Citywire Asia - Priyanka Boghani (30.05.2023) - In the wake of the UBS and Credit Suisse merger and US bank collapses, the family-owned bank is playing up its asset management proposition and steady tier 1 ratio to net clients in Asia.
Union Bancaire Privee’s (UBP) Ivan Wong says the pure play approach to private banking in Asia has never had a better competitive edge than it does now.
Wong, who has held his Hong Kong CEO and region head North Asia seat for over six months with the bank, said the bank’s strategy of synergising its asset management arm and focusing on its investment advisory platform in Hong Kong to better serve its Greater China clients will be key as the industry navigates several headwinds.
‘The UBS-Credit Suisse deal, the failures of certain US regional banks such as SVB [Silicon Valley Bank] have all placed importance on financial strength and stability for our clients, more than ever before,’ Wong told Citywire Asia in an interview.
UBS was rushed into a Credit Suisse takeover to stem further banking turmoil after Credit Suisse’s run on deposits meant it was teetering on the brink of collapse. The deal came hot on the heels of the collapse of US banks, startup-focused lender SVB and New York-based financial institution Signature Bank.
‘We have seen with these latest developments that big does not mean safe – clients are now looking at capital bases, liquidity and credit ratings to assess the overall resilience of banks.’
UBP’s tier 1 ratio, a measure of a bank’s capital against its assets, is 26.7%, while the bank has a Moody rating of Aa2 and a liquidity coverage of 304.6%. In the first quarter of 2023, Credit Suisse’s common equity tier 1 ratio had risen to 20.3%, from 14.1% at the end of 2022 and 13.8% in the first quarter of 2022.
Wong said clients might be pivoting away from the ‘one bank’ model, which gave private banking clients access to investment banking solutions, particularly as they focused on investment products.
‘The financial supermarket model may not be more relevant for ultra-high-net-worth individuals as they are sophisticated clients with multiple banking relationships and will therefore look for the best deals – this is where pure plays like UBP with its expertise in investment products selection, customised mandates with the asset management side and strength in hedge funds, alternatives and private deals can excel,’ he added.
UBP recently snapped up Tokyo-based small-cap manager, Angel Japan Asset Management, as part of its plans to expand its footprint in Japan and in Asia as well as deepen its product shelves.
Investment advisory restructure
UBP has applied a laser-like focus to its investment advisory offering so it can target its clients in both its regional booking centres.
‘We have fine-tuned how we advise our clients to increase accountability and responsibility across the investment advisory team. Now both our investment advisor and investment consultant are tagged to the client to provide an integrated advisor team and deepen penetration of client wallets.’
At the end of 2022, UBP closed $21.7bn in assets under management (AUM) out of Hong Kong and Singapore, compared with $23.95bn in 2021.
The family-owned bank is in a league of several private banks in Asia, which tout similar offerings and structures and command a large share of the wealth in the region.
Even so, Wong said the bank had no rigid Asia AUM target, given how defensively clients were behaving in their portfolio allocation on the back of uncertain markets in 2022, rising global interest rates, ongoing geopolitical tensions between the US and China, inflation and a recession looming. Rather, his focus is to accelerate a shift in revenue towards advisory, discretionary portfolio management and managed solutions from the transactional business to improve recurring income.
Greater China focus
Greater China clients are an important part of the Hong Kong strategy, and Wong is steadily increasing the bank’s Hong Kong branch with senior hires to widen its net. The bank hired four relationship managers in Hong Kong over the past four months, including the North Asia team head, Andrew Chin.
Again, product differentiation plays an important role in solidifying UBP’s presence in the market, he said.
‘Greater China clients tend to be more risk averse and therefore go for safer products like those that are principal protected. We also see emerging interest in non-traditional types of lending, given there has already been considerable deleveraging and interest rates nearing the top.’
UBP has an onshore presence in China through a joint venture from its asset management unit, UBP Investment Management (Shanghai) Ltd. UBP Private Fund Management opened a new office in Hainan last year that has a Qualified Domestic Limited Partnership licence.
