ASIA's RICH

 

 

 

NOTE:

HNWI = High Net Worth Individuals

 


Asia's new rich: young, entrepreneurial, ambitious

Asia's high net-worth individuals (HNWIs) - people with US$1 million or more in investable assets - are younger than their Western counterparts. Forty-one per cent of Asia-Pacific's HNWIs are 45 or under versus a global average of 17 per cent, according to Capgemini and Merrill Lynch. This means they are still creating and growing their wealth, as opposed to Western HNWIs who tend to focus more on wealth preservation.

Another important difference is that a greater proportion of Asian HNWIs (63 per cent in the case of our clients) are business owners, mostly first or second-generation. They have earned their money the hard way, and are more reluctant to let others manage it, meaning that the private banking model applied for decades in the West may not work for them.

Instead, many Asian clients prefer a much more hands-on approach, talking to their bank more often and looking for a faster turnover within their portfolios.

Asian HNWIs also tend to be more ambitious - obvious, perhaps, given the higher returns they would have seen in the past couple of years. We see the same trend among Asia's entrepreneurs, the region's future rich. The 2012 Futurewealth survey, by Standard Chartered Private Bank, Scorpio Partnership and SEI, shows that entrepreneurs in Asia set themselves considerably higher wealth goals and expect to get there faster than their counterparts in the West.

Futurewealth also shows clear differences when it comes to what Asian clients like to spend their money on - and more generally what they prioritise in life. Asian wealth creators tend to be more driven and focused on achieving their professional goals. They are also more interested in buying luxuries such as cars, watches, jewellery and works of art.

All this naturally affects what Asia's swelling band of millionaires need from private banks. So what should banks do to serve them?

For starters, clients who are entrepreneurs typically have much of their wealth tied up in the business. On the one hand, they need finance for the business to grow and prosper, while on the other, they need to separate out and protect their personal wealth. A private banker who offers them only investment opportunities with a similar risk and reward profile to their own business, won't add much value.

Because their wealth goals are more aggressive, Asian HNWIs also tend to be more willing to take risks. Their portfolios are often heavily skewed towards domestic Asian markets - which they understand better and whose growth story they believe in. Many Asian clients also prefer the comfort of investing in tangible assets, such as real estate, a strategy validated in recent years as prices of property in most Asian cities have risen to record levels.   --  2012 BUSINESS TIMES

Millionaire households in China rose 16 per cent to 1.43 million while those in Singapore climbed 14 per cent to 188,000 and India saw a 21 per cent increase to 162,000, the Boston Consulting Group reported in June 2012.

Asia now has more companies worth US$1 billion (by market capitalisation) than the US, the majority comprising Chinese domestic and offshore companies. With Asian economies expected to experience growth in the high single to double digits (compared to lacklustre growth expected in Europe and the US), there is no doubt that Asia's time has come.

According to the Boston Consulting Group's Global Wealth Report 2010, high net worth individuals in the Asia-Pacific tend to keep their wealth close to home. Those who keep their money offshore park it in Singapore and Hong Kong, eschewing the traditional Swiss havens. The emergence of Singapore and Hong Kong as key hubs for the private banking sector is partly a result of the increased wealth in the region, as well as the tightening of regulations in Europe and the US. It is no wonder that global private banking players are tripping over themselves to set up shop here in Asia.

Slick marketing campaigns aside, how will these global players, so used to serving the wealthy in Europe and the US, take to serving the Asian high net worth individual? Wealth management, after all, is about providing customised financial solutions and advice. Just how much of the western model will these international names be able to replicate in Asia.  --   Business Times - 23 Feb 2011

The rise of the Asian millionaire

How will the global private banking players, so used to serving the wealthy in Europe and the US, take to serving the Asian high net worth individual? Tan Su Shan gives some insights

Asia is creating wealth faster than anywhere else in the world. There are now as many high net worth individuals in Asia as there are in Europe and by 2013, this well-heeled group will be larger than that in the US.

The region now has more companies worth US$1 billion (by market capitalisation) than the US, the majority comprising Chinese domestic and offshore companies. With Asian economies expected to experience growth in the high single to double digits (compared to lacklustre growth expected in Europe and the US), there is no doubt that Asia's time has come.

According to the Boston Consulting Group's Global Wealth Report 2010, high net worth individuals in the Asia-Pacific tend to keep their wealth close to home. Those who keep their money offshore park it in Singapore and Hong Kong, eschewing the traditional Swiss havens. The emergence of Singapore and Hong Kong as key hubs for the private banking sector is partly a result of the increased wealth in the region, as well as the tightening of regulations in Europe and the US. It is no wonder that global private banking players are tripping over themselves to set up shop here in Asia.

Slick marketing campaigns aside, how will these global players, so used to serving the wealthy in Europe and the US, take to serving the Asian high net worth individual? Wealth management, after all, is about providing customised financial solutions and advice. Just how much of the western model will these international names be able to replicate in Asia?

The profile of the Asian millionaire is quite different from the European high net worth individual who has long been the main clientele of private banks globally. The average millionaire in China, which has the fastest growing population of high net worth individuals, is under 40 years old, which is young compared to the average European high net worth individual, who is likely to be in his mid- or late 50s. The Asian millionaire is also likely to be self-made, hold a substantial stake in his business, and still be in active wealth creation mode.

What this means is that more often than not, the private banker's biggest competition for the Asian millionaire's share of wallet is not other private banks - it is the client's own business. With his fortunes so intricately linked to his business, the Asian high net worth individual requires a holistic evaluation of his financial needs. A keen understanding of the industry his client operates in, as well as the ability to help him grow the business while managing financial risks, is crucial for the private banker.

In this aspect, private banks that are part of universal banks, offering the entire spectrum of banking products from corporate lending to capital markets and investment banking, have a distinct advantage.

Take an Asian shipping tycoon looking to raise funds to buy new ships, for example. In this instance, his private banker can connect him to the other business units in the bank, who understand their business and are able to use these illiquid assets as collateral to provide a corporate loan, underwrite an initial public offering for the client, or securitise the ships in order to monetise the assets.

The bank can consider the tycoon's finances as a whole, leveraging on the knowledge of both the client's business and personal needs to offer a compelling financial solution which is unlikely to be rivalled by any pure private banking or commercial banking players.

The investment behaviour of the Asian high net worth individual is also different primarily due to cultural and geographical factors. According to the World Wealth Report 2010 issued by Merrill Lynch and Capgemini, Asian high net worth individuals are overweight in cash and real estate, and underweight in fixed income securities, compared to the global average. Their cash holdings, as a percentage of total wealth, were 29 per cent in 2008 and 22 per cent in 2009 - well above the global average of 17 per cent. That Asian high net worth investors are skewed towards liquidity more than European or US investors in times of crises is unsurprising, considering that most of these investors have witnessed the 1997 Asian financial crisis.

To paraphrase the cliche, you can take the high net worth individual out of Asia, but you can never take Asia out of him. The view of the Asian high net worth individual has been shaped by first-hand experience, and his view of the region around him.

For example, in 2008, before the meltdown of the US sub-prime mortgage industry, some of our Asian clients, who were real estate players in the region, were eager for hedging solutions related to the collapse of the US sub-prime mortgage market. An example of such an exposure could have been the Paulson Advantage Fund. These real estate tycoons were not speculating on the US housing market; neither were they investing because of a substantial direct exposure to the US mortgage market. Instead, with the lessons of the 1997 Asian crisis still fresh in their memories, they understood the global contagion effect of real estate prices, and saw exposure to the fund as an important hedge for their Asian real estate investments, should US housing prices collapse.

In any case, the Asian high net worth individual does not seem to want to be taken out of Asia. Asian millionaires tend to invest in Asian products. About 70 per cent of their wealth is invested in the region, with the next major markets being North America and Europe, according to the World Wealth Report 2010. Asia is primed to be the fastest growing region for the next decade, and Asian millionaires will not want to miss out on the action in their own backyard.

Banks which have been born and bred in Asia have been quick to meet this need. For example, DBS Private Bank has created a chief investment officer position which taps on the best brains in different parts of the bank, to formulate a global investment strategy with an Asian bias targeted at Asian clients. This is different from most global banks which offer a global asset allocation strategy for all their clients, regardless of whether they are in the US, Europe or Asia.

In a region where high net worth individuals are still focused on creating, rather than merely preserving wealth, the Asian value proposition for private banking should be less about investing and managing wealth, and more about offering customised financial solutions and advice to help clients grow their business and private wealth.

The strong Asian growth story, coupled with the emergence of China and India as economic powerhouses on the world stage, has also led to the Asian high net worth individual coming into his own. The private banking space in Asia is taking off in a big way, and the traditional western set menu of private banking products and services may need to be customised for the Asian palate.

The writer is group head of wealth management, DBS Bank

--  2011 February 23   BUSINESS TIMES

How Do Asian HNWI Spend Their Money?

Singaporeans are not known to be art lovers, and it seems the rich are as Philistine as the hoi polloi.

The millionaires in our midst prefer to splurge on fast cars, diamond encrusted watches and drink, rather than on paintings, going by the 2010 Asia-Pacific wealth report by Merrill Lynch Global Wealth Management and Capgemini.

Under passion investment, the rich here allocated only 17 per cent for art but 27 per cent went for luxury collectibles - which refers to cars, boats and jets. Jewellery, gems and watches also got 27 per cent. The well-heeled also prefer fine wine to wandering around in art galleries, spending 20 per cent on 'other collectibles' - that is, coins, wine and antiques.

