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Private Banking and Wealth Management in Asia

PWM-Covers.indd 1 30/06/2010 13:32

Bringing it all back homeAsia may have sailed through the west’s financial crises in good shape but the region’s private banking clients have emerged warier about where they keep their money. Whether it’s in terms of seeking a clearer understanding of investment products, putting money in markets closer to home or simply a greater awareness of risk, investors are making new demands on their bankers. By Chris Wright

Asian private banking has felt a curious impact from the financial crises in

the west. Asian economies, some blips apart, have sailed through every-

thing from US sub-prime to Southern European sovereign debt problems

with little direct impact; their stock markets, though, have plunged with

the rest. And many clients in Asia, diversified into world markets, have

been hit as badly by global problems as if they had been sitting in New

York or London.

Correspondingly, Asian high-net-worth clients, and their bankers, have

done as much soul-searching about risk and portfolio strategy as anyone

else. As elsewhere, there has been a shift away from complexity; an

increasing awareness of the need for a diversified and stable portfolio;

heightened willingness to seek and pay for risk management services;

deleveraging; and a loss of trust in many hedge fund and other alterna-

tive asset managers.

“Clients ask for transparency, they don’t want to fly blind,” says Marcel Kre-

is, head of private banking for Asia Pacific at Credit Suisse. “Knowing what

the risks are is one thing but can the clients stomach the risk if it material-

izes? In 2007, clients and the banks took on enormous risks without being

very clear on what would happen if those risks materialized. They did, and

it cost a number of them everything. The same goes for clients.”

Clients today like their assets to be visible and solid. “People have started

looking at real and tangible assets such as gold and property,” says Aamir

Rahim, CEO of private banking for Asia Pacific at Citi. “Property is real, you

can feel it and touch it, and it doesn’t collapse.”

One of the obvious areas to suffer in this new sentiment is structured prod-

ucts. There’s still room for them, provided people can clearly understand

what it is they’re investing in, but their golden days appear to be gone.

“There’s great suspicion about anything that is not transparent,” says

Debashish Duttagupta, who heads investments for Citi Private Bank in

Asia Pacific. “The days of ‘here’s a new proprietary technology but we

can’t tell you how it works’ are far away. But people are now comfort-

able using what I would call flow structured products, with short tenors,

though they are not anywhere close to the levels of acceptance in the

boom days of 2007.”

Understanding the productPeter Flavel heads the private bank at Standard Chartered and sees a sim-

ilar theme. “As confidence has returned to the markets, we’ve seen clients

prepared to take greater degrees of risk,” he says. But with the return of

risk appetite has come greater suspicion, particularly around counterpar-

ties. “Once upon a time it was: ‘what’s the structured product and what’s

the return?’ Now it’s: ‘I need to understand the product’, and the issue of

what institution stands behind that product is very important.” But there’s

still plenty that can be done within those parameters. “Products around

underlyings of commodities or foreign exchange, people are prepared to

invest in those.”

Renate de Guzman, CEO at Bank of Singapore, reports continuing interest

in structures such as equity-linked notes and range accrual notes, but

like Flavel he says people have become much more selective about the

counterparty behind the structure. “With problems in Europe you have to

be selective with European banks.”

Eventually, though, there’s no choice for private clients but to use a

structure if they want to achieve a particular outcome. Andrea Carl, head

of product and services at Clariden Leu in Singapore, says that although

structuring to trade on a particular idea is out of favour, “a structured

product can make sense to create a certain payout structure you want

to have because of asset distribution”. Kreis sees activity in structured

products with currencies – particularly in light of the fall of the euro – and

commodities as underlyings, though not for long-term products. And

Rahim adds: “There’s always a role for structuring. If you want to take a

view on sterling in six months, you can do that with a forward rate agree-

ment, but if you want a series of options on a particular fixed income

security that’s not publicly traded, you’re going to have to go through the

structuring route.

“Clients ask a lot more questions – as they should – about the fees we

charge, the cost of unwinding and the like,” he adds. “But they are still

interested.”

Still, the lack of volume in structured products has not been great for the

bottom line. “Clients are very cautious in making long-term commitments

to more complex structures and products, and this has an impact on

revenues without a doubt,” says Kreis at Credit Suisse. “Simple products

don’t tend to be as rich in fees as more complex solutions.”

Another area that really felt the brunt of the change in sentiment was

alternative investments.

“We are finding a lot of alternative managers had no clothes, so to speak,

and there’s been a big flight to quality,” Duttagupta says. “Alpha does

exist, but clients have come to realize that there are fewer managers who

can add value compared to the number of people who say they can but

just add leverage.”

Again, this has not been an area where managers or products have

been cut off en masse. Clients do appear willing to distinguish between

different managers, styles and asset classes. “In real estate, people are

comfortable: we’re seeing that through fresh inflows,” Duttagupta says.

“The private equity side of things is much more damaged.” Also at Citi,

Rahim continues to see selective interest in hedge funds, just with greater

scrutiny of the fund structure than before. “People are looking at hedge

funds that have either no gate or a defined one so they can manage their

liquidity more precisely,” he says. “One of the big issues was hedge funds

gating people and not allowing them to take their investments out dur-

ing the financial crisis. Clients now want to know how long their money

will be locked up for.”

Flavel says the increased due diligence that has followed the financial

crisis has an impact here. “A by-product of that is that it favours the

incumbent and larger, stronger players, rather than a new start-up,” he

says. “Pre-crisis, there were a lot of new hedge funds going out and set-

ting themselves up. Now, doing that and getting on the approved list of

a major player is going to be quite difficult.” Carl at Clariden Leu makes a

similar point, saying interest in hedge funds has gravitated towards “more

liquid, USIT-3 types of funds, which have more transparency and liquidity”.

