Changing of the guard in Asian private banking

Historically, for global banks, running an Asian branch of a private bank was a “nice to have” and, by dint of flying below the radar, the sector developed some very distinct characteristics. Women dominated leadership positions and the business model was predicated on “product push”. That is what clients wanted. The Asian private banking model evolved in contrast to the European model which centred around advisory services for wealth structuring, generational wealth transfer and philanthropy.

As a result of the crisis, we have all witnessed root and branch senior management change in global financial organisations. Asian wealth management is no different. New faces have arrived and some familiar faces have moved to new roles. Historically Asian private banking leaders were female, highly educated and from the region. Some have weathered the financial typhoon, such as Monica Wong, CEO at HSBC Asia Pacific, Kathryn Shih, Asia Pacific CEO at UBS Wealth Management, and Enid Yip, CEO of Sarasin Asia.

Where there have been gaps in senior management, global banks have sent their brightest and best to Asia. JP Morgan Private Bank announced in June the appointment of Andy Cohen as Hong Kong based CEO. In 2009 RBS Coutts posted Nick Pollard as CEO of RBS Coutts Asia. A sceptic might say this is nothing new. Just look at Jardine Matheson in the 19th Century, when they sent talent to Hong Kong. But will these new leaders from the West try to insert the European wealth management model into Asia? “You cannot lift and shift into Asia,” insists Mr Pollard.

The pressure on winning talent is immense. Standard Chartered, with AUM of $42bn in Asia, reportedly wants to grow to 750 bankers, from the current level of 450. RBS Coutts Asia is also pursuing a growth agenda in Asia aiming to double AUM and hire an additional 200 staff.

Boutique private banks, like Sarasin, led by Enid Yip, take a different approach. “I have no plans to hire 100 bankers in five years time,” she explains. “We are deeply committed to remaining a boutique private bank.”

Banks are also deploying plans to grow local talent for the future. RBS Coutts is bringing in a graduate recruitment programme. “The market here is young and the talent is narrow,” says Mr Pollard.

The Asian wealth management market is characterised by a high turnover rate among staff who often move in teams every few years. Management in many banks are now offering key professionals fixed term contracts of three to five years based on appropriate rewards. But what do Asian ultra high net worth (UHNW) and HNWs clients want from private banks today and can the leadership teams deliver this?

Generally speaking, Asians are very brand conscious in their consumer choices, whether that is haute couture, jets or private banking. They will therefore flit between a group of financial brands and switch between them for product opportunities. This is particularly relevant for UHNW clients in Asia, who post-crisis have a very specific list of criteria when making asset allocation choices. Today UHNW clients want their private bank to offer them tangible investment opportunities with clear milestones and a route to exit. So a long-term investment in a Brazilian land opportunity is more meaningful than the latest quantitative hedge fund strategy flown in from New York.

Moving down the wealth spectrum, HNW and affluent clients remain ultra conservative. Private bankers have to illustrate that their product sets offer liquidity and have to deploy all their technical and influencing skills to get clients to invest in anything other than a cash plus product.

Sarah Dudney, is a partner at search firm Lockwood Gibb & Associates. Lockwood Gibb is engaged in senior level searches in Asia in wealth and asset management.

Enid Yip, Sarasin Asia