China and Malaysia are other countries where art collecting got short shrift. Spending on diamonds and watches were highest in these two countries.

Art lovers were mostly found in South Korea (28 per cent), India (27 per cent) and Australia (26 per cent).

Auction houses are doing roaring business in the Asia-Pacific, and especially in China, where the rich have regained most of the losses due to the 2008 financial crisis.

The combined wealth of Asia-Pacific millionaires surged 30.9 per cent to US$9.7 trillion in 2009, erasing losses in 2008 and surpassing Europe's rich.

In 2009, auction houses worldwide reported strong buying interest from the Asia-Pacific for tangible assets such as high-end jewellery, gems, art and fine wine.

That buying interest has increased so much that both Sotheby's and Christie's now count Hong Kong as their No 3 auction centre, after London and New York.

While Hong Kong is still the region's predominant buyer of polished diamonds, retail demand is surging in China, where diamonds have become revered as wedding tokens and sought after by the young and newly wealthy.

For example, Belgian officials recently said they expect one in every two polished diamonds from Antwerp to be sold to a Chinese buyer within five years.

China has become the third-largest art auction market, increasing its share from 7.2 per cent of the global fine art auction market in 2008 to 17.4 per cent in 2009.

Sotheby's Asia reported that 57 per cent of the wine sold at its auctions in 2009 was acquired by Asian buyers, mostly from mainland China.

Wine is an attractive category for many new 'investor-collectors' as it has a lower entry point and is more readily accessible.   - 2010 September 29        SINGAPORE BUSINESS TIMES

Asia-Pac millionaires' millions surpass Europe's

Wealth among millionaires in the Asia-Pacific region has surpassed Europe for the first time, even as the number of millionaires hits parity with Europe.

The latest World Wealth Report by Merrill Lynch and Capgemini found that the size of the Asia Pacific's wealth pie expanded by 30 per cent to US$9.7 trillion. Europe's wealth at US$9.5 trillion saw an expansion of 14.2 per cent.

The number of high net worth individuals hit three million in the Asia Pacific, equal to Europe's number.

The largest concentration of wealth is still in the US with US$10.7 trillion in assets. The number of HNWI (high net worth individuals) in the US at 3.1 million is within touching distance of the Asia Pacific.

In a statement, Bertrand Lavayssiere, Capgemini's global financial services managing director, said: 'The last few years have been significant for wealthy investors. While in 2008 global HNWI wealth showed an unprecedented decline, a year later, we are already seeing distinct signs of recovery, and in some areas a complete return to pre-crisis levels of wealth and growth.'

The report said the Asia Pacific is set to be the 'powerhouse of HWNI growth in coming years', driven by India and China. Last year eight out of 10 countries with the highest growth in HNWI population were from the region, led by Hong Kong with a stunning growth of 104 per cent.

Singapore, also among the top 10, showed an expansion of 32.7 per cent in the ranks of HNWI to over 80,900.

The Boston Consulting Group's recent wealth report named Singapore as the market with the highest growth in millionaire households. Based on BCG data, there were about 122,700 households with at least US$1 million in net investible assets, growing about 35 per cent last year.

Merrill Lynch and Capgemini noted that market capitalisation was a powerful driver of wealth in Hong Kong. Market cap surged 73.5 per cent in 2009, after plunging 50 per cent in 2008.

The territory's market cap to GDP ratio is about 11 times, compared to the global average of 0.8 times. 'That ratio makes Hong Kong particularly vulnerable to losses in wealth when the market declines as it did in 2008, but also produces outsized gains in wealth when stock prices rise.'

Singapore's market cap to GDP ratio last year was about 1.75 times.

India, whose high net worth population grew 50 per cent in 2009, has a market cap to GDP ratio of two times.

In terms of asset allocation, the wealthy showed a preference for stability, reducing holdings in cash in favour of fixed income. Equities' allocation rose from 25 per cent in 2008 to 29 per cent but still falls shy of the 2007 weighting of 33 per cent.

The wealthy in Asia Pacific ex-Japan showed a marked preference for real estate, as investments jumped 56 per cent in the second half of 2009 to US$25 billion.

By the year-end, the allocation to real estate stood at 28 per cent compared to 23 per cent previously.

The region's wealthy also had the highest exposure to residential real estate at 60 per cent.

Meanwhile the study found that the wealthy's investor psyche has shifted towards caution and conservatism. Clients are also more engaged in financial affairs, opting to educate themselves on products, disclosures and investment risks before conferring with advisers.

Capgemini director of financial services solutions Foong Lai Kiun said clients appeared to have regained trust in their advisers and wealth management firms to some degree, but they have yet to regain trust in regulatory bodies that were supposed to monitor markets.

A small number of firms are understood to be seeking to incorporate behavioural finance into their advisory process. But the challenge is to develop a model that is scalable and profitable.   - 2010 June 24   BUSINESS TIMES

Chinese Even Richer

China's richest citizens are even wealthier than the statistics suggest, and may hold as much as 9.3 trillion yuan ($1.4 trillion) of hidden assets, according to a Credit Suisse-sponsored study by a top economic think-tank.

Official statistics for 2008 failed to capture income equivalent to about 30 percent of China's gross domestic product, the "Analyzing Chinese Grey Income" report found.

And nearly two thirds of that unreported income goes into the pockets of the richest 10 percent, widening China's already troubling wealth gap, said Wang Xiaolu, the economist at the China Society of Economic Reform (CSER), who headed the survey.

The findings may explain in part Beijing's tolerance of recent strikes in manufacturing zones, and official emphasis on ensuring more equitable division of wealth, the report added.

Average per-capital income for the richest 10 percent, at 97,000 yuan, was 65 times of that of the poorest 10 percent, Wang's survey showed -- instead of the 23 times figure given by official National Statistics Bureau's household income survey.

"It means the wealth gap is widening, and the distribution of national income is becoming more and more unfair," it concluded.

A fairer income distribution could ease social tensions and support Beijing's plan to boost domestic consumption.

"One very interesting observation to argue for the highly uneven income distribution in China is reflected in the strong buying power of its richest people," the report said.

China accounted for 3 percent of sales for a brand like Volkswagen and 5 percent for Pepsi, while for luxury retailers like Richemont and Swatch Group, it made up 20 and 28 percent respectively.

"So if income distribution becomes more equitable, it would help boost the consumer market."   -  2010 August 12      REUTERS

Rich getting richer, but spending less

Affluent Singaporeans are the biggest savers in Asia despite being wealthier than they were six months ago, a survey has found.

They save 33 per cent of their monthly income, up 5 per cent from six months ago, while cutting back on consumption and daily expenses, an HSBC Affluent Asian Tracker survey found.

Compared to the first survey done in April, Singaporeans have cut their consumption by 4 per cent to 21 per cent and trimmed their daily expenses by 3 per cent to 45 per cent. Consumption refers to spending on dining, entertainment, clothing, travel and electronics.

Yet more than half of those surveyed reported a rise in net worth compared to only 23 per cent six months ago. Those who save the least, at 17 per cent, are the Indonesians and Australians.

The survey of more than 1,700 affluent individuals aged 30-55 took place in eight markets with 200 polled in Singapore. The survey gauges the views of people in the top 10 percentile of the population by income or liquid assets. Affluent in Singapore is defined as having a monthly income of at least $6,000 and $200,000 of liquid assets.

On preferred financial investments over the next six months, 68 per cent of Singaporeans surveyed voted for the stock market, followed by local or foreign currency deposits, unit trusts and life insurance.

Asked about the next big splurge, 56 per cent mentioned travel and 30 per cent said property. Buying a car was the least favoured, with only 10 per cent inclined to do so.

Indonesians were the biggest property fans at 56 per cent.

As for the sources of financial information, 47 per cent of Singaporeans said they relied on independent financial advisers, followed by the financial media (39 per cent), banks (32 per cent) and family/relatives (27 per cent).

Taiwanese relied most on the financial media (44 per cent) for financial information but only 8 per cent of Indonesians found it reliable. Indonesians prefer getting financial advice from family/relatives.

A third of affluent Singaporeans have family living abroad and close to half plan to live abroad in the next 10 years, with Australia/New Zealand as the most favoured destination.

About half of respondents in Malaysia and India feel the same way and 62 per cent of mainland Chinese - the highest proportion in the survey - plan to live abroad in the next 10 years.

Sebastian Arcuri, HSBC Singapore head of personal financial services, said the Asian diaspora will evolve into a new movement, led by the affluent who not only work and study abroad, but who now explore new wealth opportunities.

'We are seeing this with our HSBC Premier clients as we help them to purchase a second home abroad, expand their businesses internationally or invest globally in multiple locations.'- 2009 December 8   BUSINESS TIMES

Asia-Pacific's high net worth individuals harder hit than global average

The wealth of high net worth individuals (HNWIs) in the Asia-Pacific took a harder knock than the global average, falling below 2006 levels at end-2008. And while the sharp rebound in markets this year would have restored some of this wealth, it is estimated that aggregate wealth is still about 25 per cent below the peak in 2007.

But the ultra HNWI segment suffered an even bigger dent in wealth and numbers. This segment is defined by Merrill Lynch and Capgemini as people with investible assets of at least US$30 million excluding their home.

Based on data crunched by Merrill Lynch and Capgemini, the region's HNWI population fell 14.2 per cent to 2.4 million individuals, compared with a global drop of 14.9 per cent. This segment has investible wealth of at least US$1 million. But in terms of the value of assets, HNWI wealth in the Asia-Pacific sank 22.3 per cent to US$7.4 trillion, below the 2006 level of US$8.4 trillion. Aggregate HNWI wealth hit US$9.5 trillion in 2007.

