June 4, 2007

More private banks pick S'pore as global booking hub

Assets registered and managed here hit hundreds of billions of dollars

SINGAPORE is fast becoming the global booking centre of choice for private banks whose clients want an Asian home for their wealth.

Japan's Nomura Wealth Management and BHI Switzerland, the private banking arm of Israel's Hapoalim Bank, are the latest in the past three months to set up offices and booking centres in Singapore.

Booking refers to the process of registering the legal ownership of a person's assets in a certain financial centre. This means the assets will be subject to local regulations, but the individual may also be able to reap tax benefits.

Thanks partly to Singapore's attractive tax regime, wealthy people from around the world have booked hundreds of billions of dollars of their assets here, and at least 27 banks have made Singapore their key centre for this booking function.

The Monetary Authority of Singapore declined to disclose the number of private banks with booking centres here. But one Asian bank, which has 'near-term plans to open a booking centre here', reckons that 'the majority of the 30 to 35 significant players in Singapore' book assets here.

Singapore, which offers a large pool of talent to manage clients' assets, is 'an attractive booking centre not just for the region but also globally', said Mr Tee Fong Seng, UBS' head of wealth management.

Besides UBS, Swiss giants including Credit Suisse and Pictet & Cie also have booking centres in Singapore.

Boutique counterparts such as Zurich-based Clariden Leu and Germany's LGT Bank in Liechtenstein are among at least 10 private banks that count Singapore as their sole Asian booking centre. And India's ICICI Bank has sited its only global booking centre for offshore wealth outside its Mumbai headquarters here.

As a further sign of Singapore's growing international stature, Standard Chartered opened its global private banking headquarters here last week. Mr Peter Flavel, the global head of its private banking unit, expects the country to 'grow in importance' as a global booking centre.

Between $200 billion and $260 billion in assets are booked here by high net- worth individuals, with 30 per cent to 40 per cent of this from offshore clients, he said.

This figure is twice the estimated $125 billion in private banking assets booked here at end-2004, said a director of a financial consultancy.

This influx of wealth is driven by clients worldwide who are attracted by Singapore's favourable tax regime and banking secrecy laws, said Mr Andy Yong, the regional head of Nomura's trustee services.

Singapore offers all non-resident individuals tax exemption on foreign-sourced income. In contrast, a European Union directive has slapped a 15 per cent withholding tax on many assets held in European offshore centres. It will rise to 35 per cent in 2011.

'European money flows into Singapore have been increasing, while more Middle Eastern clients are also coming here,' said Mr Kunio Watanabe, Nomura's wealth management head. Most of the assets of Nomura's clients outside Japan are booked here.

A German private banker said that about 25 per cent of the assets managed in Singapore originate from Europe.

Four private banks said there has been a 'double-digit' increase in the amount of assets booked in Singapore by non-resident Indian and Middle Eastern clients, who moved assets from centres such as Zurich, Jersey and London here.

Singapore's emergence as a global booking centre has also fuelled the growth of the fund management and trust management sectors here.

'With more assets booked and managed here, financial innovation in fund management also booms,' explained one banker. 'This attracts even more money from sophisticated private banking clients who not only invest in funds but also may set up family offices and trusts here, creating more spillover benefits for the trust business.'

Another banker said: 'On average, private banks' margins are about 90 basis points, so the more assets booked and managed here, the more revenues earned.'

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