| |
| |
 |
| |
|
| |
|
| |
|
SINGAPORE: Small, boutique private banks are starting to attract greater interest from potential clients.
Citibank's recent multi-billion-dollar injection to beef up its balance sheet is just one of many similar headlines of late.
Such recent write-downs by brand-name banks have prompted private banking clients to question whether it is wise to put their money in these large financial institutions.
These clients are now looking at the smaller players as they review their investment and banking portfolios.
Prince Maximilian, Group CEO, LGT Bank in Liechtenstein, said: "People question why these large banks have failed so dramatically. If they could not manage their own profitability in a sensible way, what does that mean for the client?
"And they will question if brand is really the one thing they should look at or if there are other criteria which will be more important. So we do think that we will benefit from the failure of some of these very large banks and we do think that from a competitive point of view, this is an advantage for us."
Boutique private banks like LGT said that unlike their more famous, brand-name counterparts, the smaller ones tend to be better focused.
Prince Max said: "If you think about the larger banks such as Citi, UBS, Societe Generale, these banks are in many businesses – private banking, retail banking, investment banking, private equity, and probably in a number of businesses which I'm not even aware of. This very diversified business model helps to put their name everywhere to build a presence, a brand. On the flipside, it creates a lot of complexity.
"If you look at how some of these large banks have performed in this last half year, I'd say that you get the impression some of them have added too much complexity for what they can actually handle over the long term. At LGT, we are more focused. We are just in wealth management."
The bigger banks are also mostly publicly listed, which may put them under pressure to produce short-term results and neglect long-term risk.
"Public companies are under tremendous pressure to always show good short-term results. Capital markets tend to be very short-term oriented and as a result, many of the executives at public companies seem to become short-term oriented as well, managing the short-term upsides, but probably at times forgetting about long-term risk," said Prince Max.
As clients become more sophisticated, boutique private banks said being able to service their needs is much more important than having a full platter of products.
Urs Brutsch, Managing Director of Clariden Leu, said: "There are many ways of standing out and competing with larger banks. What we're not trying to do and which I think is not successful, is to compete in products. Product is a commodity today. If we do not have it, we can buy it from the larger banks. You can make a difference with people, (so the key is to) have the best people. Make a difference in investment performance. Many banks have become product-driven and we remain relationship-driven."
It is this relationship focus that allows the smaller players to specially tailor services for their clients.
"We have, on average, less clients per relationship manager than other banks and that allows us to spend more time with the clients, understand the clients better and deliver better quality service and investment performance," said Mr Brutsch.
There was a huge jump in the number of private banks setting up operations in Singapore last year, all seeking to tap into the huge growth potential amid the rising number of high net worth individuals in the region.
- CNA/so
|
