This is a sponsored article from Bank of Singapore.
Traditionally cast in a more inconspicuous backstage role in the world of private banking in Hong Kong, the family office has suddenly moved into the full glare of the spotlight.
As Teresa Lee, Head of Greater China at Bank of Singapore’s Hong Kong Branch puts it, “this year the family office has become the hottest topic in wealth management in Hong Kong. In the first quarter of 2023, we received double the number of enquiries about setting up a family office than we did for the whole of 2022”.
What’s behind this surge of enthusiasm for the family office? Most notably, there has been a widespread recognition among families – brought on by the sobering social and financial effects of the pandemic and subsequent geopolitical and financial market dislocations – that professionalising the management of their wealth is now an urgent priority.
“Professionalising wealth is synonymous with diversification at all levels of structuring for the wealthy,” said Lee, “family offices are the optimal vehicle to provide this. They can facilitate succession planning and wealth transfer to the next generation as well as being a point of focus for investments in both public and private markets.”
Impetus coming from both above and below
This bottom-up enthusiasm for family offices is simultaneously being amplified from above by concerted government support. In his October 2022 policy address, Hong Kong’s Chief Executive John Lee Ka-chiu said he wanted to get at least 200 of the world’s top family offices to set up or expand their operations in the city by 2025.
Actions quickly followed these words, with the introduction of a range of measures and incentives to boost the competitive environment. Perhaps the most alluring – and long-awaited – of the government’s measures was the promise of profits tax exemptions to family-owned investment holding vehicles managed by single-family offices in Hong Kong.
“Supported by expectations of more than 4% GDP growth in 2023, Hong Kong’s importance as a super-connecting international financial centre for Greater China has only grown since its re-emergence from the Covid years,” said Lee. “The government’s recently announced measures reflect their confidence and determination to develop Hong Kong into a leading global family hub. It will also add further depth, variety and sophistication to its family office ecosystem across everything from financial and business investment to tax planning and philanthropy.”
Hong Kong, Singapore or both?
Singapore’s enabling legislation and incentives-based financial support for the family office have been in place since 2004, with significant enhancements announced in the 2020 budget. The numbers tell a success story with the Monetary Authority of Singapore noting as at end-2022, Singapore had 1,100 single family offices (SFOs) which were awarded tax incentives. This is an increase from the 700 recorded a year earlier, and from the 400 SFOs as at end-2020.
While some may pit Hong Kong and Singapore as implacable rivals competing in a winner-takes-all duel for financial services supremacy – with the family office merely the latest in a series of battlegrounds – Bank of Singapore’s Lee sees things differently: “It doesn’t have to be either one or the other,” she said, “Singapore and Hong Kong have different but complementary attributes and it may make sense for some family offices to set up in both locations. It all depends on a client’s investment parameters, talents, and infrastructure initiatives. Clients will always make their decision based on which jurisdiction would give the most preferential benefits to the growth of their family office investment strategy. With Hong Kong’s favourable tax policies, stable regulatory framework and well-established financial infrastructure, it is an attractive destination for family offices seeking to set up their operations in the region.”
Hong Kong’s deep pool of skilled professionals in wealth management, legal, tax advisory, trusts, philanthropy and governance is an abiding attraction to family offices. Similarly, its superior connectivity has long drawn foreign institutions and multinational companies to make it their fundraising and financial management hub of choice. Notably, the HKEX has consistently been one of the world’s leading capital-raising venues, regularly hosting record-breaking IPOs that attract global investors to its primary market.
Lee meanwhile highlights Singapore’s enduring stability and its status as a gateway to the burgeoning economies of Southeast Asia among its key attractions. She also lauds Hong Kong’s location as a gateway to the Greater Bay Area alongside its proven track record as a centre for raising and investing capital.
The growth in the number and prominence of family offices has been a global phenomenon in recent years. Asia has comfortably outpaced the rest of the world during this period. The region has benefited accordingly, adding significantly to the assets under management in jurisdictions like Hong Kong and Singapore. This, in turn, has contributed to the vibrancy of their respective local financial services ecosystems, creating jobs and growing the depth and variety of related services as a result.
Clients always come first at Bank of Singapore
“At Bank of Singapore we have been able to build on the experience, know-how and expertise of our Family Office Advisory team in Singapore and our dedicated Wealth Planning team in Hong Kong,” said Lee. “We also have significant resources and capabilities in Dubai and Europe and well-established external partnerships with professional services firms globally. This allows us to put together a tailored plan based on the individual needs of our clients – there is no one size fits all.”
Bespoke consultancy on the ideal location, structure and operational set-up for a family office is by no means the only advantage potential clients can receive from Bank of Singapore. In times when global uncertainties have led to bank collapses and hastily-arranged mergers in Europe and the United States, Bank of Singapore’s parent OCBC Bank’s Aa1 rating from Moody’s and SG$559.956 billion group asset base in 2022 make it a bastion of strength and stability.
“OCBC is the longest established bank in Singapore (founded in 1932) and the second largest bank in Southeast Asia,” noted Lee. “We pride ourselves on providing a global platform and being a trusted advisor for clients, helping them manage their wealth for generations. In today’s complex and changing world, our values are the cornerstone of everything we do – this means taking a long-term view of our relationship with our clients, building on shared values such as hard work, integrity, transparency and prudence.”
This is a sponsored article from Bank of Singapore.