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Blue blood banks

Jasper Moiseiwitsch offers a guide to private banking in Hong Kong

 

There are many private banks out there. It can be difficult for a client to get a sense of what makes a bank stand out from the rest. Herewith, a guide:

Bank Sarasin & Cie
History in Hong Kong:
Established in Hong Kong in 1995. In March 2010, Hong Kong became home to Bank Sarasin's first bank branch outside Switzerland.
Presence in the mainland: 
None.
Key differentiator:
Pure private bank that backs sustainable (read: environmental) investing.
In November 2011, Rabobank, Bank Sarasin's main shareholder since 1992, sold its majority stake to J. Safra Companies, a European private bank with a strong presence in the US and Brazil.
What the bank says:
'Our complete and sole focus is wealth management ... Translated that means we spend a lot of quality time with our clients, since private banking is all about maximising the experience for the client,' says Enid Yip, chief executive Asia of Bank Sarasin.
What others say:
Pure-play boutique bank that has seen through some significant changes, and is now refocused on the business of wealth management.

 

Barclays Wealth
History in Hong Kong:
In Hong Kong since 1972. The booking centre (giving the bank the ability to book trades onshore) opened in 2010.
Presence in the mainland:
None.
Key differentiator:
Barclays uses behavioural finance to advise clients on a style of investing that matches their goals and their personalities.
What they say:
'With over 300 years of history and expertise in banking, Barclays offers clients the security of a strong global brand alongside an entrepreneurial 'start-up' environment.'
What others say:
Traditional English name linked to a strong investment bank that is pushing into the ultra-high-net-worth segment. Its platform of investments and products and services is evolving.

 

BNP Paribas Wealth Management
History in Hong Kong:
The parent bank has been in Hong Kong for more than 50 years.
Presence in the mainland:
The private bank was launched in Shanghai in 2006
Key differentiator:
Strategic partnership with Bank of Nanjing, and its Fortis Haitong joint venture (an asset manager) means the firm can offer investments sourced from the mainland. If you are one of the bank's 'key clients' - that is, you are worth more than US$30 million - the bank will provide services such as jet and yacht financing; 'agrifrance' which helps clients purchase farm and forest land and vineyards in France; and advice on buying property in Europe.
What they say:
'We are deeply rooted in Asia, with a presence since the bank was established more than 150 years ago. We are strong, stable and resilient with solid profitability despite the difficult market cycles.'
What others say:
A big bank with a long history in Hong Kong. The private bank is a generous lender to its long-term clients.
The French banks, BNP included, had a scare in 2011 because of the amount of euro-zone sovereign debt found to be held by the institutions. But the situation has stabilised.

 

BSI
History in Hong Kong:
The bank has been present in Hong Kong for 30 years, but in a fairly low-key way. It has since been relaunched as a proper private bank, thanks largely to a banking licence granted by the Monetary Authority in December, which allowed clients to book trades in Hong Kong.
Presence in the mainland:
None.
Key differentiator:
BSI's recent history is defined by its chief executive in Asia, Hanspeter Brunner. Brunner formerly served as the chief executive of RBS Coutts International, but he left that bank in mid-2009. After he joined BSI, 90 people followed him out of RBS Coutts' Singapore office, out of a staff of 250, and many more followed Brunner to BSI's Hong Kong office.
BSI Trust Corporation (Singapore) Limited was incorporated in May 2009 and the Hong Kong office was only officially opened last month (March 2012). So this is a new bank with a new team, albeit one incorporating the standards of a 130-year-old Swiss private bank.
What the bank says:
'More than 90 per cent of our business comes from client referrals, and that's the best endorsement we can get.'
What others say:
The relaunched BSI is trying to avoid old habits seen in this industry, such as an over-reliance on commission income from selling high-margin investment products to clients. BSI wants to persuade people to pay for investment advice, and wants to adopt some innovative ideas about how it functions as an intermediary for clients.

