JP Morgan Private Bank has made significant changes to its Asian business in the past few years, most notably to redress the balance between its Hong Kong and Singapore headcounts.
As recently as 2009, around 80% of the firm's staff were located in Hong Kong, with the remainder in the Lion City. That ratio is more like 60/40 now and is expected to hit 50/50 in the next couple of years, says Peter Flavel, chief executive of private wealth management for Asia. Moreover, the total Asia ex-Japan headcount has doubled in that time, but he declined to give a specific figure.
Flavel arrived in July 2010 from Standard Chartered to run JP Morgan PB's high-net-worth division, which covers clients with $10 million to $30 million in investable capital (the other segment being ultra-high-net-worth – for those with $30 million and upwards). He returned to Singapore from Hong Kong in mid-2012, but travels regularly between the two.
The private wealth market in Hong Kong is around the same size and is expanding at around the same pace in Singapore, he tells AsianInvestor. But the drivers of their growth are different, with Hong Kong's being down to its proximity to Chinese clients, while Singapore boasts many non-resident Indian and Indonesian clients, as well as those from other South Asian countries.
The offshore Indonesian business has been a mainstay for JP Morgan Private Bank for many years, but the non-resident Indian unit was relatively nascent in 2010, when Rahul Mahrotra came in from Merrill Lynch Global Wealth Management to build it up as head of South Asia. Flavel declined to provide figures, but said the firm is happy with growth of the NRI business from a low base.
Most of JP Morgan PB's headcount growth has come from external hiring, notes Flavel. But the bank's internal training initiative has also played its part.
The private bank has also seen executives move from JP Morgan's commercial bank arm – as well as commercial/corporate bankers from other firms – and undergo relevant training. This is a relatively common switch, says Flavel, and a similar strategy to the one that he adopted at Standard Chartered.
“The reason commercial bankers can make good private bankers is that they're used to doing account planning and to bringing in specialists where needed, such as working capital or foreign exchange experts,” he notes.
Their skills are relatively transferable to private banking, adds Flavel. They are schooled in credit, which is important for understanding clients' balance sheets and P&L, and are familiar with dealing with entrepreneurs, who form a significant part of a private bank's client base.
As for his views on what investors should be looking to do now, Flavel says JP Morgan PB is advising clients – many of whom, like the market, are long cash and fixed income – to “think about a more normal allocation to risk assets”.
“They're being quite responsive to that suggestion. Whether they're acting on it is another matter, but they are very open to discussion about what they should be moving towards. We think people will get paid for stock selection within equities over the next 12-24 months.”