Domestic players consolidate gains

In order to exploit the relative advantage that domestic banks are enjoying versus some of their weakened global peers, RHB Bank, the fourth largest banking group in Malaysia, has recently revamped its wealth management division to make sure it is better placed once the wind turns again. “Domestic banks are now in a much stronger position,” said Mr Renzo Viegas, head of retail, who joined the firm last year from Citibank, where he was COO. “But when times change and foreign banks are going to consolidate their position back again, we will be much more challenged. We had many gaps and we are on our way to closing those gaps, if not taking some leading edge,” maintained Mr Viegas. The bank branded its wealth management division Infinity Banking, set up 13 centres across the country and expanded its team to 40, with aggressive growth plans for the future. Advisers were sourced from its personal banking division as well as externally. The head of wealth management, Linda Wong, also joined from Citi, where she ran the wealth management division. The risk profiling process has been made “more robust” and six model portfolios are now available to clients. The 20,000 affluent customers, who need to have at least R200,000 ($57,000) with the bank to be able to access the wider range of services and products, represent only one per cent of the bank’s client base, but they are very profitable to service. Each customer on average generates a yearly profit of R5,000, mainly due to the sale of funds and structured products, explained Mr Viegas. Total fund assets for the retail unit amount to only R450m, but its 40 per cent growth in the past 6 months, only a percentage of which is due to improved market conditions, is certainly encouraging, believes Mr Viegas. Currently, 30 per cent of the total assets are invested in funds manufactured by in-house firm RHB Investment Management (IM) and 70 per cent by third-parties. “We always give RHB IM the first right of refusal for principle protected funds, which have been very popular over the past months,” said Mr Viegas. Of the total 80 funds available to customers, 15-20 will be recommended at any point in time. Mr Viegas believes that while Malaysia has a great potential in terms of wealth management, private banking does not offer many opportunities, as shown by foreign banks, such as Citi, shutting down operations. Competition from offshore private banks is also very strong. Carolyn Leng, co-head of private banking at CIMB, has a different view. The firm, which has been servicing the rich with at least R1m in assets for the past 5 years, claims to be the only domestic bank in Malaysia to provide “true private banking services”. “People were no longer satisfied with just off-the-shelves products. They wanted more tailored solutions and we are trying to build out business along that path,” says Ms Leng. As to offshore bankers, she says: “They are suitcase bankers, they fly in to see their clients and fly out, but there is inconsistency in the approach. The only competition that we face from them is on the product offering.” The regulatory authority in Malaysia has further tightened its rules, in the wake of recent events, making the launch of new products an even longer process, explained Ms Leng. One legal away around that is to offer solutions to accredited investors, who have to declare to have at least R3m and invest a minimum of R250,000. Ms Leng is also on the lookout to add a few more advisers to her team of 42, who liaise with the bank’s 2,500 high net worth customers. “I have been looking for advisers since 2008 and I have not been able to hire any,” says Ms Leng, explaining that five of her relationship managers, including three team leaders, were recently poached by a top foreign bank. All of them are now out of job, but that is a meagre consolation. “Now I want to hire married women, because they are a lot more stable.” Clients, who are mainly men and entrepreneurs, like liaising with women. “That motherly instinct is good, women don’t tend to take excessive risk, they are very detailed and they listen more. Ego is always an issue with male advisers, as they try to get their point across,” she explains. But Chinese men tend to prefer to deal with a male adviser, said Ms Leng, explaining that at the moment 35 per cent of her team is made up of men.