The deputy chief executive officer of the Swiss private bank BSI Asia, Esther Heer, got an early Christmas present a few weeks ago from Hong Kong banking authorities: They granted BSI a branch license on Dec. 7, several months earlier than she expected. The license allows BSI to provide full-fledged private banking services in Hong Kong and to proceed with expansion plans to boost Hong Kong–based staff to 120 from the current 70 in the coming months.
“Here at BSI we are very lucky the management team has been working for the past 15 years to set up a successful business in Asia,” says Heer, who also oversees a team that looks after North Asia from the bank’s offices in Singapore, where it employs 220 bankers and support staff. “The situation has changed quite significantly in Europe and the growth prospects as well. It is not as interesting as it is in Asia these days.”
Some 10 percent of BSI’s 76.2 billion Swiss francs in assets under management came from Asia in 2010, and Heer says the plan is to grow Asia’s contribution to 25 percent of its AUM in the coming five years.
BSI, a wholly owned subsidiary of Generali Group of Italy, isn’t the only European private bank that is accelerating expansion plans in Asia, especially given the uncertainty back in its home markets. Uncertainty in the EU isn’t the primary motivation for their Asian expansion, however. The most recent survey released by Merrill Lynch Wealth Management and Capgemini reveals that wealth has rapidly shifted eastward since the outbreak of the global financial crisis.
Asia-Pacific’s population of high-net-worth individuals—those with liquid assets exceeding $1 million—grew 9.7 percent to 3.3 million in 2010, exceeding Europe’s for the first time and placing the region as the world’s second-biggest market after North America, according to the 2011 Asia-Pacific Wealth Report released in October by Merrill Lynch Global Wealth Management and Capgemini. Asia-Pacific high-net-worth wealth gained 12.1 percent to $10.8 trillion in 2010, compared with Europe’s $10.2 trillion. With the fastest regional growth rates, the number of ultra-high-net-worth individuals in Asia-Pacific—those with more than $30 million in liquid assets—rose 14.9 percent to 23,000.
Hong Kong and Singapore have emerged as wealth management centers, where most private bankers set up their regional offices to service clients across the region.
In anticipation for growth in Asia, LGT Group, the wealth and asset management firm owned by the royal family of Liechtenstein, boosted its regional staff by 40 percent to more than 200 in the past three years, says Dr. Karl-Heinz Klaus, managing director of LGT Bank in Hong Kong. In Asia, LGT deals mostly with first- or second-generation high-net-worth individuals, while in Europe it services primarily old money families, whose wealth have been passed down through many generations. As a result, client’s requirements differ greatly, say Klaus.
In the 25 years it has run offices in Asia, Klaus says LGT has learned that client focus is paramount; Asian clients can be very demanding, but they are also very loyal. Service and expertise must be available locally, as Asian clients tend to be hands-on when it comes to their money management affairs. Focusing on quality and consistency pays off in the long term.
Asian private wealth clients tend to be younger than elsewhere, says Eduardo Leemann, chief executive officer of Falcon Private Bank Ltd., which is based in Zurich, but majority-owned by the government of Abu Dhabi. “The profile of Asian millionaires differs quite significantly from Europeans,” says Leemann. “Asian high-net-worth individuals are mostly younger than 40, self-made millionaires holding a substantial stake in their own businesses, and tend to mainly invest in Asian products.”
There is no question that European private bankers will have to tailor their services to Asian clients to grow. In addition to coming up with creative investment solutions, Falcon, which operates offices in Geneva, Dubai, Abu Dhabi, Hong Kong and Singapore, also offers advisory services that help clients grow their wealth by growing their individual businesses.
To offer that type of service, Falcon must hire highly capable private bankers who come from a wide range of backgrounds, including those who have management experience. Competition is heating up to recruit top-flight private bankers with seasoned experience, says Leemann, noting that Falcon is relying on commission-based referrals as the primary way of recruitment. Most private banks are recruiting Chinese staff to help them secure clients in China, the market with the biggest potential for wealth creation in Asia.
“We can see future growth in China,” says BSI’s Heer. “All of Hong Kong and Taiwanese manufacturers have moved to China. Wealth in Hong Kong and Taiwan are more established, but we see huge growth in greater China, the triangle between Hong Kong, Taiwan and China.”
