Swiss private banks sharpen Southeast Asia focus

Swiss private banks are looking to capitalise on global banks' retreat from Southeast Asia, pushing deeper into the region as they seek to extend their range beyond Singapore to tap wealthy clients in less developed markets.

The first Private Banking Day was held in Geneva on June 10, 2016. Keystone

Bordier & Cie is the latest wealth manager seeking partnerships with regional banks in markets including Vietnam, on the heels of a similar tie-up in Thailand between Lombard Odier and a local bank. Credit Suisse, too, is targeting rich Thais, setting up a team of relationship managers in Bangkok.

Geneva-based Bordier & Cie said it is in talks with at least three regional institutions about setting up partnerships under a strategy aimed at increasing profits in Asia without raising its fixed costs. 

Many banks have struggled to make sustainable profits from the rise of Asia’s super-rich in the face of rising regulatory costs, particularly in relation to preventing money laundering. 

In the past two years, both Barclays and Société Générale have sold their Asian private banking operations to regional banks. In April, JPMorgan cut 20% of its Asia private bank relationship managers as it refocused on a smaller pool of richer clients.

Under its proposed partnerships, Bordier & Cie will train regional banks and help them set up wealth management units. The Swiss group will charge for the service, which would include sharing specialist knowledge and training in Singapore and Switzerland, and hopes in turn to be introduced to clients who wish to bank in Singapore. 

Evrard Bordier, managing partner at Bordier & Cie in Singapore, said: “We do not have the strength to be in every country.”

The aim is to boost profits without shouldering increased costs of office rental, IT and staffing in the region, Bordier said. “We don’t try to step on their toes and set up a business in the same country,” he said. “You forge alliances.”

Bordier & Cie, which opened a Singapore operation in 2011 and now has 35 staff in the city-state, is one of a number of Swiss banks of varying sizes targeting the region. It had CHF10.5 billion ($10.9 billion) in assets under management last year.

Lombard Odier, a mid-sized Swiss bank with CHF160 billion in assets under management, has also sought to extend its reach in Asia, linking up with local banks in Thailand, Japan, Australia and South Korea.

Part of Lombard Odier’s deal with Thailand’s Kasikornbank includes referring wealthy Thai clients to the Swiss company, which provides training for the Thai bank’s relationship managers.

Credit Suisse is adding a team of six relationship managers in Bangkok and aims to doubling that number by the end of the year, while Julius Baer said in April it is hiring at least 50 more relationship managers in Asia.

But expansion in Asia can also pose reputational risk relating to the sources of some client wealth. Swiss bank BSI, which grew rapidly in Singapore over the past seven years, is facing criminal proceedings after an investigation by Switzerland’s financial supervisor Finma found it was “in serious breach” of money laundering regulations connected to the scandal surrounding Malaysian state investment fund 1MDB.

BSI has said it is cooperating with authorities in Switzerland and Singapore and has taken steps to improve management and compliance.

Copyright The Financial Times Limited 2016