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Bank of Singapore urging leveraged clients to sell in rally
[SINGAPORE] The head of OCBC's private banking arm said the coronavirus-fuelled crisis has yet to peak and leveraged clients should take advantage of market rallies to offload some investments.
"You use the rebound to sell some of the items, some of the securities that you do not want to hold. That's the best time to do it," Bank of Singapore chief executive officer (CEO) Bahren Shaari said in a Bloomberg Television interview Wednesday.
"We are only beginning to see the first part of the crisis," he said. "Many countries are still not well prepared, still do not have a clear plan of how to deal with it."
Stocks rallied in Asia Wednesday, following the best session for US equities in almost a dozen years as Congress negotiates an emergency-spending bill to combat the economic fallout from the pandemic. More than US$20 trillion has been lost from equity markets since the peak in January, leaving investors wondering whether the rebound will last.
Mr Bahren said customers have been reducing their leverage "as much as possible" over the past few weeks, though they do need to remain invested. While "a very select few clients" are highly leveraged traders, the majority "are not in that situation," he added.
"Unfortunately some clients have to liquidate at a very distressed price," Mr Bahren said. "So what we are doing is informing clients is to bring as much collateral as possible now to make sure we are able to support their position."
Bank of Singapore was ranked the sixth-largest private bank in Asia excluding China in terms of asset size by the Asian Private Banker in 2018. Its assets under management climbed 15 per cent last year to US$117 billion as of December, according to OCBC's latest earnings presentation.
Asked whether the bank will add more private bankers this year, Mr Bahren said hiring is not a priority for now.
"Our first priority is to protect jobs," he said. "If there are opportunities for us to look at good hires, we still look at that. But I think you have to also bear in mind that in this market environment new bankers will have difficulties in bringing clients over."
The bank has about 400 relationship managers, little changed from a year ago, the CEO said. While it has added bankers, mostly in its North Asia team, there have been departures including through natural attrition, he added.
One key area for expansion is a segment serving global investors and family offices, which currently accounts for about 30 per cent of assets under management, Mr Bahren said. The team led by Lim Li Li targets clients with a net worth of at least US$250 million, helping them set up family offices and invest in assets including real estate, venture-capital funds and startups, he said.
The bank seeks to double the size of assets from this segment over time, he said, without providing a specific target.