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What's a billion here there?
DESPITE torrid financial markets which slashed billions off the net worth of Asia's wealthy, private banks continue to find rich pickings in the continent. The Business Times asked the major players how they did amid these roiling conditions, and the way forward. Here are some of the answers.
The participants are Tan Su Shan, group head of consumer banking and wealth management, DBS Bank; Bahren Shaari, chief executive, Bank of Singapore (BOS); Ong Yeng Fang, head of UOB Private Bank; Edmund Koh, head of UBS Wealth Management Asia-Pacific; Francesco de Ferrari, head of private banking Asia-Pacific, Credit Suisse; Ravi Raju, head of Deutsche Bank Wealth Management Asia-Pacific; Alvin Lee, managing director, Maybank Private Wealth; and Hans Hanegraaf, chief executive, ABN Amro Private Banking Asia and Middle East.
BT: How did your bank perform in 2015?
Tan Su Shan: As of December 2015, DBS' high net worth assets under management or AUM (clients with investable assets of S$1.5 million and above) and AUMs for all wealth customers were at S$97 billion and S$146 billion respectively. In December 2014, high net worth AUM was S$92 billion, and total wealth AUM was S$134 billion.
Bahren Shaari: BOS registered revenue growth of 14 per cent on the back of a 7 per cent increase in AUM to US$55 billion. We continued to attract healthy inflow of fresh funds equivalent to triple the amount from a year ago. Total staff strength increased by 4 per cent to almost 1,400.
Ong Yeng Fang: UOB's wealth management AUM, which includes that of the private bank business, grew by 77 per cent to S$85 billion between 2010 and 2015. It registered income growth of 16 per cent in 2015. Within that, the high net worth segment grew by 25 per cent. UOB Private Bank doubled its number of senior client advisers from 50 in 2014 to 100 today and total private wealth employees have grown to around 300.
Edmund Koh: Our AUM for Wealth Management Asia-Pacific was 272 billion Swiss francs (S$385 billion) as of year-end 2015, up from 269 billion Swiss francs from a year earlier. In 2015, UBS Wealth Management further solidified our leading position in the Asia-Pacific and in ultra high net worth globally.
Francesco de Ferrari: Our private banking business in Asia recorded 14 per cent higher in revenues of 1.2 billion Swiss francs and grew pre-tax income by 11 per cent. We also generated historical high net new assets of 17.8 billion Swiss francs including three billion Swiss francs in the fourth quarter, representing a 12 per cent net new asset growth. The number of relationship managers rose to 590 from 520. AUM reached 150.4 billion Swiss francs at the end of the fourth quarter, 11.3 billion Swiss francs higher than the previous quarter.
Ravi Raju: Deutsche Asset and Wealth Management Asia-Pacific regional invested assets at end-2015 rose to 93 billion euros (S$145 billion) versus 86 billion euros a year ago. Net new money full year 2015 was three billion euros.
Alvin Lee: AUM grew more than 35 per cent and revenue 50 per cent albeit from a low base given that this is only our second full year of operation. 2015 saw us increasing front-office staff with an increase of 10 relationship managers.
Hans Hanegraaf: We are currently ranked first in the Netherlands, third in the eurozone and seventh in Europe. We are also ranked among the top 20 in Asia.
BT: Amid the harsh market conditions, was it a good time to be in the private banking business in Asia?
Mr Shaari: Even in volatile market conditions, clients will continue to invest and this is when their private bankers play an important role - to help clients find relevant investment opportunities and manage risks. In the midst of uncertainty and challenges, this was also the time for us to stay grounded and not add to our clients' fears.
Ms Tan: Asia is still the most attractive private banking market, with wealth still being created. Even with China's slower growth, Asia now puts a Germany on the map every 3.5 years. The time it takes to do so shrinks every year. Over the next 25 years, Asia will add three eurozones to the global economy. In 2039, it will be creating a Germany every seven months. Size does matter, with scale being an increasingly important factor in running a sustainable private banking business in Asia and we remain committed to being one of the largest wealth managers in the region.
Mr Hanegraaf: We have a solid footprint in Singapore, Hong Kong and Dubai, and we intend to grow our presence further. We aim to become a leading private bank in Asia, and match the group's position as the third-largest private bank in the eurozone.
BT: The rich are often said to be different from the rest of us - so, are they worried about economic slowdowns and bear stock markets, or do they focus on non-financial investment issues?
Mr Koh: Based on UBS's experience in collaborating with Asia's wealthiest families for over 50 years, these families would usually be focused on personal investment, business and family needs.
In this part of the world, Asia's billionaires make up 36 per cent of self-made billionaire wealth, overtaking Europe for the first time and is second only to the US, according to our global UBS billionaires study. Typically, most of our Asia-Pacific billionaires and ultra high net worth individuals are first- or secondgeneration business owners. As our billionaire families grow in size and as complexities within the family structures increase, there has been an increased focus by wealthy families in the Asia-Pacific on creating a family legacy over the generations.
Ms Tan: Client reaction to current market turmoil is mixed. Some are clearly worried - these clients turn to their trusted wealth adviser to provide wealth protection and risk diversification advice. Others see it as an opportunity as the economy transitions from export-driven to consumption-driven.
Mr Shaari: Just like everyone else, the rich worry about economic slowdowns and bear markets. However, successful investors are able to keep things in perspective and avoid overreaction to the market's vagaries. They never go beyond the limit of a certain amount of money they can afford to lose, in a scenario where markets turn very negative.
Mr Lee: Conventional wisdom says that it is easier to make trading profits in bull markets but financial markets are so developed that clients can generate profit even in bear markets too.
Mr Raju: The rich are no different to "the rest of us". In Asia, most of the wealth is first generation, they are business owners and entrepreneurs, facing the constant struggle through business cycles to build their businesses, often taking great financial and personal risks in the process. As business owners while this client segment is exposed to the daily mark to market of financial market fluctuations on their liquid wealth, they are also constantly engaged with the challenges of managing and growing their businesses and other non-financial assets such as residential and commercial real estate.
BT: What's the outlook for 2016?
Mr Shaari: We had been expecting 2016 to be a volatile year with broadly flat markets and, if anything, we see the recent market declines as an opportunity to increase exposure. In fact, BOS's asset allocation team has just turned positive on equities as indiscriminate selling is revealing some attractive valuations.
Ms Ong: Investors should maintain a cash buffer to take advantage of market declines. Buy on weakness and sell on strength. Conversely, avoid chasing rallies and selling into panic.
For sophisticated investors, options strategies such as covered calls and risk reversals may be considered. In the fixed income space, we see potential in US dollar-denominated debt from Asia.
In summary, investors can achieve decent returns in 2016, by planning ahead and moderating their emotions with the aid of trusted financial advice.
Mr Koh: In 2016, we continue to expect volatile markets with underlying macroeconomic challenges, geopolitical risks and low interest rates. The current market dislocation would present new investment opportunities and this is where UBS's CIO Houseview is a key differentiator as we provide our clients access to a global investment engine of over 900 of the brightest economists and skilled fund managers in the world.
Ms Tan: We had urged our clients to "prepare for the bear" and regrettably, risk asset markets have been every bit as bad as we had feared. There will be rebounds as markets have become oversold from the bearishness of January and February. Our strategy had been to trade nimbly both short and long equities. We had been urging clients to buy yen and euro with a 12-month view. We had also been urging clients to buy gold.
Supplement editor: Siow Li Sen
Sub-editor: Naveen Verghese
Cover design: Hyrie Rahmat
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