 

Citi Private Bank
History in Hong Kong:
Citi first offered private banking services in Hong Kong in 1972, and Citi Private Bank was officially opened in the city in 1985.
Presence in the mainland:
None.
Key differentiator:
Citi Private Bank is huge. It has 60 offices in more than 23 countries. About 1,000 work for the bank in Asia Pacific including more than 300 private bankers and investment specialists.
With size comes resources. The private bank has access to substantial research created within Citigroup, which also has a large investment bank with global brokerage operations. More than 280 analysts cover 2,800 stocks and 110 corporate bond issuers in 60-plus countries.
The private bank has a diverse and global understanding of what investments to recommend to clients, given its international reach.
What the bank says:
'Clients have access to innovative and customised opportunities in private equity, hedge funds, property, managed futures and structured products that are not available to retail or mass affluent customers. In some cases, participating through a co-investment arrangement with Citi.'
What others say:
An American giant that offers everything. The bank is very investment-product oriented, and it is innovative.

 

Coutts
History in Hong Kong:
Opened in Hong Kong in 1994.
Presence in the mainland:
None.
Key differentiator:
A blue-chip bank that is strong in philanthropy. It offers portfolio-management advice to charities and non-government organisations.
Coutts is owned by the Royal Bank of Scotland, a British bank that was nationalised during the global credit crisis, and which has been paring back its operations in Asia ever since. In November 2011 Coutts dropped 'RBS' from its name.
What the bank says:
'Hong Kong and Asia will play a key role in our ambitions to increase our international footprint to 60 per cent of overall business by 2015. The refreshed Coutts brand supports our ambitions to be positioned as a leading bank in the international wealth management arena, as well as our strategy to focus on growth in markets like Singapore and Hong Kong, where we can achieve scale.'
What others say:
Licking its wounds somewhat after RBS's troubles and the mass exit of bankers to BSI, two years ago. But this is still the Queen's bank, with a fair bit of cachet.

 

Credit Agricole Private Banking
History in Hong Kong:
Started in Hong Kong on February 1, 2007. Four years later, in July 2011, it received a full banking licence from the Monetary Authority, allowing it to book trades in Hong Kong.
Presence in the mainland:
None.
Key differentiator:
Bank is affiliated with sister institutions in Hong Kong, namely CLSA, Amundi Asset Management, Credit Agricole Corporate & Investment Bank. So it's a boutique-like operation, but with resources. Credit Agricole is the largest retail bank in France.
What the bank says:
'Our bank is not a product pusher, we give the first priority to capital preservation and sound advisory to bring our clients' wealth to a next level,' says Georges Zecchin, chief executive of Credit Agricole Suisse in Asia.
What others say:
If you want accumulators or to get into all the hot IPOs, don't go to this bank. But it's a good choice if you want stable, ethical wealth management.

 

Credit Suisse
History in Hong Kong:
In Hong Kong for more than 30 years.
Presence in the mainland:
In 1985 Credit Suisse became the first Swiss bank to establish a representative office in Beijing. It opened a second representative office in Shanghai, which was later converted into a branch in Shanghai.
Key differentiator:
Credit Suisse is a giant global bank encompassing investment banking and asset management, as well as wealth management. Its asset management arm gives the bank insight into investing, and its investment banking arm provides investment products and trading ideas to the private bank.
The bank has scale. Across Asia, Credit Suisse's private bank has 360 relationship managers and manages 83 billion Swiss francs (HK$703.1 billion) of assets.
Last December, it bought HSBC's private banking business in Japan.
What the bank says:
'Credit Suisse has emerged in a much better position as compared to our peers in the financial crisis. We are one of the best capitalised financial institutions globally ... which makes us a very stable and secure financial institution that has not required aid from the Swiss government.'
What others say:
Credit Suisse did indeed come out better than its peers from the 2008-09 global credit crisis. It used its relative strength to lure customers from ailing firms, and the bank has drawn in 162 billion Swiss francs of clients' capital since 2008, including 42.5 billion Swiss francs in Asia. This is a great Swiss private bank that is in perpetual rivalry with UBS.