Preparing for rising ratesDespite changes in appetite, product manufacturers are not idle. Dut-

tagupta says Citi is working on ways to address the issues that will arise

when rates begin to rise worldwide, and to provide cheap hedges for that

event. Other clients want to park cash and make a decent return from

it, so Citi is designing short-term, low-risk carry products. It has broad-

ened its property advisory business, developed products to invest in UK

property, has staffed up its investment labs with quants to help with asset

allocation, brought in a new focus on fixed income with detailed credit

analytics brought in from rating advisory teams, and is looking at ways

of investing in themes such as distressed US real estate, or to exploit inef-

ficiencies in commodity markets.

“Nothing dramatically complex,” Duttagupta stresses. “Nothing that will

take more than two minutes to understand.”

Elsewhere Clariden Leu reports an increase in inflation-linked and capital

guaranteed product, and many institutions are busy finding ways to

build exposure to the robust Asian growth story. At local institutions,

BDO Private Bank, for example, is looking for “sectoral and thematic funds,

bonds and appropriate structured products that take advantage of activ-

ity in the power, infrastructure and manufacturing sectors in the region,”

according to Josefina Tan, who runs the business.

“There’s certainly a heightened awareness of the growth stories of China

and India and the countries that are associated with that growth in Asia,”

says Flavel. “But it’s not as simple as saying I want to buy an Indian or Chi-

nese stock. It’s understanding this shift to the east in terms of economic

power and growth, and working out which investments are going to do

well as a result of that. It might be the mining stocks in Australia or Latin

America, the shipping companies handling the resources, or the manu-

facturers selling components into India and China.”

Tied into this is the trend for Asian investors to bring money back home.

“Through the crisis in the US market and now the European market we

have seen Asia sail through relatively undamaged, and at times assisted

by deposit guarantees to reassure investors in domestic markets,” says

Duttagupta. “Asian wealth has been very comfortable with its own mar-

kets.” There is already a flight into emerging markets worldwide, and this

return of capital home exacerbates the trend.

Others say the big themes in the industry are not about product so much

as the way things are sold. “Client assets are spread across different insti-

tutions, jurisdictions, even different team members or family members,

so there is much bigger demand for consolidating a view on to that,” says

Carl. “During the crisis it was a fragment here, a fragment there. Now the

holistic view is much more in favour. The relationship manager is becom-

ing less an investment selector than a strategic adviser for the portfolio.”

Experience countsHas the structure of private banking changed? Kreis at Credit Suisse says

the people mix has changed at the banks. “One of the major changes

would be a shift in focus in the type of relationship managers and invest-

ment professionals we would like to attract,” he says. “Leading up to 2007,

the more bankers you had drove your net money acquisition. It was a

market that was chasing everyone who had an interest in private bank-

ing.” But then everything changed. “2008 showed some of the glaring

shortfalls in the quality of the bankers: the training, the supervision, their

advisory capability. Many of them simply hadn’t been in the industry long

enough and most of them had never seen a downturn. They had never

had to deal with an investment recommendation they made that then

went spectacularly south.”

For Credit Suisse’s part, it has continued to hire – even all the way through

2009 – but with a focus on more experienced relationship managers

and what it calls the solution partners group, “which is in many ways a

private banking internal investment bank that helps clients find solutions

which we then execute through the investment bank”. Existing staff are

more thoroughly trained as a consequence of the financial crisis. “A lot

more effort goes into training and coaching the relationship manag-

ers, upgrading their technical skills,” Kreis says; all its client-facing staff

are now having to go through an 11-module training and certification

programme.

And is the money coming back? Rahim says “clients ebb and flow” and

that the first two months of the year were very strong for Citi, March and

April reasonable and May weaker, impacted by people taking money

off the table through the euro and Greece situation. “We are of the view

that this is a much-needed correction after a much-needed rally – we see

little danger of a double dip, though you can never say that the chance is

zero.” Credit Suisse’s private banking assets in the region are at a record

high of Sfr74.2 billion as of the first quarter of 2010 – a 9.6% year-on-year

climb in the quarter following 45.6% growth in 2009. Net new assets were

Sfr11.5 billion in 2009, and a further Sfr4 billion in the first quarter of 2010.

Domestic businesses, particularly Japan, Australia and Singapore, have

been major contributors.

Private bankers have watched closely the increased scrutiny of Switzer-

land, where the idea of client confidentiality is under threat. Is the same

attention coming to Singapore? Bankers are not worried about the Swiss

situation – which was chiefly about the US seeking tax-evading clients

– because, as de Guzman says, “Asia is more of a low-tax environment”,

and it’s not a place known for harbouring large amounts of US money

anyway.

Regulatory changesThere is, though, regulatory change coming, and not just in terms of the

requirement that clients fully understand what they are buying. Kreis

notes discussion in Singapore about requiring private bankers to be

registered and certified before they talk to clients. What does he think of

that? “I think that’s good,” he says. “We’d like to think that self-regulation

is preferable, but we are seeing more and more banks opening offices

here [Singapore] and Hong Kong to take advantage of the world’s most

dynamic region, and some industry professional minimum standards are

required.”

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Kreis thinks regulators in the region “are paying a lot closer attention

to bankers flying in and out of countries. The days of unlimited unfet-

tered travel and advisory activities in the countries where bankers

visit their clients – those days are over. You are going to see a much

tighter regime around international private bankers travelling into

different jurisdictions.” This has a consequence for clients: increasingly

they are going to need to come to Hong Kong and Singapore for port-

folio and investment reviews, where there are established systems

for legal, trust and product support. This is one reason Credit Suisse is

opening its branches on Saturday mornings, to allow people in places

like Indonesia or Malaysia to come in while passing through on leisure

or to see family at weekends.

Flavel says: “There will be greater pressure because governments

around the world are seeking greater tax compliance and looking for

ways to ensure there are less avenues for people not to comply with

onshore taxation. But it’s not going to affect the amount of money

booked in private banking in Hong Kong and Singapore.” He adds,

though, that “there is a trend of people putting money onshore,” such

as people in India seeking to participate in their own nation’s growth

story.

