Three wealth management businesses in Thailand are working on opening their fund platforms to more external managers this year in an effort to compete with foreign private banks.
Kasikornbank, Krungsri Bank and Phatra Securities are working on providing more investment choices to high-net-worth individuals (HNWIs) using product providers not affiliated to their parent firms. There is a growing list making similar moves; it also includes Siam Commercial Bank, as reported.
Wealthy Thais' interest in overseas investment has shot up over the past year or so, as reported, and global private banks already provide a wide offering to cater for this. The move towards open architecture among local players is an effort to close the gap with offshore players. Domestic fund houses, such as Kasikorn Asset Management and SCB AM, are also considering offering foreign product.
Krungsri Bank, Thailand’s fifth largest bank, is looking at how to segment its private banking client base and how many third-party managers it needs. Three or four will probably be sufficient, said Kris Chantanotoke, executive vice-president for wealth management.
Krungsri launched its private banking platform, Krungsri Exclusive, in 2006. It now has 35,000 customers and $11 billion in assets under management, spread across more than 50 funds, mostly from Krungsri Asset Management. The bank added Aberdeen AM for foreign funds in 2013.
Chantanotoke said he has received numerous proposals from overseas firms to work together on structured products, such as those linked to equity, interest rates, currencies and precious metals. “We are looking at it closely, and this could add more choices and for us to meet our customers' risk-and-reward profiles,” he said.
Thai HNWIs’ appetite for global investment has increased, confirmed Chantanotoke. Most of Krungsri Bank's clients have about 70% of their assets allocated domestically, with the remainder invested offshore through feeder funds.
“But clients are realising investment opportunities outside of Thailand are plentiful," he added. "For example China, though not that stellar, still has a considerable upside."
Meanwhile, Phatra Securities, with $8.8 billion in private banking AUM, aims to access more of the global markets through funds and direct investments.
Vorayut Vorasubin, Phatra's head of private wealth management, said regulators now let Thais invest directly overseas via securities firms. The firm has an open-architecture platform selling 1,000 funds from 19 managers, along with its own structured products.
“Competition is strong. The most challenging is to build a platform that would have products and services that are of international standard,” Vorasubin said. Phatra is seeking global players to help it achieve this goal, he added.
Meanwhile, Kasikornbank, Thailand's fourth largest bank, is adding more funds in partnership with Lombard Odier. It signed an agreement with the Swiss bank and asset manager late last year that gives it access to the latter's fund platform and research.
Kasikornbank will soon launch a series of global balanced funds using Lombard’s risk-based asset allocation approach, said Jirawat Supornpaibul, head of private banking. While the priority is to look within its group and to Lombard Odier for funds, the Thai bank can use other providers.
Kasikornbank has 8,700 HNW customers, who make up less than 1% of its depositors but account for 10% of the bank’s total fee income. Funds from Kasikorn Asset Management take up most of the bank's shelf space, but it also sells products from Aberdeen, Asset Plus, Manulife AM, Tisco and UOB AM.
For a full feature story on Thai banks' growing shift towards open architecture, see the upcoming February issue of AsianInvestor magazine.