The number of ultra-HNWIs plunged 29.6 per cent in the Asia-Pacific, compared to a fall of 24.6 per cent globally. And the value of their assets fell 35 per cent, compared to the global average decline of 24 per cent.

Kong Eng Huat, Merrill Lynch Global Wealth Management's head of South Asia advisory, said: 'Asian investors are more aggressive in their profiles and tend to allocate to volatile assets. In a down market, their wealth tends to drop more.'

As for the ultra HNWI segment, he said their exposure to 'more aggressive products and higher leverage' accounted for some of the damage. The average ultra HNWI holds an estimated US$120 million in assets.

A case in point was businessman Oei Hong Leong, who said he lost $1 billion on margin trading. His lawsuit against Citibank was settled recently for an undisclosed sum.

Singapore's HNWI population has fallen 21.6 per cent to 61,000, from 78,000 in 2007. Aggregate wealth fell to 29.4 per cent to US$272 billion. Singapore's average HNWI has US$4.4 million in net investible assets, down from US$4.9 million in 2007. The region's average HNWI wealth was estimated at about US$3.1 million in 2008.

Hong Kong's HNWI segment suffered the sharpest drop, as its ranks thinned 61 per cent to 37,000 and aggregate wealth shrank 65 per cent to US$181 billion.

Outlook still bright

Still, the outlook for wealth in the region remains bright as Asian economies are expected to grow at a faster pace than the global economy. China and India, in particular, are expected to lead the charge, as more individuals join the HNW ranks, buoyed by strong domestic consumption. The wealth of HNWIs in India and China is forecast to burgeon by over US$4 trillion over the next decade.

The combined wealth of the region's HNWIs is estimated to grow 8.8 per cent a year until 2018, faster than the global average of 7.1 per cent.

'We expect the Asia-Pacific to be a significant driver of global HNWI wealth,' said Antony Hung, Merrill Lynch's head of Asia-Pacific wealth management. 'The region's diverse economic landscape presents tremendous growth opportunities for wealth management firms.'

Asset allocation is becoming more conservative assets. Merrill Lynch research head (Singapore and Malaysia) Melvyn Boey said: 'Because of market uncertainty and tighter credit, (Asian HNWIs) favour investments closer to home. We expect them to maintain a cautious approach, focusing on capital preservation and liquidity as prime objectives.'

Mr Kong said that while investors have begun to get into equities, the mood remains 'very cautious'. 'We're also seeing more investments into fixed income.'

Singapore's HNWIs held 33 per cent in cash and 14 per cent in fixed income, compared with the regional allocation of 29 per cent in cash and 20 per cent in fixed income. In terms of alternative investments - a 7 per cent allocation among Singapore millionaires - clients favoured foreign currency and structured products with capital protection. This allocation is expected to be shaved by one per cent in 2010 as clients seek 'safer' investments.

Singapore HNWI's allocation of 24 per cent to real estate is higher than the regional average of 22 per cent. But it has fallen substantially from the 2006 allocation of 36 per cent. Merrill said HNWIs took profits from increased values in 2007 and shifted money into other asset classes.

Singaporeans' allocation to real estate is forecast to fall further to 19 per cent by 2010 as investors are expected to be sidelined by market uncertainty and economic risks. Other investment opportunities may arise in other asset classes, diverting money away from property.

In terms of wealth managers, Capgemini Financial Services vice-president Bhalaji Raghavan said 42 per cent of advisers reported client attrition. 'Trust was the key reason to move assets. Asia-Pacific advisers also did not have the experience to effectively deal with the crisis.' Of the advisers that lost clients, 63 per cent operated on an individual model and 37 per cent had a team-based model.

Some 62 per cent of those who lost clients were less than 41 years old. The average years of experience among relationship managers in the region was 9.7 years, compared with the global average of 13.3 years.   - 2009 October 15   BUSINESS TIMES

According to Merrill Lynch and Capgemini, there are 2.8 million people in Asia with total assets of more than $1 million. Those people had a combined wealth of $9.5 trillion at the end of 2007, a 12.5% jump from the previous year, which was higher than a global expansion rate of 9.4%.

In the past five years, private banks in Asia, excluding Japan, tripled assets under management to $600 billion, according to Calamander Group, a consultancy in Singapore. UBS, Citigroup Inc., HSBC Holdings PLC, Credit Suisse Group and Merrill Lynch together accounted for more than half of the total.   - 2008 November 21   WALL ST. JOURNAL   

By end 2007, Asia-Pacific millionaires, whose financial assets exceed US$1 million, increased 8.7 percent and their wealth grew 12.5 percent to US$9.5 trillion.

The number of Hong Kong millionaires rose 10.2 percent. Their average wealth amounted to US$5.4 million, making them the region's richest. They put a third of their assets into equities and 23 percent into real estate investments.

Asia-Pacific millionaires in general invested 26 percent of their wealth in stocks and 13 percent in property- 2008 September 26  THE STANDARD

Over the past five years, the major private banks in Asia have tripled assets under management from US$200 billion to US$600 billion today, according to  managing director of Calamander Capital, a Singapore-based investment and advisory firm.  - 2008 March 25


Top bankers: why so few women?
Some areas of banking seem more suited to females than others

The general traits for success in top female bankers are passion, ambition, excellent communication skills, strong discipline, and the drive to achieve them, going by extensive interviews with 19 top female bankers here [in Singapore].

Both genders can possess the above traits. Why then are there fewer women in investment banking than in private banking?

Stuck to the Blackberry, getting just four hours of sleep daily . . . with intense demands on their time, the life of the investment banker requires male-like traits of being unemotional, aggressiveness in fighting for deals, and a left-brain dominance.

Conversely, private banking requires skills more commonly associated with women such as being a good listener and empathising with people. Oey Bie Lan, managing director at an international private bank, sums it up thus: 'Private banking needs a personal touch - the ability to build deeper, interpersonal relationships even with the second and third generations of the clients' families.'

The labyrinth of challenges

Female bankers want to be career women, 'home affairs ministers' and fulfil their interests all at the same time. These different roles, fighting for a share of the same 24 hours, bring about the split-allegiance challenge that many women face as they scale the corporate ladder. Since there's less time for networking, the reduced social capital can be an impediment to their career advancement.

So is travelling, as men are more likely to be selected for long-term overseas assignments because they can mobilise their families more easily than women. This, as suggested by a private banker, may also be the reason why there are so few top women CEOs as a 'CEO of a bank needs to have experience in various parts of banking and great overseas exposure'.

Women are also not as aggressive when asking for rewards, such as promotions and bonuses, or taking credit for work done. This can be attributed to two reasons: societal perceptions that self-promoting behaviour in a woman signals a lack of modesty; and not wanting the added responsibility that comes with promotions, due to the fear of having less time for the family and loneliness at the top.

Is all hope lost?

Fortunately for women here, Singapore's society advocates meritocracy. Hence, gender stereotypes and discrimination which impede women's career advancement are less prevalent in Singapore than in Japan and Korea. Additionally, Singapore's society is more accepting of women taking up flexi-work schemes.

Singapore's infrastructure has also made career progression easier. Due to the country's small geographical size and existence of close-knit extended families, support for the working woman is abundant. Parents are often more than happy to take care of grandchildren. Domestic help, in the form of maids and tutors, is also readily available.

Emotional support from role models and mentors is also important for the working woman. Female mentors, with greater experience, will be able to advise on problems commonly faced by the bankers.

It is especially critical to manage the expectations of the spouse and children. A banker in senior management described how she sets expectations: 'When there are conference calls at night, I would inform my family beforehand that I need to focus on the calls, and get them to understand.'

Institutional support can come from banks through the implementation of flexi-work schemes for less client-intensive roles, as well as external alliances, such as the Financial Women's Association. Founder Tan Su-Shan revealed that she set it up as 'a support system to help women rise through the ranks'.

Possibilities

For most men, success is defined by their careers. For women, however, they have many choices. As a corporate banker remarked: 'Women's status in life and definition of success can take many forms: fulfilment as good mothers and of their interests. They are not restricted to work.'

What can the aspiring female banker do?

She can find her own niche to sustain her passion. Understanding her passion, the female banker must then have the right attitude - prioritising her many commitments, deciding what to sacrifice, and being open to opportunities. Complementing the right attitude, female bankers should have the right behaviour of not being shy to ask for things, be it work-related rewards or help from family members.

To maximise human capital from the female gender, banks can be more forthcoming about institutionalising flexi-work schemes, establish mentorship programmes, and be open to and celebrate different models of success in the workplace.

Kate Hu, Koh Woon Teng and Loh Hui Shan were final-year graduating students of the Nanyang Business School when they wrote this article. Dr Fock Siew Tong is the school's associate dean (external relations) and associate professor of banking & finance at Nanyang Business School, Nanyang Technological University. He was their faculty supervisor for this research. - Published 2008 October 13   BUSINESS TIMES    

WEALTH
Borderless banking and the global citizen

The global citizen is a group that has multiplied fast with a reported 4.7 million expatriates living in Asia-Pacific. In particular, wealthy families are increasingly global families.

According to the Capgemini Report (2006), at least 28 per cent of the ultra high net worth (at least US$30 million in assets) have residences in multiple countries, and some 37 per cent have offshore financial accounts, others have to handle cross-border businesses in different locales and family members living further and further apart.

