If Credit Agricole is to build an Asian private banking business of sufficient size to be sustainable, the French group will need to better leverage its strengths in terms of its IT platform and product offering.
Having relaunched under a new brand, Indosuez Wealth Management, at the start of last year, the firm is on an aggressive push to expand its presence across Hong Kong and Singapore. Yesterday global chief executive Paul De Leusse and Asia CEO Pierre Masclet discussed their strategic plans for the regional buildout, including their search for acquisitions.
But what of the product and technology offering?
Indosuez has an open-architecture platform, although Masclet said the firm sometimes prefers to source products in-house because it is more familiar with the offerings and can often obtain better pricing that way. Part of the firm's strategic plan is to work even more closely with Credit Agricole's investment bank and Amundi, the fund manager that is also part of the CA group.
Nonetheless, Indosuez does use external providers. It has an Asian custom list of products as well as its global list, and a number of investment and product specialists in the region. It appointed Arjan de Boer as its first Asia head of markets and investment solutions this month and is looking to add more to that team.
Private market demand
One area that is proving particularly popular for the bank is private market investments – across both private equity and real assets, said Masclet (pictured below). Asked how the firm's Asian clients' exposure to private markets had grown, he was non-committal, saying Indosuez recommended a typical private markets allocation of around 10%, depending on the profile of the client.
The portfolios – which can be advisory or discretionary – largely consist of funds, but Indosuez also provides exposure to co-investments as well. Clients are sometimes given access to the management of investee portfolio companies, he noted. This is far less often the case for private wealth investors than it is for large institutional investors.
Indosuez can tailor the portfolios for regional exposure or with a focus on equity or debt type underlyings and has private market specialists in Hong Kong and Singapore, added Masclet.
Asked how Indosuez services family offices – a growing segment in Asia – Masclet said they are often interested in using Credit Agricole's IT platform to manage their operations. The same is true for other firms, he added, noting that more than 20 private banks use the platform, including Swiss firm UBP for its Asian operations. By the end of the year, 25% of the AUM of the IT platform will be accounted for by external banks, said De Leusse.
He also stressed clients' growing focus on technology globally and their rising expectations when it comes to banks' electronic offerings. “They want more digital features, more information and research, more frequent updates and direct access to their banker,” noted De Leusse.
When it comes to discretionary portfolio management, Indosuez runs a fairly typical 5-10% of its regional AUM on a discretionary basis. The trend is for more clients to be using DPM, said Masclet, but the firm has no target growth figure for this area.
However, most Asian clients remain more comfortable with the advisory model, and that seems unlikely to change substantially until, for instance, regulators ban commission payments on products as they have in some countries.
Meanwhile, Indosuez also recognises the need to strengthen its regional offering in areas other than investments, including wealth planning and structuring and tax advice, in response to client demand for a full-service platform.
Clearly, the firm will not find it easy to expand its presence in Asia beyond the $9.5 billion it has under management in the region. Several banks more with larger Asian wealth businesses – notably ABN Amro and Barclays – have already thrown in the towel amid rising costs and competition.
Indosuez does appear to be looking to leverage areas where there is a large and growing focus among clients – but whether it can succeed where others have failed is yet to be seen.