By
Abby Schultz
One of the purposes of Standard Chartered Bank's reorganization
in the wake of 2013's dismal financial results was to grow its
private banking services for wealthy clients by turning to the
family-owned businesses it had been working with for years.
Standard Chartered had operated as two businesses: wholesale
banking, which handled corporations, institutions and mid-sized
businesses; and consumer banking, which handled retail banking as
well as private wealth. As a business owner, you would have dealt
with the wholesale business, not the consumer business. Now
Standard Chartered considers itself one bank offering the same
suite of products to all its customers, and that makes it easier to
cross lines within the bank.
The task of drawing in customers to the private bank has fallen
to Michael Benz, a Swiss-born banker who began his Asia private
banking career with UBS in Singapore just as the region's financial
crisis hit in 1997. Benz, who most recently was Asia chairman for
Julius Baer Private Banking, joined Standard Chartered Private Bank
as global head last February. At the end of last year he spoke with
Barron's Asia from Standard Chartered's striking new building at
Exchange Square in Central Hong Kong, a spacious five-story
structure that resembles a glass box tipped to its side.
There's some urgency behind Benz's mission as Standard Chartered
continues to search for revenue to restart its growth. Just last
week, the bank cut its institutional stocks business, including
research and capital markets, for an estimated savings of US$100
million in 2016. The private bank also recently closed its Geneva
unit after it was unable to find a buyer.
Although headquartered in London, the heart of Standard
Chartered's business has long been Asia, where it's operated for
150 years. So Benz sees it as a local bank that can draw on
long-time connections with mid-sized businesses in the region that
remain mostly owned by prominent Asian families.
"We have a huge number of existing clients in the commercial and
corporate bank, but they are not yet private banking with us," Benz
says.
In fact, the assets of families in businesses currently with
Standard Chartered are about four times the size of the bank's
private banking business, says Anna Marrs, the bank's group head of
commercial and private banking. These commercial clients are key
drivers of job creation and economic growth in the region, and "are
at the centre of our strategy to bank the people and companies
driving investment, trade and the creation of wealth across our
footprint," Marrs added.
The challenge is to bring the families of these commercial
businesses deeper into the fold as private clients.
One reason they may not be banking with Standard Chartered yet
is the private bank is only seven-years old, created after the bank
bought American Express Bank, including its private wealth unit, in
2007. With about US$45 billion in assets under management in Asia,
Standard Chartered ranked 12th among private banks in Asia in 2013,
according to Private Banker International. That still puts it
behind regional-based private banking institutions like DBS and
Bank of Singapore. Globally, Standard Chartered Private Bank's
assets under management, which includes a focus on the Middle East
and Africa, were $61 billion by the end of last year.
If you own a business and are a client of Standard Chartered,
don't be surprised then if your conversation about a business loan
turns to learning more about what the bank can offer you as a
private client now that all the bank's units are talking. You'll
need to bank at least US$2 million with Standard Chartered to
qualify for private banking services. Under Benz's guidance, the
private bank is focusing more attention on clients willing to bank
at least US$30 million by offering ultra-wealthy customers more
services as well as more access to investing opportunities.
Already 40% of assets under management at the private bank are
from clients in the ultra-wealthy category, who incidentally often
have another US$100 million to US$150 million in liquid financial
assets, Benz says. Stephen Richards Evans, who is heading this
effort out of Standard Chartered's Singapore office, says those
assets represent only a single-digit percentage of current clients,
indicating there is vast room for growth.
What the bank can offer you as a wealthy business owner is not
just asset management services - which is why most of Asia's rich
turn to private banks - but solutions that address your needs as a
business owner, as well as the head of a family who is wondering
how best to preserve the family's wealth for generations. That
means a slew of different financial opportunities and services that
could range from helping you recapitalize your company to exploring
a private equity investment.
While the institutional stock business is being shuttered,
Standard Chartered says it has partnerships and reciprocity
agreements with other banks that allocate IPOs. The bank plans to
continue to be a major underwriter of bond offerings in Asia,
Africa and the Middle East, and will continue to allocate bonds to
its ultra-wealthy clients.
"We're looking for deep affinity and responding to the holistic
needs they have both in private wealth and their business corporate
finance needs," says Richards Evans, who took up the post in
October after serving as the bank's regional head of private
banking clients for the Middle East, North Africa and Pakistan,
Africa, South Asia and Europe.
One of the opportunities Standard Chartered offers the
ultra-affluent is the ability to invest in other private companies
alongside the bank, a co-investment strategy that's appealing to
private wealth clients who know and trust the bank. Since many
ultra-wealthy customers are also business customers, they trust
those standards, Richards Evans says. Also, Standard Chartered
often does these principal finance transactions with companies it
has known well for generations.
"Our principal finance target companies are very attractive to
potential investors, and clients have asked us to open our book to
them," Richards Evans says. "That's a great starting point, when
clients are asking."
Standard Chartered also will lend you money against a single
stock - say, the stock in your own business - and then will
reinvest the proceeds in markets outside Asia, or the specific
country where you live, to help diversify the risk you have by
holding a lot of wealth within your business. "We have a balance
sheet and we use it," Richards Evans says. "It's a natural
extension of what we do, but it adds tremendous value and it's not
something that is available or is a focus of our competition."
Aside from offering exclusive investment opportunities to the
ultra-wealthy, the bank is expanding specialized services. Earlier
this year, it hired Richard Pattle, who had
worked for the English royal family for ten years, most recently
running the household for Prince Charles and Camilla, the Duchess
of Cornwall. Pattle will develop programs on topics like family
governance and philanthropy, and the group hopes to partner with
educational institutions to develop programs for family members on
leadership.
It is Standard Chartered's expectation that this breadth of
services it can offer business owners will draw in more customers.
It also has a shot at attracting the most well-to-do since it
operates in regions with the fastest growing pools of wealth in the
world. Standard Chartered estimates the wealthy have about US$14
trillion in assets now and they will have US$25 trillion by
2018.
Benz had been based in Hong Kong with Bank of America Merrill
Lynch's private banking unit, which he helped to sell to Julius
Baer in 2013. Although much of Standard Chartered's private wealth
business, including investment advisory services, is based in
Singapore, he chose to stay in large part because of its proximity
to China, where a growing amount of the world's wealth is
concentrated. "The biggest opportunity for private banking in Asia,
and for StanChart in our global set up, is the China opportunity,"
he says.
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