S'pore poised to rule wealth management

[mr funny]

http://www.businesstimes.com.sg/sub/news/story/0,4574,444330-1308772740,00.html?

Published June 22, 2011

S'pore poised to rule wealth management

By 2013, it will be top of the league, overtaking Switzerland and London: PwC

By GENEVIEVE CUA


(SINGAPORE) Singapore is expected to leap to the top spot as the world's largest wealth management centre by 2013, surpassing Switzerland and London.

This is one of the findings of a survey of 275 institutions in 67 countries by PricewaterhouseCoopers (PwC) in its latest private banking and wealth management report.

Driving Singapore's growth is the rapid pace of wealth creation and accumulation in the emerging markets, as well as regulatory pressures elsewhere.

Singapore's ranking in 2011 is third, after Switzerland and London. Hong Kong is in fourth spot, followed by New York. In 2013, Switzerland and Hong Kong are expected to be second and third placers, respectively, followed by London and New York.

Justin Ong, Asia Pacific leader for PwC global private banking and wealth management, said Singapore has always been among the top wealth management centres, ahead of Hong Kong.

'Private banks globally and regionally view Singapore as one of the best international financial centres as well as a preferred booking centre to capture the emerging Asian business . . .

'Hong Kong is perceived as big due to the larger customer base and the potential of China from a client service standpoint. But from an operational perspective, Singapore as a booking centre for private wealth for the region is still the largest due to the more favourable regulatory environment and tax incentives, etc.'

The Asia Pacific ex-Japan wealth market is expected to expand by about 11.4 per cent a year till 2015, according to the Boston Consulting Group (BCG) - almost double the global average growth rate of 5.9 per cent. The region's assets under management (AUM) are expected to rise to US$37.3 trillion by 2015, from US$21.7 trillion in 2010.

PwC's survey also threw up insights into bank profitability. It found, for instance, that the average gross margin of 72 basis points on assets under management is expected to increase to 78 basis points over the next two years.

The average cost-to-income ratio, however, remains high at 71 per cent compared to 72 per cent in the 2009 survey.

The shortage of talent remains a challenge, yet banks are themselves consolidating their workforce. Almost 40 per cent of respondents rated their relationship managers (RMs) as average or below average in terms of their ability to meet client needs.

Asian respondents had the highest redundancy rate with 52 per cent of departing RMs 'having been encouraged to leave', said PwC. In EMEA (Europe, the Middle East and Africa), 33 per cent were asked to go, and in the Americas, 17 per cent.

Referrals from existing clients were cited as the biggest source of new clients, yet only 37 per cent of CEOs believe existing clients would recommend them to potential clients.

While 81 per cent of respondents think the firm's RMs greatly understand clients' investment objectives, only 56 per cent agree that they have a full grasp of client's overall financial goals, retirement income planning needs or extended family issues.

The most profitable firms have on average far lower ratios of clients per RM. In the US$5-10 million wealth band, there are 54 clients per RM on average. But for institutions with the lowest cost-to-income ratios, there are only 26 clients per RM.

Meanwhile the most profitable client segments were those in the US$1-5 million wealth band, followed by the US$5-10 million and then the mass affluent segment of US$500,000 to US$1 million. The least profitable was the US$10-15 million segment.

Mr Ong said the US$1-5 million segment is typically the largest customer base among private banks in the global survey. 'Due to the investment characteristics of this group and their propensity to explore new ideas for wealth generation and accumulation, a lot more transactional activity occurs across a range of products. Coupled with larger economies of scale, there is more profitability to be gained as RM productivity increases.'

He said private banks have historically struggled to be profitable dealing with clients in the upper range of US$50 million as these clients' needs are akin to institutional clients.

'In Asia, private banks have not had the experience, products and services to cater well to this group especially in the areas of wealth planning and financial restructuring across family and corporate assets. The typical product push mentality has not worked.'

Only recently, he said, have private banks begun to develop ultra-high net worth offerings such as family office services.

[mr funny]

http://www.straitstimes.com/PrimeNews/Story/STIStory_682396.html

Jun 22, 2011

S'pore 'set to be top private banking centre'

But bankers say it's not guaranteed as assets in Switzerland still high

By Gabriel Chen, Finance Correspondent


SINGAPORE will become the world's top wealth management centre by 2013, thanks to growth in emerging markets, and the decline of Switzerland and London in the wake of tougher regulations.

The findings came from a PricewaterhouseCoopers (PwC) report out yesterday that pointed to the changing balance of power in financial markets.

It said Singapore will leapfrog both European centres in the next two years, with Hong Kong in third spot behind Switzerland and ahead of London.

The findings in PwC's Global Private Banking and Wealth Management report were based on a survey of wealth managers and private bankers between December last year and April. The questionnaires were completed by 275 institutions in 67 countries - 62 per cent from Europe, 24 per cent from the Americas and 14 per cent from Asia-Pacific.

'For many years, we have asked respondents to indicate which financial centres they viewed as the main wealth management and private banking hubs,' PwC said. 'The historical answer was Switzerland, London and New York. This is now changing. This year, we asked our ranking question again, but we also explored the impact of increased regulation.

'In response to increased regulatory pressures, our respondents see Switzerland, London and, to a lesser extent, New York all being challenged by the rise of Singapore and Hong Kong in the coming two years.'

Private bankers told The Straits Times that while Switzerland has traditionally been the dominant centre for wealth management and a safe haven for high net worth individuals to park money, Singapore is closing the gap due to the growing number of rich here.

After the global crisis, demands for more transparency have forced Switzerland to agree to share more bank client data with the tax authorities abroad. The Swiss also seek to avoid a repeat of the legal action that led to the country's largest bank, UBS, paying a US$780 million (S$962 million) fine in 2009 for helping Americans evade taxes.

'The range and quality of services today are very much the same between the two countries,' said Mr Hanspeter Brunner, chief executive for Asia for Swiss private bank BSI. 'A growing number of European clients are also booking their assets in Singapore, as they want an Asian-centric portfolio.'

A recent Boston Consulting Group report found that 15.5 per cent of households here have wealth of more than US$1 million - defined as investable assets, exclusive of owner-occupied property and items like art.

Still, some top bankers say it is by no means guaranteed that Singapore will upset Switzerland soon.

'I don't think Singapore will overtake Switzerland in absolute terms in the foreseeable future,' said Mr Rolf Gerber, chairman of LGT Bank (Singapore). 'The growth rates in Asia and Singapore are higher as long as the next crisis does not destroy a lot of wealth... but there is still a huge gap in terms of private banking assets managed in Switzerland and Singapore.'

Singapore's private banking assets under management are estimated to be about one-third of Switzerland's.

Morgan Stanley's chairman for South-east Asia, Mr Ronald Ong, said that while wealth management activity in Singapore will increase, it will play 'partner' to Switzerland.

'Switzerland still has a lot of money,' Mr Ong said.

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