LGT managed to tick off a lot of boxes in just five months, including the speedy acquisition and data migration of ABN AMRO’s private banking businesses in Hong Kong, Singapore, and the Middle East, and the rollout of a client-facing app. In an exclusive interview with Asian Private Banker, Asia CEO Henri Leimer discusses the lead-up to the ABN AMRO deal, organisational restructuring, AUM targets and digital innovation.
LGT does not have to contend with shareholder pressure, and was already growing at a comfortable clip in Asia. Why did you feel you needed to make an acquisition?
Indeed you are right, it was less of a need for LGT. However, it is in our DNA to look for opportunities, given our history of successful acquisitions internationally. Hence, we saw a good opportunity for us when the sale of ABN AMRO’s private banking business in Asia and the Middle East came along.
I was in favour of the acquisition.
On a personal level, did you feel the acquisition was needed?
Certainly, I was in favour of the acquisition. We are privately owned and we work very closely with H.S.H. Prince Max von und zu Liechtenstein, Group CEO. My team and I in Asia were very involved in the due diligence and decision from the beginning.
LGT’s private banking platform is comparable if not better than that of ABN AMRO’s in almost every aspect.
What did the ABN AMRO platform add that perhaps LGT was lacking?
LGT’s private banking platform is comparable if not better than that of ABN AMRO’s in almost every aspect. Therefore this made it easier for the former ABN AMRO bankers to move across to LGT. There are, however, certain mortgage-specific products that ABN AMRO did offer that we had not, for example, commercial mortgages in Hong Kong, which are now included in our mortgage offering suite.
Is it fair to say that 100 RMs from ABN AMRO were added in Hong Kong and Singapore on 1 May, effectively more than doubling the number of RMs in Asia at LGT?
Yes, post acquisition our RM headcount has more than doubled in Asia.
What was the retention strategy during the acquisition? Did ABN AMRO bankers get the same remuneration package as existing LGT partners?
I am not able to comment on the remuneration package but what I would like to emphasise is that we treat everyone at LGT equally – whether they are existing or new employees. To date, feedback and the response from our new employees [formerly ABN AMRO] that have come on board has been positive.
We will continue our open-door policy including regular conversations with every banker – new and old.
You are known to be very hands-on with all your bankers, often leaving your door open and ensuring that you meet each and every one. Will this still be the case given your growing team of bankers?
Absolutely. We will continue our open-door policy including regular conversations with every banker – new and old. I want to be directly in touch with the bankers – this is the only way to know and understand what their needs are.
LGT has built a sizeable discretionary business in Asia. How does LGT plan to continue this push with the new ABN AMRO bankers?
We do not subscribe to product pushing and we have set no targets or penetration rates. We will never ask our new colleagues to move clients to discretionary portfolio mandates (DPM) unless it is in line with their clients’ needs. If their clients prefer our trading and advisory services, we already have established capabilities to fully support this.
At the same time, we are training and sharing our DPM capabilities with all our new joiners. Of course, we understand it will take some time to gain traction with new clients.
[W]e are careful not to segment our bankers and mandate them to service only certain client segments.
How will the ABN AMRO private bankers fit into LGT’s flat hierarchy structure? For example, at ABN AMRO Private Banking, teams are structured with market heads and have investment counsellors (ICs). Will you retain this structure?
Our goal is to provide and create the appropriate infrastructure around the bankers. For example, should they want to work as standalone bankers, they can. Should they wish to continue to operate in their teams, they can do that as well. However we are careful not to segment our bankers and mandate them to service only certain client segments. Ultimately, we want them to perform and be successful. We will leverage the appropriate structure to help them do this.
In LGT, we have always had investment advisors. We have a sizeable investment team which is at all our bankers’ disposal. Certain bankers with sizeable books will have their own investment advisors.
Some of the senior managers at ABN AMRO Private Banking, including the product teams, did not join LGT. Why is that?
At LGT, we have similar and established functions in place and therefore it is logical that these functions will continue to be managed by LGT. We did however take the opportunity to enhance all the support functions and front office through the ABN AMRO acquisition.
You recently rejigged the management structure so that LGT now has a private banking head in Singapore and Hong Kong as well as a CEO in both locations. What was the reason behind this?
We have strengthened and realigned the management team’s roles in Hong Kong and Singapore but I would not say this is a structural change. It’s adding more people resources to support the existing management functions rather than creating new ones. The core management team is still the same. We appointed Silvan Colani as head of private banking Singapore and Karl-Heinz Klaus as head of private banking Hong Kong. Both have been with LGT for over a decade. We have also established a new role for Hanspeter Oes as COO, Asia, in order to streamline business support functions, compliance, legal and IT operations.
Why did you appoint Silvan Colani as both Hong Kong CEO and head of private banking for Singapore?
I had this responsibility before him, that’s all. As mentioned earlier, we now need to strengthen our management capacity to enhance our oversight of the enlarged business with people who know LGT in and out. And Silvan Colani meets these criteria; he has been with us for over 20 years in different functions. Also, it is not about two different jurisdictions, as from a private banking service offering, we operate across jurisdictions as “one” LGT in Asia.
In terms of AUM, did you see much outflow from the US$20 billion in assets transferred from ABN AMRO?
Very minimal in Hong Kong and Singapore – less than 1%. However, that is normal and has nothing to do with the actual acquisition itself. It’s a part and parcel of the private banking business; for example, clients wishing to redeem their loans elsewhere.
We want to grow to over US$50 billion in Asia by the end of the year.
What is LGT’s Asia AUM post the ABN AMRO acquisition?
We are around US$47 billion in AUM in Hong Kong and Singapore. We want to grow to over US$50 billion in Asia by the end of the year.
Given increasing regulatory burdens and the costs that are usually associated with an acquisition, how is LGT keeping its cost/income ratio in check while remaining profitable in Asia?
It’s hard to pinpoint cost/income ratios until we have fully settled down post acquisition. We are still in the first stage of getting to know the new bankers, understanding what works for us and what does not. It’s still too early for me to comment on this.
LGT just rolled out its SmartBanking app alongside the closing of the acquisition. What was the rationale behind this?
Actually, the SmartBanking app was something we had been working on for more than a year, long before we made the decision to acquire ABN’s Asia and Middle East business. The timing coincided well with the close of the deal and this helped us to onboard our new clients on the app after their assets were transferred.
For banks like ours, the digitalisation of advice should not be overemphasised.
What else is in the pipeline for LGT’s digital capabilities?
The biggest objective for us is to create an ‘RM cockpit’ that allows them to provide advice to their clients efficiently. We are still evaluating the best way to go about this with different providers in the industry and it is a work in progress that we have set no timeline for. For banks like ours, the digitalisation of advice should not be overemphasised. Our clients are happy that they can still talk to humans. The digitalisation story is very much for retail banking, rather than true private banking.
Does LGT plan to venture onshore in Asia?
LGT is certainly looking at additional markets in Asia to expand in, particularly those that have been underserviced and conducive to our business. I am not able to comment on the names of those markets yet.
[I]f we do [look at an acquisition], the opportunity needs to be sizeable and in the AUM threshold of US$10 billion to US$15 billion at least.
Any further plans to acquire?
Should an opportunity arise, we will certainly have a look. However if we do, the opportunity needs to be sizeable and in the AUM threshold of US$10 billion to US$15 billion at least. But at this point, I do not see many true opportunities in this range in the market.