Best Domestic Private Bank
Best for HNW
BDO Private Bank
|Albert Yeo, BDO Private Bank|
The firm’s management decided to keep the private bank as a subsidiary, rather than integrate it into the universal bank. At the time, BDO Private Bank’s assets under management was about P7 billion ($139 million); by February, its AuM had grown to P453.73 billion.
It is clear that the long-term growth story for BDO Private Bank’s assets is eye-catching, but its annual growth is also impressive. Its February AuM figures represented a rise of 10.5% on the previous year.
Philippine banks and their international rivals face an uphill challenge building a focused, profitable private banking operation. The first hurdle is choosing the right client niche.
Although the country has some ultra-high net-worth families, they are likely to be covered by private bankers from every firm around the world. The Goldilocks zone for most domestic private banks in Asia is the high net-worth area: big enough to make a real impact on revenues, small enough to fly under the radar of foreign rivals.
BDO Private Bank, run by president Albert Yeo, has struck a neat balance. It targets the emerging wealthy, which it defines as those between $200,000 and $2 million; HNW individuals, who have between $2 million and $30 million; and some of those UHNW clients, who have more than $30 million.
The minimum amount to on-board a typical client is P10 million, but the bank’s average AuM is about P49 million ($964,700). HNW business represented about 33% of its revenues at the end of February.
BDO has managed to position itself as the go-to firm for wealthy Filipinos, partly by focusing on the extra security offered by its trust business, which covers about 82% of its AuM.
It also offers a family office service, customer lounges in Manila, Cebu and Davao, and investment opportunities that include mutual funds, exchange-traded funds, physical commodities and the usual mix of bond and equity investments.
Best for Wealth Transfer/Succession Planning
Union Bank of the Philippines
|Arlene Agustin, Union Bank of the Philippines|
Its assets under management – worth just under P20 billion ($400 million) by the end of 2019 – are tiny compared with its bigger rivals. But the bank has made some smart moves to position itself as a key adviser on wealth transfer.
There are a few challenges facing wealthy families when considering the transfer of wealth to the next generation. They include how to reduce the tax liability, what role trusts should play, how much emphasis there should be on the continuity of investments and whether or not there should be a plan in place for the generation after next. But there is also a more basic question facing many ultra-high net-worth individuals: are my children ready for the responsibility that comes with wealth?
This is where UnionBank comes in. Under the watch of head of private banking Arlene Agustin, the bank has taken a digital-first approach: that means it is already likely to appeal to younger clients, who demand instant access to their banking services through mobile apps rather than visits to branches. But its NextGen academy is designed to show that it can also help those clients reach financial maturity.
The NextGen Academy is structured as a series of events aimed at the next generation of business leaders, mixing education with all-important networking opportunities.
UnionBank held four events between October and November. The first three covered family business succession, asset allocation and business transition across generations. The fourth was a two-day programme hosted by Swiss private bank Lombard Odier, with which UnionBank has partnered since 2016.
These events are a sensible way for UnionBank to break into the wealth transfer business.
The bank’s executives are still realistic – they are not going to be challenging BDO Private Bank for the top spot any time soon. But by putting emphasis on the next generation of clients, UnionBank is ensuring it will be among the next generation of private banks.
Best International Private Bank
It can be easy for international banks to forget about southeast Asia, especially those firms that marry corporate, investment and private banking.
China’s hordes of ultra-high net-worth individuals offer a potential fee bonanza to those banks that can cover the gamut of services from capital market funding, transaction banking and wealth transfer advice.
Given how firmly the bank is rooted in offering services to Chinese clients, one might not expect HSBC to focus on the Philippines and its neighbours. Instead, it has doubled down on the region. Last June, HSBC named three relationship managers to help grow its business in the Philippines, including a former JPMorgan banker.
The bank is making the most of opportunities in a country that has grown exponentially over the last decade, creating not just new sources of potential clients but also a more sophisticated, competitive environment.
The plan echoes the bank’s strategy elsewhere.
HSBC is leveraging the strength of its corporate and investment bank, using referrals from its global business divisions to drive net new asset growth in the country. It now offers a wide range of services to its clients in the country, including access to discretionary portfolios, alternative investments and long-only funds.
Local private bankers dismiss most foreign firms as ‘suitcase bankers’, largely covering the market from outside. There is still some truth to that. But HSBC’s recent hires show its commitment to the market, and its depth of products proves it is ready to compete with the best domestic players.