DBS, OCBC, UOB to gain from higher AUM, fees amid booming family office scene 

SINGAPORE’S strong family office sector will likely continue to boost the wealth management businesses of the local banking trio, analysts said.

More family offices have tended to be beneficial for the onshore deposit business and liquidity of the banks, said Jayden Vantarakis, head of Asean research at Macquarie Capital.

Tareck Horchani, head of prime dealing at Maybank Securities, also expects the inflow of family office wealth to boost assets under management (AUM) for local lenders.

Enhanced due diligence requirements will likely attract more sophisticated families, which should mean higher-quality assets and premium services – further increasing wealth management fees, he said.

Horchani also expects banks with expertise in structuring philanthropic contributions to also benefit from increased spending in these areas.

The lenders can also develop new ESG and climate-related investment products, to capitalise on the trend of family offices channelling funds into sustainable projects, he said.

Meanwhile, Horchani noted that recent tax reforms in the UK – including the abolition of the resident non-domiciled tax regime and higher capital gains tax – have prompted an exodus of wealthy individuals.

Given that Singapore is poised to capture a portion of this outflow, the arrival of these individuals will create opportunities for banks to manage both personal and corporate wealth, providing a significant boost to their revenue streams, he said.

In 2024, the number of single family offices in Singapore rose 43 per cent on year to exceed 2,000.

This was even as the city-state implemented more vigorous anti-money laundering checks and more restrictive criteria for tax breaks.

“Rather, a higher bar to qualify for tax incentives could attract more mature and professional family offices, bringing in more assets under management and lifting fee income (for the local banks),” said Bloomberg Intelligence analysts Sarah Jane Mahmud and Alison Hor in a recent note.

Even if the growth pace were to slow by 25 per cent, the analysts project Singapore could have 600 to 700 more family offices set up shop in 2025 – with the total number on track to break 3,000 by 2026.

More tax incentives?

Market observers said Singapore’s upcoming Budget on Feb 18 may introduce further tax incentives for philanthropy and sustainability-related investments. This could, in turn, attract more wealthy individuals to move their assets to Singapore.

“A fresh wave of new offices may come in Q1 on potential tax changes in Singapore’s Feb 18 Budget, and as a shift in the UK’s tax regime takes aim at non-citizen millionaires,” Mahmud and Hor said.

It is “highly plausible” that the upcoming Singapore budget will feature enhanced tax exemptions or deductions for philanthropy and sustainability-related projects, said Ong Sim Ho, director for tax and private client services at Drew & Napier.

Ong noted that in the past two years, Singapore has implemented a series of targeted adjustments to encourage family offices to play a more active role in philanthropic and environmental causes.

Some of these schemes include the Philanthropy Tax Incentive Scheme for Family Offices (PTIS) and the Overseas Humanitarian Assistance Tax Deduction Scheme (OHAS), which encourage family offices to make philanthropic and charitable donations.

“Hopefully, the PTIS can be expanded in scope such that more applicants besides family offices may be able to partake in it,” said Edmund Leow, senior partner at Dentons Rodyk’s corporate practice group.

Leow, who also leads the firm’s Trust, Estates and Wealth Preservation practice, noted that family offices and fund managers have been asking for two things in the list of designated investments: more clarity on the existing list; and whether the existing list can be expanded.

“Further tax incentives, I must say, might be unlikely but I would not be surprised if existing tax incentives are tweaked,” he added.