Following the acquisition of ING's Asian private banking business (IAPB), Singaporean bank OCBC has its sights set on wealth-management markets well beyond Southeast Asia. The merged entity, Bank of Singapore (BoS), plans to service and attract more clients in North Asia, Europe and the Middle East, as well as in its home region.
The takeover has substantially boosted OCBC's international client base. More than 80% of IAPB's client assets are from outside Singapore, Malaysia and Indonesia, the markets that previously contributed the vast majority of OCBC's private banking client assets.
IAPB's former chief executive, Renato de Guzman, becomes the new head of BoS, while OCBC's previous wealth head, Olivier Denis, remains with the merged entity as a senior managing director.
De Guzman suggests BoS, which has $23 billion in assets under management and 7,000 clients, will benefit from problems elsewhere in the world. "There's a lot of instability in the European market when it comes to private banking, and people are looking for an alternative -- and Singapore is a viable alternative."
OCBC chief executive David Conner adds that many clients are "unsettled" by regulatory issues in Europe.
One major concern is the issue of confidentiality, with the Swiss authorities having handed UBS client names to the US last year. Meanwhile, confidence in the Gulf region has been hit hard by the recent problems in Dubai. And Asian banks have generally weathered the financial crisis significantly better than their European and Middle Eastern peers.
Conner says BoS is the only dedicated private bank headquartered in Singapore; it is also the first stand-alone, fully licensed private bank in the Lion City. The firm's footprint in and focus on the region puts it ahead of its competitors in the region, says de Guzman, with only HSBC potentially rivalling it in terms of commitment to and knowledge of Asia.
Having beaten rivals such as DBS, HSBC and Julius Baer to the IAPB deal, BoS is now in a stronger position to compete in markets outside Asia, says de Guzman. Julius Baer bought ING's Swiss private bank operations in October, shortly before the OCBC-ING deal was announced.
It was with a view to its international ambitions that the name BoS was chosen, says Conner. "We think OCBC is a great brand that conveys a strong, stable and respectable institution," he adds. "But we're conscious of the fact that OCBC is less well known outside core markets in Asia, particularly in Europe. We wanted a brand to work well internationally, and in new markets far from Southeast Asia."
Conner points to existing and potential clients in Greater China, Japan and South Korea, the diaspora of non-resident Indians (NRIs) and the firm's plans to further penetrate the European and Middle Eastern markets.
He cites two other reasons for the choice of name; it reflects OCBC's home base, where most of the management team is drawn from, and it leverages on the brand name of Singapore as a country and financial centre known for its transparency, efficiency, solid legal structure, low taxes and so on.
De Guzman sets out a number of goals for BoS, in addition to its ambitions in Europe and the Middle East. First, it seeks to become the leading private bank in its home market, Southeast Asia. "There's no reason why we can't do so, given our branch network, client base, resources and capability," he says. The firm also wants to obtain a leading presence in the Philippines, de Guzman's home country, and in Greater China, and aims to strengthen its NRI coverage, a segment where it has traditionally been very strong.
As a result of the deal, OCBC Private Bank customers will benefit from IAPB's fully open architecture product platform and proprietary research, says Conner. And IAPB customers will benefit from OCBC's extensive branch network and products and services that were previously not available to them, he adds, such as property financing, brokerage services, insurance, retail and SME banking products and services.
BoS clients must have at least $1 million in investable funds, and the average AUM per client is around $3 million to $4 million, similar to the international level, says de Guzman. "Our main client focus -- the sweet spot -- is $1 million to $10 million," he adds.