On balance, the market looks brighter in Asia than it does elsewhere

in the world. “You see in Hong Kong and the east a natural exuber-

ance about the future,” says Flavel. “People are still quite upbeat and

confident even despite the recent volatility. Go to Europe and it’s

almost despondent. Issues around privacy and secrecy in Europe

and Switzerland have taken quite a heavy toll on the way people feel

about private banking in Europe. Here, it’s not happening to anything

like the same degree.”

Different positionsThe financial crisis brought into stark relief the three distinct structures

of private banking in Asia. There are the private banking arms of the

global powerhouses, such as UBS and Citi; the Swiss specialists doing

nothing but private banking, such as Clariden Leu and Pictet; and the

local Asian institutions with private banking operations. They make for

a competitive environment which the financial crisis did nothing to thin

out. “If anything the field has gotten more crowded,” says Kreis.

Unsurprisingly, people’s views on the future of private banking depend

very much on where they’re sitting. The big see the virtue in scale; the

small see the virtue in focus; the local see the virtue in Asia.

“The landscape will increasingly shift towards banks that can provide

full service private banking and bring genuine global advice and prod-

uct capability to clients, rather than private banks that are boutiques

and don’t have a global footprint in terms of research and product

execution,” says Duttagupta at Citi. “Our client needs are becoming

increasingly institutional and sophisticated in nature. Private banks that

are part of larger banks can tap into that capability.”

The Swiss specialists see their own approach as the way to go. “For us,

this model has worked for 250 years,” says Carl at Clariden Leu. “We have

just the private banking clients to focus on. The future is bright for pure

private banks.” Asked about clients wanting to see public data about

these most private of private banks, she points to Sfr100 billion under

management and a tier one capital ratio of 24.6%. “They feel a lot more

comfortable putting deposits in our bank, particularly during the crisis.”

She claims “very good momentum” in flows.

Local domestic banks claim to have come through the crisis with little

impact, and gained in terms of flows. Josefina Tan, who heads BDO

Private Bank in the Philippines, says “the global financial crisis had

minimal effects on the assets of clients” with her institution. “Although

the majority of the assets were in local currency [the Philippine peso],

even the foreign currency assets did not suffer the massive valuation

swings brought about by the violent market volatility.” She attributes

this to the fact that banks like BDO have never offered risky or complex

products, focusing instead on the basics of capital preservation and

estate planning.

She says her bank “was a beneficiary to the inflow of investments back

home: a flight to safety, so to speak. Clients who have made investments

abroad would select a strong and robust domestic financial institution

with the experience and expertise in handling private banking funds.”

One institution uniquely well positioned to comment is Bank of Singa-

pore, the private banking subsidiary of OCBC, the Singaporean bank.

This is primarily made up of the private banking business that OCBC

bought from ING.

Today, Bank of Singapore’s CEO, Renato de Guzman, pushes the

advantages of local ownership: strength of the parent (OCBC is rated

Aa1/AA+, higher than many global peers), the fact that Asian banks had

little exposure to toxic assets or European sovereign debt, and a vast

branch network to reach the local population (382 branches in Indone-

sia, for example, and a full bank licence in China where it offers banking

services in seven provinces.) “For those who want to diversify out of

Switzerland into Singapore, we are a different proposition to a branch

of UBS or HSBC or Credit Suisse,” he says. “We are a locally-owned Singa-

pore bank with expertise in global private banking.”

Local private banks in Asia universally claim to have received inflows as

a consequence of mounting suspicion of western institutions through

the financial crisis. “During the crisis a lot of money went from the

international banks to the local banks because they are easier to under-

stand and better regulated,” de Guzman says. “ING was very difficult to

understand: insurance, banking... and when you look at the capital ratios,

OCBC’s tier one ratio is 14%, whereas ING’s was 6, 7%. Generally the Eu-

ropean banks are undercapitalized, overleveraged and have exposure to

the PIGS [Portugal, Italy, Greece, Spain] countries.” He feels the combina-

tion of businesses in western banks also causes problems. “You see very

complicated models in the US where investment banking and private

banking platforms have been combined and got them into trouble.”

Whichever model works best, one interesting development is the

degree of international seniority in the region. Standard Chartered has

its international headquarters for private banking in Singapore; JP Mor-

gan’s private bank international head is now in Hong Kong; and Citi’s

international private banking head (that is, head of private banking

operations outside the US) is in Singapore. Singapore is one of only two

key booking platforms for Clariden Leu, the other being the home office

of Zurich. “You really are seeing in Asia some very senior executives of

global private banks being based in Asia,” says Flavel. “That reflects the

shifts to the east. These are not Asian outposts; banks are voting with

their feet and moving their senior executives to Asia.”

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Bank of Singapore: Asia’s global private bankFormerly known as ING Asia Private Bank, Bank of Singapore is now a wholly owned subsidiary of OCBC Bank and inherits the strengths of one of Asia’s premier financial services groups – the second largest in Southeast Asia by assets

Formerly known as ING Asia Private Bank, Bank of Singapore is now a

wholly owned subsidiary of OCBC Bank and inherits the strengths of

one of Asia’s premier financial services groups – the second largest in

Southeast Asia by assets

With a branch in Hong Kong and offices in Manila and Dubai, Bank of

Singapore, Asia’s global private bank, serves high-net-worth individu-

als and wealthy families from China, Taiwan, Hong Kong, Indonesia,

Malaysia, Thailand, Singapore, the Philippines, Japan, South Korea, the

Middle East and Europe as well as global non-resident Indians.

Operating as a dedicated private banking subsidiary with headquar-

ters in Singapore, Bank of Singapore embodies proven expertise

combined with Singapore’s unique brand and extraordinary attributes

as a thriving financial centre of international repute.

