Time for Singapore premium to outshine Swiss finish

WEALTH managers and private bankers expect a step-up in client requests and fund movements this year, as the strength of Singapore’s financial system earns a premium amid widespread banking industry turmoil.

The collapse of major Swiss private bank Credit Suisse, in particular, has shaken many wealthy investors. Although Swiss regulators provided support to stabilise the Swiss banking sector and engineered a takeover of Credit Suisse by rival UBS, investors remain watchful of repercussions. Some experts said the collapse had affected Switzerland’s reputation as a safe place to invest.

Meanwhile, Citibank Singapore chief executive officer Brendan Carney noted that Singapore’s political stability, transparent government policies and pro-business environment remain intact.

UOB’s head of private wealth Chew Mun Yew added: “Since 2019, we believe this Singapore premium has taken on added significance – just like there used to be a Swiss finish.”

Chew expects banks in Singapore to continue to see a step-up in activity. UOB has seen increased client interest all through 2022, with an especially healthy pickup in net new money inflow since January this year, he said.

Manish Tibrewal, co-founder of wealth management platform and multi-family office Farro Capital, said he has seen clients move their assets to Singaporean banks, or the Singaporean branches of US and European banks, in the wake of the collapse.

Tibrewal said: “Singapore is cementing its place as a well-regulated jurisdiction amid the recent crisis of confidence in Western banks.”

But Leon Ong, a partner of the financial services advisory at KPMG in Singapore, said there may also have been outflows in wealth, given that the two Swiss banks were among the largest wealth management and private banks in Singapore and Asia-Pacific.

The average Asian investor also has an inclination to diversify investments with a number of different banks, Ong said.

Ong nonetheless flagged opportunities for wealth managers and private banks to win new clients or additional funds. He expects increased activity in sales and marketing in the near term, as relationship managers seek to get as many new clients as possible.

Asian wealth

Banks polled by The Business Times said they are setting their sights on serving Asia’s growing high-net-worth population.

Olivier Denis, global market head for Singapore, Malaysia and international at Bank of Singapore, said one of the private bank’s strategic business focuses is to capture rising Asian wealth on the back of the increasing wealth flows it has been seeing in this region.

He noted that Asia is expected to be at the forefront of the world’s wealth growth.

Kerrine Koh, head of South-east Asia at global investment manager Hamilton Lane, also noted that Singapore remains a gateway to the rest of the Asia-Pacific region.

Koh said: “We see (Singapore) as the centre of an ecosystem; deals are being done here, there is vibrancy, with more investors and wealth being accessible out of Singapore for the region.”

Meanwhile, DBS Private Bank group head Joseph Poon said client interest in banking with DBS has intensified amid recent uncertainty.

Poon noted an increase in interest in the areas of succession planning and wealth preservation, adding: “The unique strength of the Singapore Inc proposition – a cocktail of attributes including a strong force of law, political and economic stability, and established financial centre, among others – continues to appeal to families worldwide.”

But amid the recent turmoil, clients are shifting their investment perspective from “return on capital” towards “return of capital”, said DBS’ Poon.

This means funds need to be well diversified across quality assets in both equities and fixed income, and looked after by a bank that has a strong balance sheet and solid credit ratings.

Poon observed growing interest in high quality fixed income, and said his clients are no longer quite as keen on businesses promising high rates of future growth without demonstrating consistent track records of profitability, cash flow and margins.

Poon added that the demand for alternative investments – such as private equity, gold and hedge funds – has also seen some growth, given a greater need for diversification and for returns that are less correlated to the broader market.

Hamilton Lane’s Koh also sees private markets outperforming public markets, both in the short and long term.

Koh expects a “great opportunity to serve this expanding investor base” in Singapore, given that many investors here have zero to very low allocations to private assets.