While it is a perception that only the high net worth or ultra high net worth have a need for a specialised and globally oriented wealth management plan and service, increasingly more people are becoming global citizens by virtue of their choice to take up a new job, take up multiple citizenships or accumulate family ties.

Global employment and expatriate situations are becoming commonplace. Deciding to take an overseas job is a complex decision for an individual, one that involves a number of decisions that will impact the family as well. It means having to uproot one's family from their comfort zone and to consider both career and personal implications.

Other than the personal considerations, one's banking and investment needs will undoubtedly evolve. It becomes necessary for one to navigate the complexities of managing wealth across borders. The management of one's wealth will take on a new dimension and might even require a host of international financial connections to ensure that the different financial portfolios are aligned.

Diverse needs

The global citizen has diverse banking and investments requirements, including the need to access their funds in multiple locations. With increasingly easy access to information, their expectations of financial service providers are justifiably raised. People are increasingly looking to work with financial institutions which understand both their global perspective and their perceived 'home country' requirements.

The implications are that asset allocation models and investment products need to cater to both, and clients expect to have first-class transactional services as well. for instance, the global citizen will need remittances, Internet banking and access to banking accounts in their country of origin. and the high net worth global citizen expects a private bank to offer services, beyond products, that deliver the 'home country' requirements.

For instance, an Indian expatriate expects a bank to manage more than his domestic assets. Global Indians will need investment advice based on an understanding of their unique needs and goals, and more importantly, management of their wealth created worldwide. They want a seamless, full-scale onshore and offshore offering.

The Standard Chartered Private Bank's Global Indian programme addresses clients' needs through an ethnic lens rather than a geographic one, offering a global private bank financial service package. its private bankers are primarily global Indians themselves and have the specialist knowledge and understanding to appreciate the specific needs and aspirations of Indians. On the investment side, the global citizen is faced with the need to review his investment portfolio and wealth needs. Fundamentally, he would have to consider taking on a more diversified approach to investments. from experience, a global citizen's investment portfolio tends to be biased towards the home country, and needs to be adjusted in line with the changing life phase, adopting a global outlook. Some considerations:

  • Base currency of investments

    A majority of a global citizen's investments would be held in the currency of his home country. The currency mix should change on relocation to include more global currencies. The mix and extent of diversification would largely depend on a client's risk appetite and investment needs.

  • Composition of investments

    The geographic location and type of investments also gets affected. Generally, regional/global investing becomes bigger.

  • Professional advice

    Access to professional advice becomes increasingly important as clients become more sophisticated. Advisers will make available more sophisticated investments, broadening access to a wider range of products and investment instruments. For example, hedge funds, private equity, single premium life insurance, or customised structured products.

  • Change in investment style

    Moving into a new environment and trying to balance new challenges at work while adapting to a new country can be daunting and will reduce the amount of free time for other activities like managing one's investments. Working with a financial adviser will relieve one of the time and effort of doing so. One should also consider allocating more assets to professionally managed investments if access to information is not as readily available.

  • Retirement planning

    It would be prudent to review retirement plans, in consultation with investment advisors in other markets. Cross-border planning and collaboration with investment advisors will be key in ensuring that all aspects of retirement planning are taken care of and no stone is left unturned. Generally, one should not hold too high a percentage of their total investments in cash. The length of investment and capital growth are related. The longer the funds are invested, the more important compound returns becomes to total investment returns.

  • Financial planning and insurance

    As a global citizen would have acquired assets in various countries, it's important to title and manage these as part of estate management. Portable health insurance may be needed to ensure that there is continuity in coverage when employment conditions change. Another consideration would be to take up health insurance providing regional coverage, rather than one which is single country specific.

Where and what to invest in?

In the last 15 months, we have gone from a period of 'greed' where investors really only thought of high returns to a period of 'fear' where the global economic environment remains challenging near term.

First, the credit crisis is likely to continue to be of concern for some time to come. Second, global equities are likely to trade volatile to weak whilst the credit market turmoil continues. Third, while inflation should moderate, it will remain relatively high in emerging market economies.

It is in these uncertain times that investors need to stay the course through a balanced and diversified investment strategy, while taking advantage of the opportunities that might arise.

Are we nearing the end of the financial turmoil? Probably not. We expect the secondary impact to slow economic growth. Lower housing prices, lower share prices, slower economic growth and heightened job insecurity should contribute to the consumer spending less in the future. Expected corporate earnings haven't priced in the global slowdown. In the short term (three months), the bank's asset allocation is overweight cash, neutral on bonds and underweight equities. There are still downside risks to equities and volatility will continue.

Right now, investors could manage risk and exposures by:

  • Diversification of assets (cash, bonds, equities) and, within an asset class, diversification of managers.
  • Adopting total return strategies like absolute return bond/equity funds or hedge funds to minimise risk.
  • Investing in structured products for a desired risk-reward return.
  • Employing less leverage. Market volatility is high and directional movements have been quite big. If a position goes against a leveraged investor, they will be required to sell assets into an illiquid and falling market.
  • Having long equity exposure at the lower end of the range for your risk profile.
  • Stay as liquid as possible with investments.

    Diversification doesn't mean investors will never have negative returns, but it does minimise the risk and keeps one positioned for the future. More importantly, regardless of the economic cycle, it is important for an investor to work with a trusted adviser banker as one's needs and circumstances evolve over time. for the global citizen with diverse banking and investment needs, this becomes more pertinent.

    The writer is head, Investment Advisory Asia Pacific, Standard Chartered Private Bank

The writer is head, Investment Advisory Asia Pacific, Standard Chartered Private Bank

Growing wealth

Stock markets have fallen sharply this year, soaking up a substantial amount of wealth. Consultants, however, remain optimistic that global wealth remains on an upward trajectory.

Merrill Lynch and Capgemini, for instance, expect the Asia Pacific wealth market to grow by nearly 8 per cent a year over the next five years. The Boston Consulting Group is even more optimistic, pegging the annual compounded growth rate at 11.4 per cent.

Even with a slower economy, some trends are clear: Wealth markets are getting more concentrated - that is, wealthy households own more than 80 per cent of global assets under management, says BCG. Portfolios of the wealthy also tend to be well cushioned by cash and hedging strategies that stand a better chance of preserving value.

One bright spot is that of 'passion' investments, as highlighted by Merrill and Capgemini in their annual report. Such investments include art, luxury cars, yachts and sports teams.

Last year, luxury collectibles and fine art each accounted for roughly 16 per cent of the global demand. Jewellery held third spot with a 13.8 per cent share and luxury travel 13.5 per cent.

The Forbes' Cost of Living Extremely Well Index (CLEWI), which tracks the cost of a basket of luxury goods, rose 6.2 per cent from 2006 to 2007, more than double the inflation rate, as cited in the Merrill and Capgemini report. Despite the significant price increases, the report says luxury segments posted record sales figures last year.

Among the Asian wealthy, jewellery, gems and watches were their favourite, accounting for 19 per cent of the passion dollar. This was followed by luxury consumables, wellness and collectibles.

Yet another hard asset dear to Asians is property. In Singapore, in defiance of generally softer prices, all 30 private preview units of SC Global's apartments in Martin Road were snapped up. A unit at The Sail @ Marina Bay was also recently sold for over $15 million.

But what of the future? Certainly some segments will begin to feel the pinch of a slower global economy. But the ultra high net worth segment may well remain resilient.   - 2008 September 26     BUSINESS TIMES

Rich set to get richer when markets improve

The rich and super rich will increase their share of the world's wealth when markets eventually turn upwards.

So-called high net worth individuals (HNWIs), especially in Asia, have been building up their cash reserves. The potential flow into global markets is enormous. The wealth of the world's HNWIs increased by 9.4 per cent to US$40.7 trillion in 2007, according to Merrill Lynch and Capgemini.

The latest World Wealth Report estimated that the number of HNWIs with financial assets of US$1 million or more has reached 10.1 million, with average holdings of US$4 million.

There are now 103,300 ultra high net worth individuals with financial assets of US$30 million or more, the report said. Since much of their wealth is hidden in offshore accounts, this is likely to be an underestimate.

Due to a slide in the value of assets, notably stocks, property and hedge funds, the wealth of these HNWIs has declined in 2008. Despite this, they still have huge resources that will move back into global markets as soon as there are signs of a potential revival.

The poor performance of global markets, mutual funds, hedge funds and banks has made wealthy investors much more cautious. After betting heavily on riskier assets in 2006 and the first half of 2007, HNWIs began to retrench in the second half of 2007 and shifted their investments to safer, less- volatile assets. By the year's end, HNWIs were moving into cash/deposits and fixed-income securities. HNWI investors in Asia and Europe, for example, set aside 25 per cent and 21 per cent in cash and money market deposits.

According to the report, there are 2.8 million HNWIs in the Asia-Pacific region and 20,400 super rich with US$30 million or more. So what are these people doing with their money?

HNWIs tend to invest in local stocks and bonds rather than foreign ones since they prefer to put their money in things they are familiar with.

They have trimmed their allocations to alternative investments from 20 per cent of their financial assets in 2005 to 10 per cent in 2006, falling further to 9 per cent in 2007.

Globally, hedge funds represented the largest portion, that is, over 30 per cent of HNWIs' alternative investments. But during the course of 2007, HNWIs grew more distrustful of hedge funds as the credit crunch intensified, the report said. They raised investments in sovereign bonds and other AAA fixed-income securities which accounted for 27 per cent of their assets in 2007, up from 21 per cent a year earlier.    - 2008 July 7   THE BUSINESS TIMES

Global private banks manage US$4.6t for super-rich 
Asians estimated to hold more than 20% or US$1t of assets

The rich are becoming the mega-rich and the number of Asian multi-millionaires has increased substantially in the past year.