Backed by an experienced and distinguished team of professionals,

Bank of Singapore presents the best of both worlds – combining

a global private banking approach with a fully open architecture

product platform and proprietary research to ensure truly independ-

ent advice.

Personal serviceBank of Singapore’s private wealth approach is built on a personal and

highly individualised service. A dedicated professional will act as the

single point of contact for all client transactions, managing all aspects

of client financial requirements with the backing of a team of financial

specialists.

With our experience and resources, we take a bottom-up research

strategy and develop solutions tailored to suit every investment

objective. Coupled with OCBC Bank’s extensive branch network (both

domestic and global) and its recognised expertise in retail, mortgage

and SME banking as well as stockbroking, insurance and investment

management, clients will enjoy privileged access to a wide suite of

investment, banking and financial services across the region.

Discretionary portfolio managementDiscretionary portfolio management is one of the many products

that we are proud of within our complete package of products and

services. Our team consists of many experienced investment profes-

sionals with backgrounds from highly regarded financial institutions.

With our robust risk management yet flexible approach, we are able

to customise portfolios that suit ultra-high-net-worth individuals. The

team leverages on good security selection of our analysts and timely

execution of our traders to manage portfolios with clear direction

from our monthly investment guides.

Minimum assets per client are USD 1 million and total assets stand at

more than USD 23 billion.

Rating upgrades and awardsOur parent, OCBC Bank, was recently upgraded by Moody’s from AA+

with negative outlook to AA+ with stable outlook. Moody’s highlighted

the capability of OCBC Bank to navigate through the financial crisis and

its ability to deliver financial results in the current year similar to pre-crisis

levels. On 24 May 2010, Moody’s gave a similar rating of AA+ with stable

outlook to Bank of Singapore, recognising the financial strength and

stability of the bank as well as it being a member of the OCBC group. This

rating is made more meaningful in the current environment where we

are seeing more downgrades particularly of sovereign credit (Greece,

Spain, Portugal) than upgrades. In contrast, OCBC Group is highly capital-

ised with a tier one ratio of more than 14%.

Bank of Singapore also recently received the Euromoney award in the

Philippines for Best Private Bank for relationship management and Best

Private Bank for range of investment products. As Best Private Bank for

relationship management, this award recognises our high standards for

service excellence and our good understanding and management of our

clients’ private banking needs.

As best private bank for range of investment products, it affirms the

strength of our unique open architecture product platform, strategic

investment views and high quality products.

Since the launch of Bank of Singapore, we have been successfully offering

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Apart from our truly global capabilities, we also distinguish ourselves

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benefit from professional and reliable advice, and solutions to their per-

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Philanthropy: the next generationPhilanthropy is constantly growing and evolving, which is why it is essential to get younger family members involved as early as possible, says Cynthia D’Anjou-Brown, senior adviser, philanthropy and governance at HSBC Private Bank in Hong Kong

For many outside observers, it might seem that giving away money

is a straightforward task. However, the practicalities of philanthropy

are more problematic than one might assume. Often philanthropy

involves giving by more than one individual and may involve an entire

family. Necessarily, getting others to agree on a charitable mission can

be time-consuming and complicated.

At the same time, in considering where to commit funds it is important

to understand what other donors are doing, especially governments

and non-governmental organizations. Moreover, given myriad charities

– and the growing importance of social entrepreneurship and social

enterprises for philanthropists – it is essential to be able to differentiate

organizations that ostensibly have similar goals and strategies.

Similarly, potential donors have to know how to marshal evidence to

support their charitable decisions and understand how the effec-

tiveness of a donation can be judged in terms of its social impact.

Ultimately, philanthropy is pointless unless it makes a difference. HSBC

Private Bank is committed to helping its clients achieve that goal by

supporting every aspect of philanthropy.

While many banks simply offer legal services, HSBC Private Bank rec-

ognizes that giving is about much more than that. Our continuum of

services ranges from determining the focus for giving and helping the

client to source and review charities through to the legal set-up. We

also help clients to continue to evaluate the merits of their philan-

thropic choices.

Continuity and stabilityMany business families are complex and fragile – they evolve through

generations and have differing needs and priorities. Nevertheless, the

goal of most families is to safeguard their prosperity and leave a last-

ing legacy. Of course, one aspect of this legacy is the continuity and

stability of their business and the preservation of wealth. However,

philanthropy can play an equally important part in creating an ap-

propriate legacy.

Philanthropy can offer a unique opportunity for business families by

acting as a meeting point for all generations. It can create a role and

a voice for family members who are not involved in the family busi-

ness. As importantly, it provides a chance to stimulate the interest of

younger members of a family to take responsibility and learn about

the importance of stewardship of resources. Philanthropy also helps

to establish the boundaries around the intersection of family life,

community life and business.

It is often said that exemplary philanthropists are a reflection of good

parenting – the explanation being that the values instilled by parents,

including their attitude to charitable giving, are handed down to

their children. The benefits of practising philanthropy – and involving

children in it – are therefore twofold: it encourages giving by children

in later life and, more broadly, it reinforces the core beliefs and values

held by a family. In short, philanthropy is an excellent way to put into

action a family’s values and aspirations and reflect its ethos in a more

tangible and timeless way than property or other assets.

Passing on the giving habitIt is easy to talk about passing on deeply held family values to chil-

dren but in practice it is hard to achieve. Research from the Pearson

Foundation in 2010, the non-profit arm of international media com-

pany Pearson, shows that parents often do not do as good a job as

they think in raising children to become charitable adults. One of the

main reasons for this is the frequent absence of dialogue regarding

philanthropy.

While no one disputes the importance of being a giver, many people

do not speak openly about their voluntary and charitable work.

There are good reasons for this. In all cultures, but especially in Asia,

modesty is perceived as a positive attribute and that may discourage

people from talking about their philanthropy.

However, it is not immodest for someone to explain their philanthropy

if it enables children to learn how their actions can impact others. As

crucial as it is to explain the scale of giving, it is perhaps more impor-

tant to pass on an understanding of why philanthropy is important for

that individual.

