take note of is the extended deadline for Model 2 IGA jurisdictions, like Hong Kong, to file non-consenting US accounts under FATCA. On a daily basis, it has become part of corporate life such as lengthier onboarding procedures.

“The whole infrastructure costs for financial institutions are going up,” says Nigel Rivers, global head of private clients, TMF Group, a firm that focuses on providing financial and administrative services to high net worth individuals including management of costs, compliance and risk.

“We know that it’s more complicated and it takes much longer and the costs to go up. If you look at opening an account with a financial institution, you used to be able to do it in a few weeks, now you’re lucky to be able to do it in three months.”

A recent On-the-Spot poll on this publication’s website showed about a third of respondents, or 34%, spend 40% or more of their time on compliance-related issues.

Some 41% put this at 20-40%, and 25% indicated 20% or less.

As a result, insiders tell us, banks are turning away up to 20% of new business, not least because fines are now a very real thing, unlike, as one veteran banker recalls, a “slapMichael Blake, Coutts on-the-wrist gesture that shows more than anything else that someone is simply on the case.”

For example, HSBC Global Private Bank is under intense scrutiny after reports surfaced claiming that it helped clients dodge taxes and laundered money for wealth individuals, including 984 Hong Kong and 246 mainland Chinese clients in February 2015.

HSBC said it made nearly US$3 billion in provisions for legal proceedings and regulatory matters in the first half of 2015, from US$1.8 billion the same period a year ago.

The Hong Kong Monetary Authority adds that it has taken measures to ensure that banks have effective anti-money launder-

ing (AML) and counter-terrorist financing (CTF) controls. These include “increased number of on-site examinations and deskbased reviews; increased number of AML seminars to compliance officers and money laundering reporting officers; high-level seminars for banks’ senior management to foster a stronger AML/ CTF culture; and circulars on topical AML/CTF issues and guidance papers.”

These follow the enactment of the city’s Anti-money Laundering and Counter-Terrorist Financing (Financial Institutions) Ordinance (AMLO) in 2012.

“In the period since the commencement of the AMLO, the range of supervisory measures taken following our on-site examinations has included issuing examination reports with directions for remedial actions and the use of powers under the Banking Ordinance to appoint an external auditor to conduct examinations of bank’s AML/CTF controls,” HKMA tells Asian Private Banker.

MEASURES

The obvious thing is to hire more compliance professionals.

“With fierce competition to hire experienced compliance professionals in Asia, many financial institutions are seeking expertise from consultancy services to better respond to regulatory Ron Lee, Goldman Sachs changes across jurisdictions,” says Michael Blake, CEO of Coutts’ international private banking operations.

Ron Lee, head of Goldman Sachs Private Wealth Management in Asia Pacific, agrees, citing that the private bank’s compliance headcount has increased over the past year.

Indeed, the ratio of compliance officers to relationship managers has changed from 1:10 to 1:5, say insiders. While private banks focussed on hiring compliance generalists in 2014, they are now looking into more niche areas such as financial crime, sanction audits and anti-money laundering, says one Hong Kongbased headhunter.

This article first appeared in Issue 91 of Asian Private Banker’s monthly print magazine, published in the first week of September 2015.

62 asian private banker

FIRST MOVERS WILL ALWAYS CHANGE THE WORLD. BUT WHICH ONE? >> Discover our approach at juliusbaer.com/visionary-thinking

Julius Baer is the leading Swiss private banking group and present in some 50 locations worldwide. From Dubai, Frankfurt, Geneva, Guernsey, Hong Kong, London, Lugano, Monaco, Montevideo, Moscow, Mumbai, Nassau, Singapore to Zurich (head office).

SINCE 2011 JULIUS BAER HAS BEEN REPEATEDLY HONOURED WITH AWARDS FROM “ASIAN PRIVATE BANKER”.