 

Deutsche Bank Private Wealth Management
History in Hong Kong:
Bank declined to say.
Presence in the mainland:
Deutsche Private Wealth Management has been present in Shanghai since November 2006, and DB China was locally incorporated in the mainland in April 2008.
Key differentiator:
Part of Deutsche Bank, a large investment bank in Asia with particular strengths in brokerage and trading. The firm excels in providing trading ideas. They are aggressive and have grown from a low base to become, recent years, on par with Citi Private Bank in Hong Kong in terms of assets managed.
What they say:
'The bank has had its best year so far in 2011 in gathering new client assets.'
What others say:
Smart, aggressive bank that appeals less to the emotions (clients seeking status or a need to 'understand wealth') and more to the intellect. They want to talk about trading ideas. They are better at wealth optimisation than wealth preservation.

 

Falcon Private Bank
History in Hong Kong:
The bank began in Hong Kong 25 years ago as the representative office for AIG Private Bank. Its Hong Kong branch was fully licensed in May 2006. In April 2009, as its parent firm American International Group was engulfed in the global credit crisis, the private bank was sold to Aabar Investments PJS, which is indirectly owned by the government of Abu Dhabi, richest of the United Arab Emirates, and relaunched as Falcon Private Bank.
Presence in the mainland:
None.
Key differentiator:
Falcon Private Bank is a Swiss private bank focusing on emerging markets backed by the Abu Dhabi government. The bank is small - it is a boutique operation - which means that management are closer to clients and are perhaps more responsive to sensitive decisions such as whether to lend money to a client. But it also has resources in the form of its backing by the deep-pocketed Abu Dhabi government, owner of one of the biggest sovereign wealth funds in the world, thanks to its vast oil sales.
What the bank says:
'Falcon Private Bank is a boutique Swiss private bank focusing on emerging markets. We are confident that with our strong heritage of Swiss private banking, our solid financial background and ownership structure, our profound market knowledge and dedicated team of seasoned private bankers, our business in greater China will be sustainable,' says Eduardo Leemann, chief executive.
What others say:
A small bank that is just getting started in Asia. But, given the growth of the Asian market and the rapid changes seen in the private banking market, this could be an ideal time for a newcomer.

 

HSBC Private Bank
History in Hong Kong:
The private bank has been in Hong Kong for more than 30 years. The parent bank has been in the city since 1865. It is one of the largest private banks in Hong Kong and Asia.
Presence in the mainland:
The private bank opened branches in Beijing, Guangzhou and Shanghai (headquarters) in 2008.
Key differentiator:
HSBC Private Bank is well-connected to the legion of entrepreneurs and businessmen in Hong Kong and the mainland through its long history of providing corporate banking service in China.
It builds relationships to entrepreneurs by lending money in the early stages of the business. When the entrepreneur becomes rich, he is converted into a private banking client.
Because the bank is so well established in China, it is an early adopter of new products linked to the region. For example, it was among the first to offer yuan investments in Hong Kong, in 2010, after important currency liberalisations that year.
What the bank says:
'As a leading international private bank, we build and leverage the strengths, heritage and prudent long-term strategy of the HSBC Group.'
What others say:
Still The Bank. Conservative, reliable; it is unassailable in Hong Kong.

 

JP Morgan Private Bank
History in Hong Kong:
Opened in Hong Kong in 1981.
Presence in the mainland:
None.
Key differentiator:
Focuses on the ultra-high net worth segment. The bank has been trying to reach deeper into the non-ultra market, to do more business with the merely high-net-worth.
In 2010, the chief executive of JP Morgan International Private Bank, Douglas Wurth, relocated from New York to Hong Kong, a move which was in recognition of the importance of developing the mainland market out of Hong Kong.
It has a team catering to principals of hedge funds and private equity funds, taking the view that these people need input on trusts, estate planning and philanthropy.
What the bank says:
'We focus on managing money and advising clients, rather than predominantly on transaction-based brokerage services,' says Kwang Kam-shing, market manager for Hong Kong for JP Morgan Private Bank.
What others say:
A true blue chip. A brilliant bank if you have more than US$20 million to invest.