Global private banks, which cater for the super-wealthy, now manage in excess of US$4.6 trillion, according to a study by Scorpio Partnership, a London firm that specialises in wealth management.

The study doesn't break down the Asian proportion of this impressive sum. It describes Asian-based banks as cagey about disclosing managed assets of the super-rich.

Industry data show that Asia remains one of the largest and fastest growing markets for private banking, according to the bank. More than a quarter of the world’s 8.7 million high-net-worth individuals, who possess at least $1 million in net assets, are located in Asia. 

Collectively, the total assets of these individuals account for $7.6 trillion.

For the next few years, private wealth in the region is expected to grow at an annualcompounded rate of 6.7% to reach $10.6 trillion by 2010, the Citigroup release notes.

The bank claims it has more than 6,000 high-net-worth individuals (at least $10 million in net worth) as its clients, including half of non-Japan Asia’s billionaires.

“Asia is, and will remain, a key market for The Citigroup Private Bank, accounting for 29% of the private bank’s global revenue and 34% of net earnings in 2006”. They also notes the “promising outlook for many of the region’s economies and the unabated rates of wealth creation”. -  29 March 2007

Private Banking in Asia
Wall Street Journal

Anyone superstitious - or merely curious - enough to flick through this year's Chinese Astrology predictions for The Fate of Hong Kong might puzzle at the love or health forecasts. But on the subject of money, the words have a familiar ring: 'The Wealth House is perhaps the best among the twelve houses. Hong Kong is financially sound and remains the goose continuing to lay golden eggs," it reads.

For those whose property interests plunged by 55% in the wake of the 1997 Asian crisis, or whose shareholdings crashed through the floor, this might sound like wishful thinking. Yet a surprise 0.5% second-quarter GDP growth rise, following several quarters of contraction, demonstrated a re-emergence of confidence in the territory.

Private bankers in Hong Kong back up the figures: "We've seen a strong recovery in the local market," says Nigel Jeacock-Fewtrell, director of the private clients group at Lloyds TSB Pacific. "Customers are prepared to move out of cash and into more adventurous investments such as property and equity."

Hong Kong's turnaround is proving more gradual than some of its Asian neighbours: Singapore posted a 6.7% second quarter GDP rise, South Korea 9.8% and Taiwan 6.1%, but the signs are generally positive, as property prices stabilise, exports increase thanks to a crackdown on smuggling from China and tourism regains ground.

A slew of private bankers are pacing eagerly through their air-conditioned corridors, keen to sign up customers with at least the magic figure of $1 million available to place on deposit. Once this figure is reached, the banks lay on a plethora of services, ranging from 24 hour phone access to platinum cards and leveraged foreign exchange investment facilities.

Competition between banks is tough and getting tougher. A number of mergers and acquisitions have taken place in recent months, including the sale of Bank of America's Asian and European private banking business to Union Bank of Switzerland (UBS) AG in March this year. "There are around 70 players in the market," comments Raoul Weil, head of private banking at UBS, "and there is not profit enough for all of them. There are a lot of clients but too many competitors. You can assume that not all will stay in the market."

Mr. Weil blames the high labour and infrastructure costs of operating in Hong Kong for the present squeeze, along with unrealistic expectations. "People thought they would outgrow their start-up problems, but they haven't grown quickly enough to make things happen. Some of the players were betting on 20 or 30% growth per year, which was conceivable pre-crisis." For UBS, the upside is a 'flight to quality'. Even though the market has shrunk, the company is gaining clients who are concerned about smaller, less well-capitalised companies. Recent figures in the International Herald Tribune showed the UBS private banking arm having 607 billion Swiss francs ($404.6 billion) under management and contributing 4.3 billion Swiss francs in pre-tax profits.

Private banking in Asia as a whole (including Japan) is thought to account for around 30% of the world market, despite the 1997 crisis. So there is little prospect of operations such as UBS leaving it behind. Indeed, Mr. Weil is bullish on the bank's future strategy: "We're investing in private banking, so we're very much open to opportunities," he says, referring to potential acquisitions. Citibank, which pioneered Internet banking in the region, Lloyds TSB, Coutts & Co and others are all surveying the scene.

The same ambitions apply to ABN Amro, the Dutch bank which has operated a private banking service in the region for more than 15 years. The bank's regional head of private banking for Asia Pacific Urs Brutsch, based in Singapore, is keen to expand his customer base in Hong Kong. The entire group's rising stock will clearly be an assistance - ABN announced a profits growth of 29.7% this summer - although Mr. Brutsch recognises that it is a crowded market. "There will be very fierce competition going forward. Some locals will disappear because they don't have the muscle or the critical mass. We'll probably see ten or twelve global players within the next ten years" he says. "But we don't want to compete on price but on relationships. The quality of service is what matters in this business: the role of relationship manager makes or breaks a private bank."

Away from finance, clouds of uncertainty persist in the region's political sky. While the concept of 'one nation, two systems' has largely been honoured by China, the country's government has taken unexpected and severe measures when it feels itself threatened. "There is an underlying concern over possible legislation or directives from the mainland," says Nigel Jeacock-Fewtrell at Lloyds TSB Pacific, "but generally there is complete harmony. Hong Kong is the goose that lays the golden eggs from the mainland's point of view," he added, echoing the Astrologer's phrase.

Taiwan, on the other hand, presents other, more alarming scenarios. Hong Kong's papers have been full of stories this summer about military build-ups by both China and Taiwan. "It has been a show of military strength. Relations are hostile and could deteriorate at any time," says Mr. Jeacock-Fewtrell. "We wouldn't get involved but there could be an impact on Hong Kong." Such fears of Chinese aggression persuaded many Hong Kong investors to place their money elsewhere and a thriving off-shore investment network has its base in the territory, with links to the Isle of Man, the Channel Islands and elsewhere.

The hand-over of Hong Kong to China in 1997 was itself an event which impacted on Taiwan. Taiwanese investors had traditionally put funds into Hong Kong, yet now that the territory is in the hands of the enemy, so to speak, there has been a drain of capital out of Hong Kong and into alternative locations, principally Singapore. On the other hand, Singapore used to benefit from Malaysian and Indonesian private investment, but changes in regulations and currency restrictions has caused this to ebb.

In Hong Kong it is not regulations or restrictions which have kept the recovery low key, but relatively high interest rates, now standing at 14%, alongside mild deflation, expected to be 3% this year, which has kept wages virtually static and depressed consumer spending. The only significant piece of intervention from the post-handover Hong Kong government came last summer, when it unexpectedly bought a large amount of stock on the local market, pushing up prices and embarrassing speculators who had been profiting from short sales of stock, which fell due to the Hong Kong dollar being pegged against the U.S. dollar. Capital outflows caused higher interest rates and an economic slowdown, hitting share prices.

This was a fairly sophisticated slap on the wrist to a section of the financial community and certainly well short of tanks rolling across from the mainland and curfews after midnight. In fact, while local observers confidently expect a shake-down in the Hong Kong banking sector, there are many reasons to trust that the industry is in robust shape. Of the 100 largest banks in the world, 79 have a presence there and it ranks 8th in volume of external transactions and 7th in foreign exchange. While the private banking sector is - like the rest of the economy - taking time to recover its full sheen, there is no doubt that its eggs are incubating nicely. And they're still golden.

Hong Kong's New Rich  >>  MORE

"Certain clients have forgotten what happened in 1997," says Urs Brutsch, ABN Amro's Asia Pacific head of private banking. He has seen them going back into the same investment patterns as before, piling everything into property, or into one particular industry. "We recommend diversification," says Mr Brutsch, using the mantra of the modern private banker. "They should think global."

But will the young ever learn from the mistakes of their fathers, or even from their own mistakes? In Hong Kong, the urge to get rich at the drop of a hat is deeply ingrained. Fortunes have been won here since the days of the opium and spice traders and 1999 is no exception. Entrepreneurs have sprung up from the ashes of the Asian crisis, ready to stake their millions on the roulette wheel of internet stocks, of mainland Chinese start-up companies, or the international currency markets.

Some caution has been taken on board, however. Investments with capital guarantees, where the principle deposit is safeguarded, but profits are variable, is gaining in popularity. Derivatives, index-linked funds, funds of funds and the various financial instruments at the banker's disposal are also winning new friends in Hong Kong, according to those such as Mr. Brutsch who deal in them. This, despite the Long Term Capital Management fiasco in the US.

There have been subtle shifts in the make-up of the Hong Kong private banking clientele: ex-patriots are thinner on the ground, post-handover. "They were only ever a small part of the cake," says Mr. Brutsch, "the icing, you could say." They are being replaced by Asian customers, often people who own their own business and are planning for a prosperous retirement.

To attract them, banks host lavish and exclusive events, entertaining current clients but hoping to pull in their friends and associates. UBS might lay on a preview of antique jade jewellery; ABN Amro might invite its clients to an exhibition of Indian art. Sport sponsorship - cricket, racing or polo - is popular. More seriously, expert seminars on tax or trust funds are arranged.

Clients would typically include import-export directors, real estate company heads or partners in legal firms. With their $1 million-plus deposit, they gain access to the sanctuary of the wealthy, a kind of Masonic Lodge for the 1990s. Their tastes in financial instruments are certainly becoming more exotic. "In the last three or four months they have been more adventurous," says Raoul Weil, head of private banking at UBS. "Equity or regional investment was out of favour last year but now it's becoming en vogue."

