Twenty-five years after it set up in Asia, LGT Bank is making use of the banking licence it won in April by starting to book assets from today in Hong Kong.
For one thing, the Liechtenstein-based wealth- and asset-management group sees the offshore renminbi market as a major opportunity for firms in Hong Kong, says Silvan Colani, Hong Kong deputy chief executive at LGT Bank.
“China is going softly softly in opening up the RMB market, because it’s aware of the problems you can have with a fully open capital account, such as attacks by hedge funds on the currency,” he adds. “And yet they want to be able to have an open trading hub.
“So using Hong Kong as an offshore market is very smart – it lends itself very naturally to that purpose,” says Colani. “[Hong Kong] always jumps on these kinds of opportunity and it’s made itself another great opportunity for the next 20–30 years.
“Private clients are looking to diversify their portfolios away from US dollars and euro for obvious reasons," he adds, "and the RMB provides an excellent opportunity to ‘hide’ from the problems in the US and Europe."
And LGT is well set to make the most of the market, he says, having made some senior hires in the past 18 months or so, several of whom came from much larger shops.
Stephen Corry arrived in April as Asia head of investment strategy from Merrill Lynch Wealth Management, where he was regional chief investment officer. His predecessor in the Merrill role was Tony Stanton, who joined LGT Investment Management as Asia head of investments in early 2010. Stanton had also worked as Asia-Pacific head of research and investment strategy at Citigroup Global Wealth Management.
In addition, LGT hired Andrew Hua in November as an equity specialist and head of investment advisory in North Asia. He was previously the Asian head of equity investments at Deutsche Private Wealth Management.
Like most wealth managers, LGT prefers to see itself as a portfolio adviser rather than a product seller. Rather than pushing certain products, the firm starts out with an investment view that it sets out to clients, says Colani, and then explains the various ways they can get the exposure they want.
As a result, the more clients reveal of their portfolio, the better the bank can advise them on suitable allocations, notes Corry. LGT advisers back-test portfolios going back 70 to 80 years, to analyse how badly it could have performed.
“We found that $100 placed in our flagship GIM [Global Investable Markets] product at inception in October 1999 would be worth around $175 today,” says Corry. “That has been achievable through the worst financial crisis in living memory." (It also included a 20% drop in the portfolio value during 2008, far less than the 40%+ fall in the S&P 500 and many other major stock indices.)
Asked whether it’s a challenge for LGT not having as well known a brand in Asia as, say, Citi or UBS, Colani says the firm doesn’t rely so much on ‘walk-in’ clients; most come in through the network of relationship managers. But he admits the company needs to raise its profile and become better established as a brand.
LGT Bank has been in Asia for 25 years, but made a concerted push in the region around 2000. It set up its first regional booking centre – in Singapore – in 2003. Then, in 2006, Hong Kong abolished estate duty, which had made it less attractive to book assets in the territory. As a result, a Hong Kong licence was “back on the table”, but ended up being delayed until this year due to the recent financial crisis.
Another part of the group, LGT Investment Management (Asia), has maintained its own securities dealing and advisory licence since 1988 and 1990 respectively.
As of year-end 2010, LGT Bank had SFr86.1 billion ($96 billion) in assets under management, around one-tenth ($10 billion) of which is sourced from Asia-Pacific.