Credit Suisse has set up a wealth management desk in Thailand, in a move seen as unusual but sensible, amid rising local demand for overseas investments and growing interest among foreign banks and asset managers to service it.
The move will provide further rivalry for local players, which already face tough offshore competition from global private banks for wealthy clients’ wallet share.
The Swiss bank has established the desk, chiefly for client relationship purposes, through Credit Suisse Securities (Thailand), which has been operating locally for 16 years. It will be supervised by Christian Senn (pictured below), Singapore-based private banking market group head for Thailand and Vietnam.
The team will initially comprise six investment planners, and the aim is to double that number by the end of the year. Credit Suisse has relocated Thai nationals who have been working abroad, and therefore have strong international experience, back to Thailand to serve domestic clients.
The desk will serve high-net-worth individuals (HNWIs) with more than $2 million (Bt70 million) in assets under management (AUM) and ultra-HNWIs with $50 million-plus in AUM. The target clients will be mostly first- or second-generation entrepreneurs with family-owned businesses, noted the bank.
Credit Suisse’s move is a not common one, as most foreign private bankers fly in to serve clients there, said Steven Seow, Asia head of wealth management at consultancy Mercer.
But it makes sense, because ‘suitcase banking’ client relationships will inevitably be less deep than permanent onshore ones, he told AsianInvestor. For instance, there are limits on the number of days a banker can spend in a market if he/she is to avoid issues related to permanent establishment, as well as taxation and other cross-border rules to comply with.
“This [desk] is absolutely beneficial, as it provides faster service and better relationship to clients,” said Seow. “It also create a synergy between Credit Suisse private bank and its securities arm, which works with entrepreneurs on activities such as IPO and debt financing.”
Benjamin Cavalli, head of private banking for Southeast Asia, told AsianInvestor that it was a good time to set up the desk “due to the evolving regulatory policy towards overseas capital flows, and sizeable HNW wealth in Thailand [estimated at $456 billion]”.
Thai regulators are steadily becoming more open to allowing offshore investments, both for institutions and individuals. In turn, noted Cavalli, wealthy clients in the country are increasingly looking to diversify into global investments and seeking availability to a wider range of geographies and asset classes.
Credit Suisse said clients would get access to its international investment and wealth management platform via its regional private banking hub in Singapore. Assets will not be booked in Thailand. Clients must open an account with Credit Suisse Securities Thailand, and funds are then transferred to an account in Singapore hub to do international investments.
The move comes as Thailand attracts growing attention from other foreign private banks. Swiss firm Lombard Odier last year formed a strategic partnership with domestic player Kasikornbank to provide a more sophisticated investment platform and human resources training.
Of the two strategies used by each Swiss bank – onshore desk versus local partnership – the partnership approach can be more challenging, as the coming together of two corporate cultures can be difficult, said Seow. Finding a company with the right cultural fit is often challenging, as attested by frequent failures of cross-border joint ventures in Asia in both banking and fund management, most notably in China, he added.
There are around 91,000 high-net-worth individuals in Thailand with more than $1 million in investable assets, holding a total of $456 billion in investable wealth, estimates the Capgemini/RBC Global Wealth Management 2015 Asia Pacific Wealth Report. And there are 340 UHNWIs with more than $50 million in net wealth, according to the Credit Suisse Global Wealth Report 2015.
Moreover, the Credit Suisse’s Asian Family Business Report 2011 says 66% of all listed companies in Thailand with market capitalisation above $50 million are family-owned businesses, representing almost half of total market capitalisation in the country.
Credit Suisse has $688 billion in AUM and 3,340 relationship managers globally, including some $150 billion in AUM and 630 relationship managers across Asia. Its regional hubs are in Hong Kong and Singapore, but it also has local businesses in Australia, India and Japan.