 

Julius Baer
History in Hong Kong:
Opened in Hong Kong in 2006 and upgraded to a full branch licence in 2010.
Presence in the mainland:
Opened representative office in Shanghai in 2011.
Key differentiator:
A pure-play private bank with a brash identity. Hong Kong office has a cigar room. The Swiss institution describes Asia as its 'second home market'.
What the bank says:
'Big enough to matter, small enough to care.'
What others say:
A large Swiss private bank that is growing quickly in Asia. It came close to buying Sarasin before it went to Safra Group. Eventually Baer will have to stop describing itself as a 'boutique'.

 

Societe Generale Private Banking
History in Hong Kong:

Societe Generale Private Banking was established in Asia in 1997 with Hong Kong and Singapore as two key international booking centres.
Presence in the mainland:
None.
Key differentiator:
SG is known for its strengths in structured products in general and derivatives in particular. It is a global bank present in many markets, with strong brokerage and trading skills. It is all a strong supporter of the arts in Hong Kong, sponsoring the Hong Kong Philharmonic Orchestra and Le French May, among other endeavours.
What the bank says:
'With a high calibre investment platform comprising 42 market specialists in Singapore and Hong Kong, we offer robust and sophisticated offerings for clients. Our specialists scour the investment universe to search for optimal solutions for high-net-worth clients,' says Olivier Gougeon, chief executive Asia Pacific, Societe Generale Private Banking.
What others say:
If you want structured products and other complex, bespoke trading instruments, this bank is for you.

 

Standard Chartered Private Bank
History in Hong Kong:
Standard Chartered Private Bank was launched in 11 markets including Hong Kong in 2007.
Presence in the mainland:
Largest physical presence of the foreign private banks with three dedicated private banking centres in Beijing, Shanghai and Shenzhen and eight sub-branches in several cities including Guangzhou, Dalian, Chongqing, Chengdu, Qingdao, Hangzhou and Xiamen.
Key differentiator:
Standard Chartered Private Bank is young, but growing fast. It bought American Express Bank in February 2008. In 2010, global assets under management grew 30 per cent, including an increase of 39 per cent in Asia.
Like HSBC, Standard Chartered has strong commercial banking ties in the region, and therefore long relationships with many of the region's entrepreneurs - more than 60 per cent of its clients are business owners. The parent bank prides itself on its emerging-market focus. The parent bank fared much better than most during the global credit crisis.
What the bank says:
'We are more local than other international players and more global than local competitors.'
What others say:
Standard Chartered Private Bank is excellent for a newly wealthy client that is using a private bank for the first time.

 

UBS
History in Hong Kong:
UBS has been in Hong Kong since 1964 - it was the first Swiss bank to come to the city.
Presence in the mainland:
UBS' mainland presence was established in 1989. It started to provide wealth management services when it opened a Beijing branch in 2004. In 2006 it launched UBS Securities, an investment bank joint venture in the mainland, with which it also offers wealthy advisory services in the mainland.
Key differentiator:
UBS is the world's biggest private bank, and it is huge in Hong Kong. More than 1,000 people work its wealth management unit in the city. It is part of global bank with operations in investment banking and asset management.
The private bank as such leans on the group's total resources to offer clients an array of investment products and services (its platform, in the industry parlance).
For example, UBS's investment bank is a leading underwriter of initial public offerings in Asia. The firm is able to offer its private bank clients a favourable allocation of IPOs when demand is strong (or even, perhaps, when it is not).
What the bank says:
'UBS combines the best of Swiss private banking tradition with regional expertise, all backed by the resources and strength of a global financial powerhouse.'
What others say:
UBS was hit hard by the global credit crisis in 2008-09, where the investment bank lost a lot of money, triggering a Swiss government bailout of the institution. UBS management belatedly realised that its large, highly profitable private bank was the jewel in the crown, and it created more space between the private bank and investment bank, to better insulate the former from the troubles of the latter.
Today there is less of a seamless interplay between the investment bank and private bank, which means that private bank clients are less likely to be offered an allocation in UBS-led IPOs or other products flowing from the investment bank.
UBS's private bank has also been hurt globally by efforts in the United States and the United Kingdom to clamp down on tax evasion. Swiss banking secrecy is not what it used to be.
But, through it all, UBS remains the market leader and the standard by which other private banks are compared.
 

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