2023 has been another challenging year for private banks. From the high interest rates environment to the shock merger of UBS and Credit Suisse, to the slower-than-expected growth in mainland China, CEOs in Asia Pacific shared how they navigated these and other challenges during the plenary panel discussion CEOs in Focus at the 13th annual APB Summit 2023 in Hong Kong on 28 November.
Staying close to the clients: UBS’s Lo
On top of the macro challenges over the last 12 months, 2023 was also a shocking year for both UBS and Credit Suisse after the shotgun marriage of the two banks. For UBS, the focus of its global wealth business is to continue to stay close to its clients.
Amy Lo, UBS
“Our focus is still staying close to the client and delivering the client value, as well as continuing to sustain growth. We don’t want to be distracted,” said Amy Lo, chairman of Global Wealth Management Asia, co-head Wealth Management Asia Pacific, UBS GWM, and head and chief executive, UBS Hong Kong.
While in Asia, UBS has not commented significantly on the current integration process with Credit Suisse, Lo highlighted the focus for 2024 will include a few areas, one of which is to continue to focus on the “seamless and successful integration” to bring the “power of two”, referring to the combined strengths of both UBS and Credit Suisse.
“Another important pillar is [to] continue our leading position in Hong Kong and Singapore as the important hub,” she added. While Lo helms the North Asia market for UBS GWM, the bank hired Credit Suisse veteran Jin Yee Young to oversee its Southeast Asia business earlier this year, which are key regions for UBS and Credit Suisse.
The next key pillar for Lo is to build growth in some of the established markets, particularly onshore markets such as Australia, Taiwan, Japan and India, where UBS can leverage the strengths of Credit Suisse, which already has a significant presence in some of these markets.
UBS in 3Q23 attracted US$13 billion of net new money in Asia on the back of the integration with Credit Suisse. Lo highlighted that the bank has to leverage on these assets and plan for how they can best service clients going forward, in terms of asset allocation and diversification on the back of the two banks.
Diversified business model: BNP Paribas’s Tellier
BNP Paribas Wealth Management is seeing strong momentum and puts this down to its diversified business model and balanced coverage in Hong Kong and Singapore.
Arnaud Tellier, BNP Paribas
Despite the impact of COVID, Arnaud Tellier, CEO of BNP Paribas WM APAC, said the bank saw single-digit growth in its top-line revenue in 2022, and in 2023 it is already seeing double-digit growth.
“Because we have been able to stay engaging with our clients, protecting our client portfolios, listening to what’s their fears, what’s their values, what’s their interest. Also, because of our diversified and resilient business model in terms of asset classes, in terms of geographies. Clearly, we are not over-relying on China. We are fairly well diversified across Southeast Asia and North Asia,” Tellier shared.
He said the bank also saw rapid growth in net interest income, with transactional activity being fairly resilient. “Banks like us with a diversified business model, it’s an opportunity to engage more with our clients and to offer some innovative solutions.”
Risk management benefitted us: Morgan Stanley’s Chui
Fewer IPOs and a quieter business environment mean a less busy year for Morgan Stanley Private Wealth Management. But Vincent Chui, head of PWM Asia & chief executive, Morgan Stanley Bank Asia, sees the opportunities this year as stemming from the need for risk management among clients.
Vincent Chui, Morgan Stanley
“We did well,” Chui said, sharing that at the beginning of the year, he emphasised counterparty risk management and interest rate risk management. “And both turned out to be important concerns and opportunities for us as a global tier one bank […] and I think we benefitted from that trend.”
For clients, Chui added that apart from benefitting from the net interest rate environment from major banks, the bank is also trying to focus on offering appropriate products for clients who could actually generate suitable risk-adjusted returns.
“After all, when you can gain 5% to 6% rates from a major bank, how would you actually think about investing in high-risk products? So I think that will continue to be the case.”
Asset allocation and diversification
In a higher interest rates environment, private banks are searching for the best way to help clients protect their wealth.
“Morgan Stanley is not a traditional private bank. We like to think about ourselves as a private bank, but think and act as an investment bank,” Chui said. In 2023, he said the bank was busy working on flow transactions to hedge large stock positions within client wealth.
The 13th annual APB Summit in Hong Kong saw a record turnout, bringing together over 300 professionals, ranging from C-suite executives to market heads, discretionary advisors, investment professionals, and wider members of the private wealth management community
“Because we are not just talking about helping clients to give them another point of savings, right? We are talking about how I could help you protect your largest stock position, either as your majority shareholding or maybe a large significant stake in some of your key portfolio. That, I think, is extremely important, and we are very proud that we can offer that.”
In terms of net new money, given the challenging macro backdrop, Tellier shared that a lot of new assets come from deposits, but he also stressed that clients should stay invested and remain diversified with their portfolios. He added that principal-protected, structured and credit-linked notes and products are more attractive in a higher rates environment.
Increasing private market penetration
When it comes to private markets, private banks in the region agreed that the asset class was one of the most well-received asset classes in the region.
Stephanie Drescher, Apollo
For Apollo, one of the largest private equity firms in the world, Stephanie Drescher, partner, chief client & product development officer at Apollo Global Management, said the path to increasing penetration in private markets is through education.
“A big piece of that is education. In terms of making sure that everyone understands the power of adding that excess return, albeit with some additional illiquidity in a portfolio, and ensuring that the foundation is there to ultimately have the advisors and the bankers speak with their clients about the role of developing a private allocation,” Drescher said.