By being more explicit about how deeply we care about giving back

to others, it is possible to make a significant contribution to nurturing

the next generation.

How HSBC Private Bank can helpHSBC Private Bank works with philanthropic families that span

several generations and through its experience over many years

has developed some common approaches and models. Our models

allow children and young people to learn through experience and

ultimately encourage and nurture giving and build an understanding

of why it is important.

One such way to encourage the involvement of young people is to

ask them to explore and research issues of interest to them. By stimu-

lating an interest in a particular cause – and developing a practical

understanding of the issues and challenges surrounding that cause

– it is necessarily easier for them to make the leap to philanthropy.

A possible next step, perhaps for children aged 12 and over, could be

to establish small charitable funds to be allocated by the children. Such

a strategy enables them to learn the practicalities of how money can

most effectively be put to use. Moreover, by encouraging children to

contribute some of their own money, such funds can be the start of a

philanthropic career. Encouragement from the family can be offered

through the provision of matching funds.

A more formal model for involving young people in families’ philan-

thropy could involve the establishment of junior boards. These can

offer an opportunity for individuals to develop a deep understanding

of a good cause while developing skills that broaden their abilities as

philanthropists. The activities of junior boards vary considerably – from

fundraising efforts and developing local partners to voluntary service

to more traditional charitable donations – but all are beneficial in imbu-

ing younger members with the philanthropic ethos of the family.

Tapping the potential of the youngWhile it is important to develop an interest among young members of

the family in charitable giving for its own worth – and because of the

broader benefits it delivers in terms of creating moral and confident

adults – philanthropic education also has a role to play in preventing

animosity between older and younger members of a family. Put simply,

if children are not involved in the family’s charitable efforts there is a

risk that they will resent family funding going to charity – they may

view philanthropy as a means of reducing their inheritance.

The key to successfully involving the next philanthropic generation is to

understand that they are different people to their parents so that their

interests are reflected in family giving. For example, many young people

feel an empathy with environmental and animal welfare causes that

their parents may not appreciate and they may also be more interested

in funding programmes rather than capital projects.

Similarly, it is also essential to gauge the talents and strengths of young-

er family members so that effective use can be made of them and that,

in turn, the individual feels valued.

For example, HSBC Private Bank’s experience is that many next-gen-

eration philanthropists enjoy the challenge of solving social and

environmental problems using their business acumen, leverage and

entrepreneurial aptitude. They may also want to be more personally

involved in projects, including through voluntary service, and many

younger people show an interest in accessing the outcomes of their

charitable involvement rather than just their inputs in a way their

parents might not.

Harmonious familiesHSBC Private Bank is committed to the preservation and growth of

harmonious families and we believe that one of the best ways to

achieve that goal is through involving younger members in a family’s

philanthropy.

To that end, HSBC Private bank has developed a wide range of strate-

gies and tools to encourage children and young people to take an

interest in giving and develop the skills to ensure their philanthropy

is effective.

One of HSBC’s most popular programmes is the Legacy model that

helps young family members to learn through seminars, experiential

learning and peer dialogue about the many challenges faced by them

as members of a business family. We also offer forums on family govern-

ance and succession planning issues.

HSBC Private Bank is open-minded and constantly looking for new

ways to help families achieve their philanthropic goals. For example,

one of our newest research projects is trying to capture the experi-

ence of Asian daughters and mothers in business families – a dearth of

information is available on this subject.

Whether in research, practical assistance or guidance, families can be

confident that HSBC Private Bank has their interests at heart in work-

ing to help the next generation and ensure a smooth succession. We

believe that philanthropy is a truly unifying and ageless activity and has

an inclusive role to play in promoting families and creating a harmoni-

ous life – and we work hard to do everything we can to support it.

For further information, please contact

HSBC Family Office Services Limiteda non-bank member of the HSBC Group Level 13 HSBC Main Building1 Queen’s Road CentralHong KongTel: 2533 6333Fax: 2869 1492Email: familyoffice@hsbcpb.com H

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“Philanthropy is an excellent way to put into action a family’s values and aspirations and reflect its ethos in a more tangible and timeless way than property or other assets”

Cross-generational personal asset management From implementing systems designed to capture inter-generational wealth transfers, such as family business succession planning and trust and estate services, to hosting matchmaking nights for young clients, Hana Bank continues to increase its value as a leading private bank in South Korea

Having started financial planning for high-net-worth individuals in 1971,

Hana Bank is proud to be recognized as the first domestic bank in South

Korea to implement a private banking model. The bank merged with a

number of commercial banks in the late 1990s and early 2000s, becoming

a financial conglomerate with components operating in banking, securi-

ties and insurance.

While it grew its total assets under management to 192 trillion won

in March 2010, Hana Private Bank draws on the strength of the Hana

Financial Group, providing a comprehensive range of financial services

to our private banking customers. Winning Euromoney’s ‘Best Private

Bank in Korea’ for six consecutive years, Hana Bank clearly underlines the

continued strength of its reputation in private banking business.

Hana Bank’s driving force is brand and business development services.

The bank has built a team of expert professionals in the fields of real

estate, tax planning, and investment funds. The Hana Bank team has

developed the experienced project planning leaders and skilled support

staff essential for effective wealth and investment management, provid-

ing bespoke private banking services to high-net-worth individuals and

their families through 170 branches across the country.

Unique client servicesHana Bank designs and promotes products and services differently to

meet the needs of different age groups. In the rapidly ageing Korean so-

ciety, many of our elderly clients visit a branch for wealth transfer and es-

tate planning advisory. With a warm welcome to these clients, the bank’s

financial experts make sure that assets pass from one generation to the

next in a smooth and orderly manner. Through its knowledge of estate,

gift and income taxes, for instance, the team offers carefully conceived

and executed estate planning as a trusted family office.

