OCBC taps Indonesian wealth with new onshore private banking services

Singapore

OCBC looks to entrench itself deeper in the wealth management business in this region by tapping into the burgeoning wealth in Indonesia that is held onshore.

The move also follows a headline tax amnesty programme in Indonesia that led to a total repatriation of 84.5 trillion rupiah (S$8.8 billion) from Singapore to Indonesia this year.

OCBC on Monday launched its onshore private banking in Indonesia through its subsidiary OCBC NISP, of which OCBC owns 85 per cent. Singapore's second-largest bank said OCBC NISP had clinched approval to establish the private banking unit that would manage the wealth of Indonesians with assets under management (AUM) of more than US$1 million. Capgemini's 2016 report estimates there to be at least 48,000 high net worth individuals with a total wealth of US$161 billion in Indonesia.

OCBC NISP has hired an industry veteran, formerly with a global private bank, to lead the team. This individual has more than 20 years of experience in advising high net worth private clients, family offices and business owners in South-east Asia, the bank said.

The launch team includes four other private bankers who have an average of 18 years of onshore and offshore private banking experience. The team is expected to double in size by the end of the year.

In a media statement, OCBC chief executive officer Samuel Tsien said OCBC NISP has gone deeper into the retail banking customer segment in Indonesia, while growing steadily its large corporates segment.

"Many of the business owners, whether they are of the SMEs or the larger companies, are our potential private banking clients. This new business enables us to broaden our client coverage of high net worth individuals," said Mr Tsien. "We are confident that OCBC NISP Private Banking will be a strong addition to our already solid wealth management business."

In September 2016, OCBC NISP was appointed as a gateway bank authorised to receive and manage repatriated funds under Indonesia's recent tax amnesty programme.

Figures reported by Indonesia's state news agency suggested that funds from Singapore repatriated by Indonesians accounted for more than half of the total amount of funds that returned to Indonesia.

In the wake of the tax amnesty programme, domestic Indonesian banks now have "many new opportunities in the high net worth segment", said Parwati Surjaudaja, president director of OCBC NISP.

Indonesia's contribution to OCBC's group earnings has been growing over the past few years. In 2016, the market accounted for 5 per cent of the group's profit before tax compared to 2 per cent in 2010. OCBC NISP has also been outperforming the Indonesian banking industry in both pre-tax profit and loans growth.