Mainland Chinese immigrants rarely figure among the private banking clientele. Some attribute this to a lack of sophistication, since banking systems in China are far behind those of Hong Kong. Others have a different explanation. "Mainland Chinese is a very touchy issue because of compliance," explains Mr. Brutsch at ABN Amro. "You have to do very detailed due diligence on clients. Everyone is more aware of money laundering now, as you can see from the Russian experience recently. You have to be careful not to attract money you don't want. There are a lot of funny people running around Asia," he adds.

At the most conservative end of the scale are British bankers such as Nigel Jeacock-Fewtrell, director of the private clients group at Lloyds TSB Pacific. His customer base includes many Asians who have been educated in England, opened a bank account with Lloyds, and then developed the relationship further on their return to the east. "They know we won't be chucking their money around," he says. "We're not trying to be the highest performer, but balancing risk and performance to give a robust medium- to long-term return. We're a typical British bank."

Untypically for Hong Kong, Lloyds TSB does not operate the $1 million minimum rule, but increases the facilities it will provide in line with the size of deposit or potential earnings. And rather than spend money on fancy promotions or events, it relies on satisfied customers giving good word of mouth. Mr. Jeacock-Fewtrell has noted a particular fondness among his clients for guaranteed investment structures. "There is a definite demand for solutions with a strong upside and a very limited downside," he notes. "Especially from clients whose losses in 1997 were beyond their wildest nightmares."

SINGAPORE

Singapore's number of US dollar millionaires is rising faster than in any other Asian nation, according to Merrill Lynch & Co and Capgemini.

Singapore's economy grew at the quickest pace in two years in the second quarter, and will probably expand faster than estimated this year, according to the Monetary Authority of Singapore. The central bank has forecast the economy will grow 7.5 per cent this year.  

Gross domestic product in Singapore expanded an annualised 14.4 per cent in the three months ended June, up from a revised 8.8 per cent pace in the first quarter, Singapore's trade ministry said last month. -- Bloomberg   2007 September 11

Singapore's Richest   

Singapore's four richest men - Ng Teng Fong, Kwek Leng Beng, Lee Seng Wee and Wee Cho Yaw - have held on to their spots in the Forbes 2006 Billionaires List. And Mittal Steel boss Lakshmi Mittal continues his reign as the richest man in Asia.

Other than Mr Mittal, the only Asian to make the top Forbes top 20 worldwide is Hong Kong tycoon Li Ka-shing, who jumped 12 places from 2005 to 10th position with US$18.8 billion. Singapore's Mr Ng came in 174th worldwide. And he took the top spot locally from Kwek Leng Beng, who was ranked Singapore's richest man last year.

Mr Kwek, who controls the Hong Leong Group, including City Developments and London-listed Millennium & Copthorne, came in second locally, with his wealth falling to US$3.6 billion this year, from US$4 billion in 2005.

Mr Ng, who also made his fortune in property, was worth US$2.6 billion last year. He runs the privately-held Far East Organization, which includes listed Yeo Hiap Seng, Orchard Parade Holdings and Hong Kong-based Sino Group. Singapore bankers Lee Seng Wee of OCBC and Wee Cho Yaw of United Overseas Bank are said by Forbes to be worth US$3 billion and US$2.4 billion respectively, giving them third and fourth place locally.

The Asia Pacific is home to 115 billionaires with a collective worth of US$364 billion. Japan has the most billionaires in the region at 27, although their net worth slid 11 per cent from 2005. India has 23 billionaires.

Meanwhile, the sleeping giant that is China twitched a little to increase its presence on the list from two to eight, led by Larry Rong Zhijian, head of the Citi Pacific conglomerate, with a fortune of US$1.7 billion.

Worldwide, Microsoft tycoon Bill Gates remains the richest man for the 12th year running, with a personal fortune of US$50 billion. Investor Warren Buffett again ranked second, though his fortune fell US$2 billion to US$42 billion.

The total number of billionaires worldwide rose by 102 to a record 793 over the past year, and their combined wealth grew 18 per cent to US$2.6 trillion. - ASSOCIATED PRESS      11 March 2006

 >> - MORE

Sebastian Dovey, managing partner at Scorpio, refers to recent research of Capgemini, the management consultants, and Merrill Lynch. They found that the Asian-Pacific region, including Japan, accounted for 25 per cent of 7.3 million individuals with financial assets of US$1 million or more around the world.

Two international banks, notably HSBC and Citigroup, disclosed detailed numbers. Both banks didn't forward high net worth individuals' wealth at the private banks.

Out of around 25,000 clients at Citigroup's private bank division, there are about 6,500 Asians who account for about a third of earnings of that division. Citigroup's private banking division is toying with the idea of raising the minimum investment to US$10 million from US$5 million.

At HSBC, high net worth individuals in Asia-Pacific contributed to about 29 per cent of the bank's private asset division last year. Banks in Singapore, South Korea and other parts of Asia were reticent, according to Scorpio. But HSBC noted that Asia's share of the profit was 29 per cent.

In terms of the value of investment holdings, the Asian proportion is 21 per cent. On this basis Asian clients or private clients hold more than 20 per cent or around US$1 trillion of the total individual assets controlled by private banks.

As a general rule, private banks look for customers with a minimum of US$1 million to invest, according to the study by Scorpio. But millionaires are not what they used to be. Today, there are numerous individuals around the world boasting assets of US$10 million to US$20 million. While smaller private banks are in intense global competition, larger ones such as Citicorp's private banking division are seeking minimum liquid assets of US$5 million and that will rise to US$10 million, according to Scorpio.

The study is based on a review of 120 institutions worldwide and includes the 2003 year-end results of over 50 private banks. The estimates come from an analysis of private bank financial statements and interviews by Scorpio.

On average, the total amount of money invested by private banks on behalf of their clients rose by 14.4 per cent during 2003. The survey indicates that the private banking business is growing by 15 per cent a year.

Much will depend on the performance of bonds, equities and alternative investments such as hedge funds, property portfolios, private equity funds and gold and other commodities. But if Scorpio is correct, private banking assets will soar over US$5 trillion next year. - By Neil Behrmann in London        Singapore Business Times       28 May 2004

Private banking to grow 20 to 30% annually in Asia: Citigroup

SINGAPORE : Private banking in Asia is expected to rake in revenue growth of 10 percent a year on average, according to a recent Pricewaterhouse Coppers survey.

But some private banks are confident of beating the average by a wide margin.

Citigroup, for one, is looking at 20 to 30 percent expansion annually.

Private banking is feeding on the immense wealth generated in this region, as well as wealth outside the region flowing here.

Henk R de Glint, Deputy Managing Director, MeesPierson, said: "I think indeed Asians are getting richer. It is globally estimated that around one-fifth of wealth is in Asia. And I think other things that are moving is money from the rest of the world to Asia especially to Singapore and Hong Kong. That is an indication that the industry is growing."

Patricia Enslow, Head of Marketing Communications, Citigroup Private Banking, said: "Industry forecast has indicated a growth rate of 10 percent in the region for private wealth management. We think the industry is more likely to grow 20-30 percent well into the foreseeable future. Our private banking business in the region has been growing at a 20-30 percent each year for the last 5 years. It is one of the fastest growing businesses in Citigroup."

The rapid growth in private banking is leading to a scramble for talent.

Mr Henk R de Glint said: "We are looking globally for 300 people, so in Asia that will be quite a number as well. We have started our campaigns already and we continue to look for these people. We are looking to add to the workforce."

Ms Enslow said: "Just in Singapore alone, we have recruited 25 management associates."

The hiring got a boost recently when the Monetary Authority set aside S$2.5 million over two years for the Financial Sector Manpower Conversion Scheme to train people to switch into growth areas like private banking. - CNA     YAHOO!      25 June 2004

Hong Kong to Have 83,000 Millionaires by 2011

Hong Kong will have 63 percent more millionaires by 2011, with their wealth growing faster than peers in Singapore, projected London-based business information provider Datamonitor.

The number of Hong Kong residents with more than $1 million of liquid assets in the city will increase to 83,000 from 51,000 last year, Datamonitor said in a statement. That represents an annual growth rate of 10 percent, according to Bloomberg calculation.

The assets they hold in Hong Kong will expand 11 percent a year to almost $250 billion by 2011, from last year's $150 billion, Datamonitor projected.

The number of millionaires in Singapore is forecast to grow 7.3 percent a year over the same period with the liquid assets they hold in the country projected to rise 7.5 percent annually, Datamonitor said.

Hong Kong is benefiting from low taxes, simple regulations and flexible labor market rules that have attracted global financial institutions to set up shop, boosting the city's financial industry, which contributes almost 90 percent of its economy, Datamonitor said.

``It is Hong Kong's open economy that has seen its financial services industry thrive,'' David Lalich, author of the report, said in the statement.

Hong Kong residents have also gained from the city's rising stock market since 2002, when there were about 31,000 millionaires, Datamonitor said. Hong Kong's Hang Seng Index has tripled since the end of 2002, according to data compiled by Bloomberg.   - 2007 November 2    BLOOMBERG

Hong Kong Millionaires  
The number of people with more than $1 million in liquid assets rose to more than 274,000 last year from about 260,000 in 2003, according to a Citibank survey   - 24 Feb 2004       SOUTH CHINA MORNING POST

   >>  MORE

CHINA

China's richest citizens are even wealthier than the statistics suggest, and may hold as much as 9.3 trillion yuan ($1.4 trillion) of hidden assets, according to a Credit Suisse-sponsored study by a top economic think-tank.

