When Arnaud Tellier was named BNP Paribas Wealth Management’s Asia-Pacific co-head in late 2019, the French private bank was on the cusp of a tumultuous period in the region.
Just weeks after his appointment, Andy Chai, Tellier’s regional co-head resigned, leaving the Frenchman as sole Asia-Pacific CEO. By early 2020, COVID-19 had barrelled through the region, upending many industry leaders’ plans for that year. If the Frenchman did not already have enough on his plate, in June of the same year BNP Paribas WM withdrew from India’s onshore market, shedding billions of dollars of AUM in the process.
But fast forward to early 2022, and Tellier is faced with a rosier scenario. “2021 has been a record year for us. We are reaping the benefits from two years of reorganisation and consolidation,” he told Asian Private Banker. “We had substantial net new cash last year, and we grew our revenues by two-digit figures in Asia. Asia has been the growth engine of the business overall.”
By Tellier’s own admission, part of BNP Paribas WM’s robust performance in Asia-Pacific was down to a “very supportive” market environment for much of the year — high-yield bonds and technology stocks in China notwithstanding. As he pointed out, the bank was able to “keep the momentum” throughout 2021, despite challenges in sourcing new clients due to pandemic travel restrictions.
Much of that growth, as Tellier described, boiled down to the bank better defining what it is: in terms of products, markets, platform and clients.
Record year for DPM
On the product side, BNP Paribas WM has made significant inroads in terms of penetration of discretionary portfolio management (DPM). “For DPM it was not only a record year for volumes, but also a record year for revenues,” Tellier explained, even as the bank suffered outflows from bond mandates. As is the case for many of Asia-Pacific’s private banks, volatility in regional markets last year along with low interest rates underscored the urgency with which to shift to mandates, which offer a more stable source of fees. “We can’t depend only on transaction activity — we see that the market is very volatile,” he added.
BNP Paribas WM has thought hard about how it should differentiate in terms of DPM. Part of that is having a local focus, such as basing DPM portfolio managers and sales teams in Hong Kong and Singapore. This allows them to interact with clients in the Asia time zone, while using BNP Paribas WM’s global research and methodology. Other initiatives include offering tailor-made mandates at smaller sizes, as well a higher LTV and lower cost of funds for clients who want to deploy leverage on a DPM portfolio. Its mandates also feature a strong undercurrent of sustainability.
In DPM adoption by clients, one weakness for the bank is North Asia, which lags South Asia. Tellier attributes this to a different client mindset in the former. “Many of them have sophisticated family offices. They normally want to select their investments and trade themselves.”
But that is changing. The BNP Paribas WM head of APAC, explained that many U/HNWIs in Greater China, particularly younger entrepreneurs, saw their self-managed portfolios hit by the market meltdown in the latter half of 2021. A good part of them are now shifting assets into DPM. “Until recently they knew where they wanted to invest,” Tellier pointed out. “They didn’t want to delegate this, but I think with what has happened in the last quarter — we see that is changing.”
Making a meaningful difference
The bank’s DPM push succeeded in expanding BNP Paribas WM’s wallet share with existing clients in APAC, but the bank had less joy in converting prospects in 2021. “We grew with existing clients and with new clients, but overall in terms of client acquisition, we were below our targets largely due to the pandemic,” Tellier said. “That’s our top focus for this year.”
One hurdle to sourcing new clients had been onboarding procedures amid regional travel restrictions, which the bank has recently sought to resolve through initiatives such as the introduction of e-signature. “We have made lots of improvements in our client onboarding process,” Tellier noted. “Two years ago, it was pretty slow. Now, I would tend to think that we have probably one of the fastest turnaround times for client onboarding.” About four-fifths of new accounts in less than 20 business days, he added. “This will certainly help us in reaching our targets for client onboarding.”
Perhaps more significant has been BNP Paribas WM’s efforts to redefine its target clients. The most dramatic example of that was the bank’s withdrawal from India’s onshore market two years ago. “The main lesson for me is that what matters is not scale. Scale is not the ultimate goal, you need to be relevant and you need to be able to bring a difference into the market that you’re serving,” Tellier believes.
Likewise, BNP Paribas WM has sought to more specifically define itself in China, the bank’s largest regional market in terms of growth in net new cash and revenues. “We want to be the bank for entrepreneurs and families — we understand them and are able to serve them well,” Tellier explained.
“We have significantly deepened our credit penetration in terms of our Chinese clients. That has allowed us to be much more focused and to grow our credit penetration on those existing clients and new ones.”
Hong Kong as wealth hub for Greater China
Following his appointment as regional head of BNP Paribas WM, Tellier relocated from Singapore to Hong Kong, a much larger market for the bank. After more than two years of strict quarantine and travel restrictions, as well as political upheaval, Hong Kong’s status as wealth hub for Greater China and the wider region has faced increasing scrutiny.
While Tellier noted that Singapore is burgeoning as a centre for Greater China wealth — particularly for luring family offices — it is not currently challenging Hong Kong in this regard. Chinese clients “still prefer to have a Hong Kong-based RM and when they want to have a second home, it is generally in Hong Kong. The talent pool is still a lot wider in Hong Kong than in Singapore, but Singapore has a long term view in addressing all of this”, Tellier pointed out.
He added that the French private bank is hiring Greater China-focused RMs in the Lion City for clients who do want this option. Hong Kong-based clients too can choose to book their assets in Singapore. “We are totally agnostic and do not advise clients on booking sites. It’s the same for us, we have a fully regional platform.”
BNP Paribas WM’s deeper DPM penetration, faster client onboarding and better defined target clients should give Tellier reason to be pleased with what has been achieved so far. But he is just getting started.