More than six years after Francesco de Ferrari, former APAC head of Credit Suisse Private Banking, entered Asia with ambitions for growth and scale rather than cost management, the numbers back up a transformative exercise to create a leading integrated private bank.
“I’m not going to leave behind a legacy of just managing costs in Asia,” said de Ferrari in a conversation with Asian Private Banker in 2012, one year removed from the integration of Clariden Leu.
At that point, Credit Suisse had already begun to make transformative moves and implement a progressive strategy which, in hindsight, made de Ferrari and the leadership team private banking pioneers in Asia.
The bank had just acquired HSBC’s wealth management business in Japan, a sign of Credit Suisse’s openness to onshore ventures — an area most competitors have preferred to avoid due to complex compliance risks and difficulties in scaling — which would eventually lead to more tactical initiatives in other domestic markets like Thailand and the Philippines.
Early on, de Ferrari had also identified the opportunity to support Asian family businesses to grow their business and monetise wealth, highlighting its strong investment banking franchise in the region.
Today, the integrated bank approach is becoming increasingly mainstream for large financial groups to realise synergies and tap into internal opportunities. And the term ‘entrepreneur’ — front and centre of Credit Suisse’s slogan to be the “trusted entrepreneurs’ bank” of Asia — is now deeply engulfed in the industry’s lexicon.
The reality is few banks that boast their one-bank credentials have been as successful as Credit Suisse’s integrated APAC division at delivering on this objective.
It was under de Ferrari’s watch, too, but in no small part due to the work of François Monnet, now head of private banking North Asia, that Credit Suisse Private Banking APAC made steady strides in the digital sphere. Its Digital Private Bank is one of the most functional, feature-laden, and ‘adopted’ digital platforms in the region, and the decision to deploy ‘CS Invest’, a flat-fee and retrocession-free advisory solution when demand on the street for such a service remains debatable points to the private bank’s willingness to drive the industry — and investor — forward.
So what do the numbers say? Since 2012, the bank has nearly doubled its AUM from CHF 106.8 billion to 2H18’s CHF 205.6 billion. As a percentage of AUM, net new asset inflows have maintained a tight range of 8-12% every year. And since the bank first publicly disclosed its regional private banking figures in 2013, the Asia business under de Ferrari’s leadership has grown almost 140% from CHF 964 million to CHF 2.3 billion.
|AUM (CHF bn)||NNA (CHF bn)||Net revenue (CHF mn)||Net margin (bp)|
“Under Francesco’s leadership, we have built a highly successful onshore and offshore private banking business model and expanded its footprint across the region, beyond established key wealth management hubs, to capture the opportunities in both mature and emerging wealth markets,” said Helman Sitohang, APAC CEO for Credit Suisse.
Although the exit of de Ferrari will undoubtedly be felt by the bank, it rests in able hands.
In North Asia, Monnet has proven himself capable of turning around the business with a focus on quality, productivity, and penetration, particularly of Hong Kong entrepreneurial UHNWIs — a segment the bank has had long-rooted relationships with but lacked a viable strategy to generate activity. In 2017, net new money from Hong Kong clients increased by a triple-digit percentage with the majority sourced from existing clients — a clear indication of satisfaction, the effectiveness of reactivating relationships, and Monnet’s laser-like focus on individual performance.
Benjamin Cavalli, head of private banking South Asia has proven he can navigate the complexity of the various segments and achieve results. In addition to its onshore ventures, including in Thailand and the Philippines where Cavalli is overseeing a growth drive, the bank’s Singapore business has registered strong results. Just this week, Asian Private Banker reported Credit Suisse’s three-fold growth of net new assets, an all-time high after having set the last record in 2017 when the bank also added 11 more Forbes-listers.
Under their leadership, Credit Suisse APAC’s private banking franchise will function on dual-engines, with Monnet and Cavalli reporting directly to Sitohang in the absence of an overarching APAC head. On paper, that structure should provide the two major offices with greater autonomy to execute strategies they see fit for their respective segments — a distinctively different approach from other major competitors.
The bank said today that the “new structure will enable closer proximity to clients, shorten decision making lines, increase regional focus and continue to foster business collaboration across the bank’s integrated private banking and investment banking platform”.
Of course, this could also lead to some siloing which may create additional cost pressures not immediately visible, and impinge upon the scalability of some functions given their closeness to one or the other office. Time will tell.
Last year, Asian Private Banker asked de Ferrari if he thought a change at the top of the private bank would be positive. His reply was as follows:
“Change is always very good. I am a big proponent of change. This is the longest I have been in a job. We now have a management team that grew up together but in different roles and I think this helps drive innovation and change while preserving a certain amount of stability. The team now has front-to-back experience, and the way this business is going, the DNA and skill set that are required are completely different from those when I arrived … Six years ago, you could be a front office guy and do fantastically well as long as you are good with clients and don’t make too many mistakes. Today, it’s completely different. You need to know compliance, you have to understand the regulatory environment, you have to discharge your advisory responsibility otherwise you could go to jail.
I think it is going to be fascinating in the next four to five years for this industry. For instance, the development of technology, blockchain etc, some of this is going to be really exciting and will happen in Asia.
I am here to stay. As far as I can decide, I am very happy, plus the kids are happy here too!”
Famous last words.