Official statistics for 2008 failed to capture income equivalent to about 30 percent of China's gross domestic product, the "Analyzing Chinese Grey Income" report found.

And nearly two thirds of that unreported income goes into the pockets of the richest 10 percent, widening China's already troubling wealth gap, said Wang Xiaolu, the economist at the China Society of Economic Reform (CSER), who headed the survey.   - 2010 August 12    YAHOO!

Rich in China stashing their fortunes abroad
8% of country's wealth is offshore and proportion set to rise: consultants

Around 8 per cent of China's US$2.5 trillion wealth is parked offshore and the share is rising as the country's economy opens up, boosting business for private banks in Hong Kong and Singapore, consultants said yesterday.

The Boston Consulting Group said that the Greater China region - comprising China, Hong Kong and Taiwan - is now home to 45 per cent of the total US$10.6 trillion of wealth in Asia excluding Japan.

'There is a substantial portion of money that is already sitting offshore,' Tjun Tang, a Hong Kong-based partner of the group, told reporters.

The wealth in the Greater China region is forecast to grow to US$8.6 trillion by 2011, the consultancy group said in its Wealth Markets in China report.

The data includes the wealth of millionaires and a larger group of affluent people although the report said that wealth was highly concentrated. Less than one per cent of households hold more than two-thirds of China's personal wealth.

'In the near-term we are certainly estimating that the offshore component is rising for Chinese money,' Mr Tang said.

He added that most relationship managers for China are based in Hong Kong, given the proximity to the mainland.

Ranu Dayal, a Singapore-based partner for the group, said that Singapore also plays a role in product development even if relationships are managed in Hong Kong.

China's growing pool of millionaires have been monetising their assets by listing companies in Hong Kong and Singapore, creating opportunities for global private banks, such as UBS and Citigroup, to grab clients.

In Singapore, there are over 100 Chinese companies listed on the stock exchange including firms such as property developer Yanlord Land which has a market value of US$5 billion.

Mr Tang said the millionaires are parking more wealth offshore because of their ability to list companies abroad and move assets, compared to the mass affluents who face tighter regulation.

China will not match the level seen in Taiwan where 25 per cent of wealth is outside the country, but overall the net amount would increase as a strong economy boosts underlying wealth, Mr Tang said. -- 2007 November 1 Reuters 

According to an annual report on global wealth compiled by Merrill Lynch and Cap Gemini Ernst & Young, the number of millionaires in China - with their wealth figured in U.S. dollars - increased to 320,000 in 2005, a 6.8% increase from the year before.   Their average per capita holdings stood at $5 million, well above the global average of $3.8 million for people in the high net worth bracket, defined as those with more than $1 million in liquid assets.   China's wealthy also outpaced their neighbors; per capita wealth stood at $4.7 million for Singapore's millionaires, and $2.7 million for Japan's. -   INTERNATIONAL HERALD TRIBUNE

China has 340,000 Millionaires

China had 340,000 millionaires in 2009, the fourth highest number in the world in spite of a 11% decrease the year before according to the 2010 edition of "The Wealth Report" released by Citi Private Banking.

China is one of the most fertile territory for new business as all Private Bankers know!!


26-year-old tops Forbes China Rich List
The female property developer grabs the No1 spot with US$16b

A 26-year-old female property developer tops this year's Forbes list of the richest people in China, grabbing the number one spot with a net worth of US$16 billion, the US magazine said yesterday. That amount also makes Yang Huiyan the richest woman in Asia, according to a statement from Forbes.

All 40 people on Forbes Asia's 2007 China Rich List are billionaires, compared with only 15 last year, it said, attributing the rise to a boom in the nation's stock and property markets.

Their combined net worth is US$120 billion, up more than three times from last year's US$38 billion, it said.

The list was published as China prepares for the opening next week of the 17th Congress of the Communist Party, where the growing gap between rich and poor is likely to be among the top agenda items.

The nation's rulers are concerned that the widening difference between the haves and have-nots could endanger social cohesion in the world's most populous nation.

Ms Yang, a graduate of Ohio State University, is the daughter of Yeung Kwok Keung, the co-founder of Country Garden Holdings, a property development firm.

Mr Yeung transferred his shareholdings to his daughter in 2005, and she now sits on the company's board as an executive director, Forbes said. Ms Yang is one of more than a dozen property developers to make this year's Rich List, reflecting roaring demand for homes and real estate investments, according to Forbes.

'Household incomes are rising rapidly, and a growing number of people are moving into cities from rural areas,' said list compiler Russell Flannery.

'Those trends are creating great business opportunity for property developers in the country.' The latest Forbes list had 20 newcomers including solar energy entrepreneur Peng Xiaofeng.

Last year's number one, Wong Kwong Yu, fell to No 10 even though his fortune increased by 56 per cent to US$3.6 billion, the statement said.

The list underlined that south China, where economic reform first took off more than two decades ago, remained the centre of gravity for the country's economic might.

South China's free-wheeling Guangdong province produced 13 billionaires, more than any other region, according to Forbes.

'Guangdong has been overshadowed of late because the Beijing Olympics and Shanghai's growing international role have attracted a lot of attention,' Mr Flannery said in the statement.

'This list illustrates that southern China still has plenty of money and plenty of entrepreneurial zest.'   2007 October 9  AFP

China has 106 billionaires compared with only 15 last year

China now has 106 billionaires, seven times as many as last year, according to a list published Wednesday that underlined the rapidly growing economic muscle of the Asian giant.

Yang Huiyan, a 26-year-old female property developer, topped the list with a net worth, mostly inherited, of 130 billion yuan, according to the website of Hurun Report, a Shanghai-based magazine.

The figure was up from just 15 billionaires in the 2006 list, a surge attributed in the report to sizzling economic growth, and in particular a steep rise in stock and property prices.

"We all know that China is developing very rapidly. But the speed is so fast that it shocked all of us. It's much faster than the US and shed Europe"  Rupert Hoogewerf, Hurun Report's publisher, said in a statement.

The average wealth of the 800 people on Hurun's list is now 562 million dollars, an increase of 104 percent from 2006, and it takes 105 million dollars to make the list, the statement said.

This compared with the first list, nine years ago, which could only rank 50 people who each had six million dollars or more.

Among the people singled out by Hurun was 32-year-old Peng Xiaofeng, whose 5.3-billion-dollar fortune is based on LDK Solar, a manufacturer of solar panels. While not even on last year's list, he was now number six.

"These success stories are encouraging a large number of young Chinese to entrepreneurship," said Hoogewerf.

Hurun's list was released just two days after US magazine Forbes published its list of China's richest, which also put Yang in the lead.

Yang, a graduate of Ohio State University, is the daughter of Yeung Kwok Keung, the co-founder of Country Garden Holdings, a property development firm.

Yeung transferred his shareholdings to his daughter in 2005, and she now sits on the company's board as an executive director, Forbes said. The US magazine put her wealth at 16 billion dollars.

Ironically, both lists were issued just days before the opening of the Communist Party's five-yearly Congress, which is expected this year to focus much attention on the growing wealth and income gaps in China.

Hoogewerf, a trained accountant whose Chinese name is Hu Run, previously compiled the Forbes rich list.  - 2007  October 10   AFP

China's New Rich

There are 345,000 millionaires in China 
It also has 4,935 super rich with assets of more than US$30m each: study

China had 345,000 millionaires by the end of last year, the second-most in Asia after Japan, according to a new study by US investment bank Merrill Lynch.   

The number of Chinese US dollar millionaires was up 7.8 per cent from the year before, helped by a stock market that saw its value soar 130 per cent over the 12 months, according to the study, co-authored with consultancy Capgemini.

'The Chinese economy turned in another year of strong performance in 2006, driven by surging exports and rising domestic consumption,' Merrill Lynch executive Francis Liu said in a statement released on Wednesday.

'Returns from the stock market also gave a lift to the number of China (millionaires) and their holdings.'

China also has 4,935 extremely rich people, or 'Ultra-HNWIs' (Ultra-High Net Worth Individuals), defined as those with financial assets of more than US$30 million, the statement said.

'China's rapid economic growth is reflected in a high concentration of Ultra-HNWIs,' said Dirk Chanmueller, a Capgemini executive. 'The country is home to more than 28 per cent of the Ultra-HNWIs in Asia Pacific.'

The survey was released a week after two annual 'China Rich' lists emerged, showing an explosion in the number of very wealthy people.

China now has 106 billionaires, up from 15 a year ago, according to one of the two lists, published by Shanghai-based Hurun Magazine.

The latest data was published just as the elite of China's Communist Party were gathered in Beijing for their five-yearly Congress, with the growing wealth divide among the top agenda items. -- 2007 October 19 AFP

There are already 250,000 millionaires (USD millionaires) in China today according to Citibank Private Banking which is also why they are focussed on building market share with this young group. - YAHOO!  Special Report  2006 February 2

China's middle class

China has 17 million middle income households, defined as those with monthly salaries worth $622-$1,244 (5,000 to 10,000 RMB), accounting for 50 million people, or 3.8% of the total population. In neighboring Hong Kong, middle class homes account for half of the Chinese territory's population.
Source : China Daily, McCann Worldgroup   2006

Total worth of the 100 richest Chinese has grown to $50.7 billion; most of the tycoons made their fortunes in property

A 35-year old who made his fortune selling electronic appliances, heads this year's list of 100 richest Chinese compiled by EuromoneyChina.