Hana Bank provides cross-generational personal services as parts of

its diversified Total Life Care Services in an attempt to engage multiple

generations: a private funeral service, a matchmaking service, thematic

overseas travel, study-abroad consultancy service - you name it. Clients

can be provided with all lifecycle services throughout their lives, from the

cradle to the grave. Among Hana Bank’s unique services are:

Seniors: funeral limousine serviceWhen customers or their families pass away, the bank provides a lim-

ousine for the funeral or memorial service. Hana Bank introduced this

service to South Korea and is still the only bank that provides it.

Active seniors (age between 40 and 60)Our Gold Club clients’ greatest interest is often their children’s marriage.

To fulfil this need, the bank provides a personalized matchmaking service.

Begun in 2003 for the first time in South Korea in the financial sector,

the matchmaking service has become Hana Bank’s signature premium

service. About 50 children of clients, in their late 20s and 30s and still

single, are invited to the nights once or twice a year, held at the best

luxury hotels like Marriott or W Hotel. In the seven years that the bank has

been running these nights, 20 weddings have resulted. Those who have

participated in the nights are also welcome to join the bank’s club HPBM

(Hana Private Bank Members). In this way, the bank hopes to get to know

the children of its Gold Club clients better and attract them to become

major clients of the bank in the future.

Youth: study abroad consultancy serviceKorean parents make enormous efforts to educate their children. The

bank’s study-abroad planning is thus perfectly suited for our major cli-

ents. To meet this educational need, the bank established an alliance with

one of the top education consultation organizations. Educational experts

with immense experience give relevant advice to clients.

Hana Bank is focused on further strengthening its range of private bank-

ing products and services, such as the Domestic Tour Service and Arts

Academy, and the bank will continue to integrate its private banking

operations successfully, which eventually adds value for clients.

For further information, please contact

101-1, 1Ga, Eulgiro, Jung-Gu, Seoul, 100-191, KoreaTel : +82 2 2002 1740Email : hanair@hanafn.comWebsite : www.hanafn.com

BDO: private banking with a local edgeBDO Private Bank proves that a domestic bank can deliver a private banking service that can compete with the global players

Although the private banking and wealth management industry is

still dominated by foreign banks, rising standards of living and an

explosion in per capita income in emerging economies, particularly in

Asia, will lure local banks to compete for market share with interna-

tional banks.

According to Goldman Sachs’ demographic projections and model of

capital accumulation and productivity growth, Brazil, Russia, India and

China (more popularly known by the acronym ‘BRIC’) will continue

to be a major force in the world economy over the next 50 years.

These nations currently account for about 2.5 billion people or over

one-third of the world’s population. Average income per person in

India and China will increase by about 3.5 times to $3,000 and $10,000

respectively in 2030.

China’s exponential growth, according to a Franklin Templeton study,

has brought tremendous demand for consumer durable goods,

particularly in the countryside. The percentage of households in rural

areas that now have refrigerators, washing machines, mobile phones,

colour televisions has risen dramatically from non-existent levels in

1992. China could have more millionaires than the US in the next 10

years. The rapid economic development of China and India should

benefit Southeast Asia through rising intra-regional trade. For the

Philippines alone, BDO Private Bank Research forecasts per capita

income will jump by 300% in the next decade.

This explosion of purchasing power and wealth is expected to

increase the number of people requiring private banking and wealth

management services in future. A recent study estimates that Filipinos

account for $15 billion-20 billion of wealth managed outside the Phil-

ippines. The level of Filipino wealth is expected to expand dramati-

cally in the years to come.

Domestic private bankingIn past decades, Filipinos have sought the security of offshore jurisdic-

tions to keep their money safe, sacrificing the potential for growth.

While safety remains a key objective, the more important need to

preserve and grow wealth has now taken precedence. The liberaliza-

tion in banking as well as in other finance-related sectors has brought

in knowledge and new skills, nurturing a new breed of dynamic and

innovative local bankers, who are experts in their respective fields.

Our new banking professionals are now capable of servicing clients to

achieve not only their financial objectives but also their trans-genera-

tional aspirations. Domestic banks are now better prepared to handle

the wealth management needs of fellow Filipinos.

In what ways can a domestic bank excel in providing private banking

and wealth management services to the Philippine market? First, local

expertise and constant presence assure clients regular updates and

performance of accounts in both good and challenging times. Second,

employing an open architecture framework allows local private banks

to access financial products and other services from different institu-

tions, providing best execution in managing their wealth and not just

selling financial products. This change in paradigm puts clients’ needs

first in meeting their long-term performance objectives. In addition,

the integration of varied insights and research outputs from different

institutions help clients understand and evaluate an uncharted eco-

nomic landscape and the range of possible outcomes.

Third, local private bankers can easily form a diverse team of experts

specializing in investment, tax strategies, estate planning and

philanthropy to respond quickly to the needs of clients. Fourth, local

private banks can consolidate all the offshore and onshore holdings

of affluent clients to improve overall performance and evaluate if their

objectives are being achieved.

Clients have realized that they need not just to preserve wealth, but

more importantly to ensure that its value continues to appreciate

under the prudent care and management of a trusted adviser. Assets

like properties may deteriorate over time if not properly maintained,

investments have to be reviewed with constantly changing market

conditions in mind, insurance policies, titles and other documents of

value can be kept in a secure place and access given to designated

persons if the inevitable happens.

“As a domestic private banking institution, we have the advantage of being in touch, on call, on demand for our clients”

Aside from being the repository and administrator of assets, a domes-

tic private bank can also act as executor and distribute clients’ assets

as provided for in a will or a letter of wishes attached to the trust

arrangement.

Therefore, domestic or local banks are seen to join in providing wealth

management services to the new affluent or emerging affluent in

the future. Instead of competition, we expect local private banks to

partner with both local and foreign financial institutions in delivering

the best service and execution for their clients. Wealth management

is expected to become part of a domestic bank’s core activity in the

future.

