Standard Chartered’s million-dollar club of priority private clients – those with US$1 million and up – is fueling growth at the emerging markets-focused bank.
Amid a challenging year for the banking industry, the bank saw its AUM in Asia increase 7% to US$137.4 billion in 2022. This growth propelled Standard Chartered’s ranking from ninth position in 2021 to sixth in Asian Private Banker’s AUM league table for 2022.
According to Raymond Ang, the global head of private and affluent banking, the growth can be attributed to two factors: the expansion of its client base and a focus on deleveraging.
“First, in the last two years since I joined, our private banking segment started to focus more on bringing in new clients. This is in addition to internal clients of the bank, such as clients in priority private who are upgraded to private banking, and corporate clients who become private banking clients,” Ang shared with Asian Private Banker.
“UBS’s private client is equivalent to Standard Chartered’s Priority Private, HSBC’s Jade and Citibank’s Citigold. Basically, we’re serving exactly the same clients.”
Last year, Standard Chartered recorded 68% year-on-year growth in new private banking clients, with China making up about 35%, while the remaining 65% are from Southeast Asia. The bank does not disclose AUM for the private banking business.
“Second, we faced the same deleveraging issue as every other pure play because the markets were not good,” Ang continued. “However, we are one of the few banks that actually grew beyond the deleveraging. The net new money secured by the private bank alone was enough to offset the deleveraging.”
In February, Standard Chartered opened its fourth private banking centre in India in Kolkata, after Mumbai, Delhi and Bengaluru, to serve the country’s growing client base. Globally, the bank hired 48 private bankers in the last 12 months.
Credit Suisse takeover less significant
Ang sees the takeover of Credit Suisse by UBS as primarily affecting the UHNW segment, and as such may be less significant to Standard Chartered.
However, not all UHNW clients have sophisticated needs, he pointed out. “There are some whose needs are very simple. For example, a client with a US$200 million fixed income or private markets portfolio may choose to bank with us to diversify.”
Before joining Standard Chartered, Ang spent about nine years at UBS in various roles including head of Southeast Asia UHNW and head of Greater China, Japan, and Indonesia. He has also worked at DBS, Citi, and The Carlyle Group.
Same clients, different models
When queried about his perspective on the inclusion of retail-linked banks in Asian Private Banker‘s league table, Ang’s said, “basically, we’re serving exactly the same clients”, but just in different segments.
“For example, a Swiss private bank would have their private clients’ investible assets threshold between US$2-US$5 million, while their private banking clients are US$5 million and above. These clients are managed separately because it is expensive to offer the full platform to all clients.”
“So, to draw a parallel, UBS’s private client is equivalent to Standard Chartered’s Priority Private, HSBC’s Jade and Citibank’s Citigold.”
The investable amount at Standard Chartered’s private banking business starts at US$5 million, while the priority private segment covers clients ranging from US$1 million to US$5 million in assets.
“If they are big enough they will have a family office in Singapore as a preferred booking centre. So this one family is serviced by one bank across three locations. You can’t go to a pure play for this.”
It’s the client’s choice
Ang believes the retail-linked banks will continue to service the US$1-US$5 million segment because the economics are better. The cost to income in the segment is 40-50%, whereas in the private bank its 65-70%.
For clients below the US$5 million threshold, they require not only a credit card and mortgage but also rely on retail banking services and private banking products. He noted that clients often show a preference to take a mortgage with an onshore bank, and they know that’s the strategic strength of a retail-linked bank.
“Let me cite an example of an NRI family. Parents have a business in India, and children who are in their 40s, live in Dubai and want to buy UK real estate. If they are big enough they will have a family office in Singapore as a preferred booking centre. So this one family is serviced by one bank across three locations. You can’t go to a pure play for this,” he said.
“It’s beyond multi-geography and multi-segment. The father could be a private banking client with a mortgage account in priority banking. They bank across the bank.”
The US$1-US$10 million client group has evolved in a way that they only stay with the bank because of their satisfaction with the relationship manager (RM), which is very similar to private banking, Ang observed.
If the RM joins another bank, there’s a chance that the client will leave with the RM. On the other hand, if the client is at US$50,000, the bank matters because access to credit card and giro payments are more important.
“Once their wealth grows to US$1 million and above, the relationship tilts more towards the RM. Relationship matters, for clients with up to a certain wealth threshold,” he concluded.