Benjamin Cavalli, head of private banking, South Asia, Credit Suisse shares his views with Asian Private Banker in the ‘Final Word’, a ten-part series where the industry’s leaders share their thoughts and opinions on key issues around industry trends, business performance, investment solutions, regulations and compliance, and technology.
Industry trends | What is the state of Asia’s talent pool and did your firm pay significantly higher for new talent? What is your view on private banking talent development in Asia?
The regional market is indeed very competitive when it comes to hiring RMs experienced in private banking. There is a scarce supply of experienced talent in a relatively nascent industry, so it’s important for banks not only to hire from the market, but to groom talent from within the organisation’s existing talent base.
At CS, we focus on strategically recruiting senior bankers who are the right fit for our integrated banking model, onboarding and integrating the new bankers effectively, as well as increasing the productivity of existing talent, and maximising returns from the investments we have already made.
In addition, with our distinct APAC business model and our integrated wealth management and connected unit combining the expertise of our private banking, and investment banking and capital markets teams, we’re able to leverage on collaboration efforts in the coverage of our clients in both revenues and asset generation, as well as the delivery of holistic solutions.
In the first nine months of 2018, our RM headcount remained stable, while we grew net new assets by 11%.
Business Performance | In the midst of what has been construed as an increasingly difficult macroeconomic environment, how do you think the private banking and asset management industry will perform in 2019? Will it be a year to separate the wheat from the chaff?
In these more challenging markets, we believe our integrated approach and focus on more stable, annuity-like revenue streams leaves us well positioned to support our clients and help them not only navigate the current climate but also capitalise on opportunities that arise.
We continue to strive for a balanced mix of transaction and recurring revenues and net interest income while a key focus remains in driving managed solutions spanning discretionary and advisory mandates — i.e. CS Invest — and funds and alternative fund solutions. In the first nine months this year, our recurring revenues grew 16% YoY despite challenging markets.
In addition, we aim to increase our leading mandates penetration and to make our clients better investors with a fee-for-advice model that increases alignment of interests between the bank and client. CS Invest — our human-led, digitally enabled advisory solution that offers clients access to retrocession-free share classes of funds — is one such differentiator that helps clients improve performance. We’ve seen substantial demand with assets tripling since launch, as clients are acknowledging the benefits of a systematic process supported by our house view and the leveraging of technology and digitisation to enhance their investment experience.
Assets of our bespoke discretionary mandates, which represent more than 80% of our discretionary mandate business, have also grown by more than 20% per year in the past few years.
Investment Solutions | Ten years on from the GFC, how has your product shelf evolved and how has clients’ perception of structured products changed since then?
Since the GFC, the use of leverage and the level of risk-taking has decreased significantly, our solutions shelf has diversified more, and clients are increasingly demanding managed solutions and adopting a more structured portfolio approach to investing. In addition, our front office is more educated on products and solutions and the industry has a much better understanding of client suitability.
We still see good interest from clients for structured products as they recognise that these can be an efficient way of investing in multi-asset classes that are tailored to individual risk appetites and risk/ return profiles. Increasingly, we’ve observed that more clients are venturing into more bespoke products.
Meet 2018’s industry leaders in the full round up of of Asian Private Banker‘s the Final Word 2018.