The BDO Private Bank experienceBDO Private Bank was the first to find this fertile ground for a new

and unique business initiative. It is focused and committed in build-

ing a private banking business based on a comprehensive wealth

management platform. Though operating under a commercial bank-

ing licence, we have decided to focus our resources in offering and

creating customized investment products to achieve clients’ specific

goals for wealth accumulation and growth, structuring bespoke en-

gagements that cover financial investment and advisory, investment

management and, more importantly, providing clients with assistance

in creating their estate.

As a domestic private banking institution, we have the advantage

of being in touch, on call, on demand for our clients. Being on the

ground and knowing what is happening locally and globally give

clients the security and confidence that their trusted adviser is but

a phone call, a text message, a fax or a few blocks away. Our proxim-

ity to our clients allows us to be pro-active through planning and

advisory and, more importantly, hand-holding, guiding and reassuring

clients during periods of crisis and market volatility.

Being domestic does not mean being confined to local affairs and

concerns. Domestically-rooted yes, but more importantly with a

global perspective. In this electronic information age, clients are

deluged with data from all forms of media and information channels.

Clients need independent and unbiased expert help to digest the

data into meaningful information that can be used to make invest-

ments and life decisions. The open architecture philosophy starts with

accurate and reliable information on the macro-economy, markets

and products to produce strategies that will seek to achieve the goals

and aspirations of a client. More importantly, the open-architecture

approach allows clients access to best-of-breed products, not only

within the local environment, but on the principle of best execution,

access to appropriate products onshore and offshore. If what best fits

the client’s objective is in the bank across the street, we will not ask

the client to cross the street and find out for himself, we will tell the

client that there is a better offer and, if he allows us, we will cross the

street and get that product.

A core business for domestic banksThe domestic banking industry does not lack people of brilliance, skill

and talent. The exposure of Filipino banking professionals to global

financial institutions upgraded their expertise in offshore markets and

enhanced the knowledge base. This has created a pool of financial ad-

visers, investment bankers, financial risk specialists and legal and fam-

ily estate lawyers that domestic banks can use as a resource to create

the platform from which to deliver a domestic private banking service.

We are properly positioned to take advantage of this opportunity.

There is a growing market, a ready pool of local experts and a banking

platform to deliver a truly domestic private banking service.

The experience of BDO Private Bank is proof that there is a niche for

domestic banking institutions to focus on private banking. Interna-

tional recognition proves that the bank’s model for private banking

is workable and sustainable as a business. A domestic bank can

excel and deliver private banking and wealth management services

relevant for the Filipino emerging affluent.

The opportunity and the challenge for domestic private banks is to

create a true private banking platform to serve the needs of domestic

clients.

For further information, please contact

BDO Private Bank, Inc.27/F Tower One, Ayala TriangleAyala Avenue, Makati City, 1226, PhilippinesTrunk Line: +632 848-6300Facsimile: +632 848-6306Email: wealthadvisors@pb.bdo.com.phWebpage: http://www.bdo.com.ph/Wealth_Management/Private_Bank/index.htmLounges: Greenhills, Alabang, Binondo, Cebu and Davao BD

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Gamalielh Ariel O. BenavidesSenior Vice President and WealthAdvisory & Trust Group HeadBDO Private Bank, Inc.

Safe and secure in a turbulent worldSince the financial crisis, Hang Seng’s wealthy customers have been paying particular attention to risk management. The bank feels it can provide the stability and security they need

More and more people are turning to Hang Seng Bank’s private bank-

ing services, seeking certainty and solidity in an uncertain and unstable

world. Hang Seng Private Banking offers customers from Hong Kong,

mainland China and Taiwan – as well as from across the world – pre-

mium private banking services as well as direct investment access to

China, the world’s fastest-growing major economy.

As one of Hong Kong’s – and also Asia’s – strongest and most diversi-

fied lenders, Hang Seng Bank came through the global financial crisis

unscathed. That is proof that its long-term devotion to risk manage-

ment has paid off. In a more turbulent world, it is more vital than ever

for investors to feel safe and secure.

Hang Seng Bank offers its high-net-worth clients premium, tailored

private banking services, including custodian, insurance and investment

management services, offshore private banking, property asset man-

agement and advisory services, and credit facilities. It offers a diversified

investment platform, allowing busy investors to relax in the knowledge

that their assets are both safe and gaining strongly in value.

Certainty and stabilityHang Seng offers certainty and financial stability. “Since the financial cri-

sis, more people have shifted their focus toward risk management and

wealth protection services,” says Rosita Lee, assistant general manager

and head of private banking and trust services at Hang Seng Bank.

“We are a highly trusted brand,” says Lee. “We are one of the largest

banks in Hong Kong in terms of market capitalization.” Lee adds that

ever more emphasis is placed on product innovation. “We are able to

provide special wealth management services for premium custom-

ers while allowing them to enjoy our strong branch network in Hong

Kong.”

Hong Kong remains the centre of Hang Seng’s private banking opera-

tions, catering to the city’s high-achieving professionals and entrepre-

neurs, providing everything from the trading of securities and invest-

ment funds to property management and advisory services.

Hang Seng is also expanding rapidly around the region, providing

premium private banking services to high-net-worth customers from

across the Chinese-speaking world. Hong Kong’s successful Capital In-

vestment Entrant Scheme (CIES), which permits non-Hong Kong inves-

tors with more than HK$6.5 million in fixed assets, including property, to

invest in the city, has been hugely successful. That has led more people

to open private banking facilities with Hang Seng.

Targeting China“China is our strategic target,” says Lee. “China has overtaken the UK

as the country with the fourth highest number of HNWIs in the world.

That gives us a huge advantage, as does our strong, strategic position in

Hong Kong as a local bank that understands the culture and perspec-

tive and needs of mainland Chinese customers.”

As times change, so do customers’ demands. Pre-financial crisis, many

premium customers sought new products that maximized immediate

market potential. But as the world recovers from recession, customers

are seeking to ensure that their wealth is preserved. Hang Seng has

invested heavily in private trust services to ensure the financial stability

of future generations. It has also introduced facilities that help potential

non-Hong Kong citizens apply for CIES services quickly and efficiently.

An increasing proportion of Hang Seng Private Banking customers are

in their thirties or early forties, doctors, accountants and business opera-

tors who work hard and seek to ensure their wealth is both actively and

securely invested. Mainland customers tend to be cut from a slightly

different cloth – many are business owners, entrepreneurs who have

different needs and concerns from Hong Kong customers.

Hang Seng’s front-line private banking team is pivotal in ensuring that

the bank gives customers its best possible service. “We always need a

full understanding of our customers’ wealth management needs,” says

Lee. “Our customers’ time is very precious to them. Some customers may

want you to get straight to the point, while others may need time to get

comfortable with you and build a rapport. So it’s vital that we create a

tailored wealth management solution for each of our clients.

“Hang Seng Private Banking helps take care of your financial matters.

Your wealth will be preserved and will grow, ensuring that you hand on

a solid financial platform to the next generation. Hang Seng Bank devel-

ops and hones a secure, lasting financial legacy for all of our premium

private banking customers.”

For further information, please contact

Hang Seng Private Banking Service Dedicated phoneline : 852 - 2198 3288 www.hangseng.com.hk

Maybank strengthens its foothold in the Asian regionRobust economic growth in Malaysia, and its ASEAN neighbours, is expected to stimulate the wealth management sector. With its strong record and extensive distribution network – with offices in 14 countries - Maybank is positioned to cater to vast growth in demand from the region’s high-net-worth individuals

Maybank is Malaysia’s financial services leader with over 1,750 offices

across 14 countries. It now serves more than 16 million customers.

Its products and services cater to all segments of the community,

ranging from individuals to small and medium enterprises and large

corporates.

In the area of wealth management, Maybank is the recognized leader.

It has consistently been selected by Euromoney as Malaysia’s provider

of Best Private Banking Services Overall. Maybank’s wealth manage-

ment services, first established in 2007, have seen significant growth

since their inception, with the customer base growing by more than

25% a year from 2007 to 2009 and total financial assets increasing by

50%.

The unveiling of the New Economic Model by the Malaysian govern-

ment in March 2010 aims to create a high-income nation by 2020,

which is expected to provide a boost to the wealth management

services segment. As such, Maybank Wealth Management sees bright

prospects in this area.

Rising affluence in the region, particularly in MalaysiaWhile there are still lingering concerns about the recovery path for

the global economy, the ASEAN region has achieved an upward

growth momentum at a quicker pace than the developed economies.

Major Asian trading partners have registered robust GDP growth in

the first quarter of 2010, while the Asian Development Bank predicts

growth exceeding 7% in Asia over 2010 and 2011. The Malaysian

economy expanded at a decade high of 10.1% during this period,

while the IMF World Economic Outlook issued in April 2010 projected

that most ASEAN countries will see robust growth averaging 5.2%,

well above the global financial crisis average of 1.7%.

Growth in the financial position of high-net-worth individuals in

Asia-Pacific is expected to be healthy from 2008 to 2013. This rate of

growth, measured by financial wealth, is projected at 12.8% annually,

and will potentially outpace other developed regions, such as North

America and Europe.

Managing growing affluence in MalaysiaThe better-than-expected rebound in the domestic and regional

economies is expected to provide the impetus for healthy growth in

the high-net-worth market segment, especially in Malaysia.

Maybank Wealth Management, through its extensive distribution

platform of Maybank Private Banking centres, has embarked on a

host of strategic initiatives to serve this segment of customers better.

We provide products and services catering to a diverse spectrum of

needs, encompassing cross-border transactions and seamless offer-

“While there are still lingering concerns about the recovery path for the global economy, the ASEAN region has achieved an upward growth momentum at a quicker pace than the developed economies”

Teh Cheah May, Maybank

ings within Maybank Group. For example, high-net-worth individuals

are now able to apply for foreign property-related financing here in

Malaysia – choosing between ringgit- and foreign currency-denomi-

nated packages.

Reaching beyond the domestic marketExpecting stronger growth in the region, Maybank Wealth Manage-

ment has set its sights on expanding its market beyond Malaysia.

Private banking clients today gain instant recognition at all Maybank

offices across the region, tapping into markets wherever Maybank has

a presence.

Maybank has offices in 14 countries, seven of which are in ASEAN.

Maybank Private Banking customers enjoy exclusive benefits and

privileges, complemented by the highest level of service in all these

locations.

AspirationsAsia is projected to lead economic growth at 6.9% a year. This is

significantly higher than the estimated 4.2% global growth rate. Based

on this optimistic projection, combined with the rising number of

affluent and high-net-worth individuals in the region, and especially

in Malaysia, Maybank believes in the vast growth opportunities of

the wealth management industry. The bank is set to capitalize on

this niche market segment by leveraging on our vast resources and

expertise within the Maybank Group.

This year, Maybank celebrates its 50th anniversary in the year of the Ti-

ger, with the theme ‘Close to You’. This resonates with the spirit of the

Maybank brand, serving customers and all communities in urban and

non-urban areas, bringing banking convenience, enriching lives and

contributing to the prosperity of the peoples and nations it serves.

For further information, please contact

Teh Cheah MayExecutive Vice PresidentHead, HNW & Affluent Banking,Community Financial Services,Level 34, Menara Maybank,100 Jalan Tun Perak,50050 Kuala Lumpur, MalaysiaTel: 603-2074 8391Fax: 603-2711 3417Email: cmteh@maybank.com.myEmail: wealth@maybank.com.my M

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2009 Best private banking services overall in Malaysia

2010 Best private banking services overall in Malaysia

Maybank have been awarded by Euromoney