Mr Huang Guangyu founded GoMe Appliances, China's largest electronics retailer.

With a fortune of US$1.3 billion (S$2.2 billion), he ousted last year's No. 1, Mr William Ding Lei of NetEase.com, who slipped to the seventh position.

Mr Huang broke through the billion-dollar barrier by building up GoMe.

He expanded its chain of stores last year to some 200 outlets from 140, and is pushing his business aggressively in Hong Kong.

Also the chairman of Hong Kong-listed China Eagle Group, he has ventured into Beijing real estate.

Born in Shantou in Guangdong province, the vocational school graduate moved to Beijing with his brother when he was 17.

They set up a business selling low-end electronic household appliances with a US$3,600 bank loan.

His big break came when high inflation hit in 1987, and his business took off.

This is the sixth annual list of Chinese millionaires compiled by Shanghai-based researcher Rupert Hoogewerf.

The list offers a snapshot of the changing times.

The lion's share of tycoons on this year's list made their fortunes in real estate - a sector that has flourished amid a nationwide construction boom.

The elite club of China's Richest 100 is now worth US$30 billion (S$50.7 billion), up 29 per cent year-on-year.

It requires an entry level of US$150 million - a far cry from the paltry US$6 million when the list was put together in 1999.

However, this year's champion failed to appear on Forbes' list of the World's Richest.

No. 2 on the EuromoneyChina list is Mr Timothy Chen Tianqiao, 31, of Shanghai, with a fortune of US$1.05 billion.

He owns 60 per cent of Shanda Networking - China's largest online games company and its largest Nasdaq-listed company with a market value of US$2 billion.

Mr Chen took over Mr Ding's mantle as China's top IT geek, creating a US$1 billion paper fortune in online games.

The Fudan University graduate now plans to move from games to cartoons to all forms of entertainment.

He has even hired the former president of Microsoft China as Shanda's president, said Fortune magazine.

Third on the list is Mr Larry Rong Zhijian, 62, with a fortune of US$1 billion.

Ironically, he is the only Chinese to have made it to this year's Forbes' List of the World's Richest People, where he is ranked No. 514.

Mr Rong, born in Jiangsu province, went to Hong Kong at 36 and started an integrated-circuit business, listing it in the United States in 1982.

Four years later, he joined Citic Pacific, the Hong Kong arm of Citic, which was run by his father Rong Yiren.

The junior Rong invested in blue-chip Hong Kong companies such as Hong Kong Telecom, Cathay Pacific airline as well as civil infrastructure and real estate.

Ms Chen Lihua, 63, fell by two positions to share the seventh place with Mr Ding.

Beijing's richest woman, who comes from a line of Manchu aristocrats, owns Fu Wah International Hong Kong Group - one of Beijing's top real-estate developers.

Heading the list of 32 new names this year is Mr Li Jinyuan with US$720 million generated from a nine-million-strong direct sales international network selling health products.

Ranked No. 100 on this year's list is former Olympic gymnastics gold medallist Li Ning, whose sporting goods business is estimated at US$150 million.

As China opens up to the world, its entrepreneurs are fast learning the strategies of the global business game.

According to EuromoneyChina, the United States has the biggest impact on China's entrepreneurs, followed by Japan and Singapore.   - by Connie Er   SINGAPORE STRAITS TIMES    12 Sept 2004

China's Rich

Dotcom tycoon William Ding will lose his place at the top of China's rich list when Asiamoney publishes this year's listing tomorrow, according to mainland media.

The 33-year-old founder of popular Internet portal NetEase.com, with assets estimated at US$900 million (HK$7.02 billion), nudged aside Citic Pacific Group chairman Larry Rong as No 1 on the annual list of China's 100 richest people in 2003.

But in fast-changing China, fortunes can wax and wane quickly, according to the Beijing Youth Daily.

The newspaper said Ding's fortune has shrunk because of NetEase's falling share price. It's one of the big three Nasdaq-listed Chinese portals.

NetEase shares, valued at US$39.08 on Friday, have lost almost half their value since October 13, 2003, when they sold for US$71.65.

Shanghai-based researcher Rupert Hoogewerf, who compiles the list for Asiamoney, said the 2004 list had changed greatly from last year. ``Compared with last year, there are 32 new faces on this year's list and the richest people have got more money,'' he said.

The combined assets of the 100 richest people exceeds 245.6 billion yuan (HK$231.57 billion) with each, on average, having 2.5 billion yuan in assets compared to 1.8 billion yuan a year earlier.

The threshold for inclusion on the list of China's 100 wealthiest entrepreneurs has climbed to 1.25 billion yuan compared to the 900 million yuan required last year. Hoogewerf said real estate players dominated this year's list. About 45 of the list's entrepreneurs are from the real estate and building sectors while new faces come from the agricultural, retail and steel and iron industries.

Hoogewerf, who has complained of the difficulties involved in uncovering the mainland's wealthiest, said it is getting easier to identify them thanks to the growing number of listed Chinese companies.

``As more private enterprises are preparing for listings, the transparency of these companies is higher, which makes my work easier and more accurate,'' he said.

This is Hoogewerf's sixth year listing China's richest but, asked about rising stars, he declined to name names.

However, 31-year-old Chen Tianqiao, Shanda Interactive Entertainment chairman and chief executive, at No 10 last year with a net estimated worth of US$480 million is expected to be at or near the top this year.  - by Olivia Chung    HK STANDARD   11 Oct 2004

“Just do it” Chinese-style

With an increasingly sophisticated and wealthy customer base, Chinese consumer-goods makers are starting to pay attention to brand-building. The smartest are moving beyond simple product ads to marketing an entire lifestyle. In an echo of Nike's famous “Just do it” campaign, Li-Ning, the largest producer in China's sportswear market, has just launched an advertising blitz under the mottos “Goodbye” and “Anything is possible”. Costing 15m yuan ($1.8m), eight times the company's usual ad spend, it taps into the Chinese belief that they can safely wave goodbye to their hard lives of the past, and that the future is filled with unlimited opportunities.

One of those opportunities, if you ask Wilson Xu, Li-Ning's marketing manager, is a new-found freedom to seek a more balanced life. Putting it plainly, consumers should stop chasing academic and commercial success and get out more often to participate in more sport. Only around 15% of Chinese mainlanders aged 15-35 actively play a sport, compared with 50% in America. “Most Chinese people believe that success is about academic achievement and making money. They don't care about their health,” says Mr Xu.

The sophisticated ads, which feature ordinary people overcoming failure (one shows a boy who smiles despite hurting his hand skateboarding; another a girl kick-boxing and then a shot of her bandaged knuckles), are supposed to puncture the self-consciousness that keeps many Chinese on the sidelines unless they are already good at a given activity, says Kelvin Cheng, managing director of Leo Burnett Beijing, the agency behind the campaign. Mr Cheng says that the style is a new way of advertising for Chinese companies, which usually sell on price alone.

Of course, appealing to a new fad for spiritual well-being and for sports ahead of the 2008 Olympics in Beijing is also a good way to get modern Chinese consumers to part with their money. After years of focusing on cheap prices, Li-Ning, like many Chinese companies, has spent the past two years learning that branding pays. The company is investing around 10% of its 1 billion yuan revenues in marketing, compared with 5% two years ago, and the proportion is due to grow.

That investment, which includes hiring a foreign ad agency, has enabled Li-Ning to hold on to its leadership despite the encroachment of foreign firms. Li-Ning leads both America's Nike, which has about 800m yuan in sales in mainland China, and Germany's Adidas. The prospect of the Olympics is helping to expand the market by more than 25% a year. Mr Xu reckons the new branding campaign should enable Li-Ning to double the retail prices of its most expensive products (shoes) to around 1,000 yuan in a few years, roughly what Nike's most expensive shoes cost now.

Will Chinese consumers continue to choose a home-grown brand over a glamorous foreign one such as Nike, which uses sports celebrities with global appeal to endorse its products? As China gains in self-confidence, they might. And Li-Ning understands the danger of relying too much on celebrities. Its founder was Li Ning, who won three gold medals for gymnastics in the 1984 Los Angeles Olympics, but is now regarded as a bit passé by younger consumers. Mr Li's days as a sporting hero may be over, but his brand may yet bring more glory.  - The Economist    13 August 2003

For China's Wealthy, All but Fruited Plain

Super-rich are emerging in China, along with thousands of multimillionaires, despite government's concern that emergence of wealthy class threatens social stability and Communist monopoly on political power; bold displays of wealth are still rare, while bureaucratic barriers and government prejudices make accumulation of vast wealth difficulty, even risky; some immensely wealth capitalists are gaining prominence abroad  - By Craig S. Smith  New York Times   May 15, 2002

Home Decor Takes Off in China 

SHANGHAI -- When Sun Shuwen moved into her new apartment last year in Shanghai's Pudong district, her vision was simple. The 48-year-old accountant dumped her traditional clunky furniture, and scoured stores for pieces with a modern edge. In her lounge room, a Scandanavian-style coffee table is now flanked by two hip orange and cream chairs accessorized with purple and yellow cushions. But she got most creative in the bathroom. With help from an in-house designer at a local B&Q home-improvement store, Ms. Sun chose green marble tiles to surround the bathtub and an unconventional transparent sink. The total bill for the overhaul: a whopping $50,000.

Ms. Sun and others like her are fueling a Chinese boom in home decoration. In six years, the average annual amount home renovators in major cities spend improving interiors has almost tripled to $9,600 from $3,600, according to retailer Homemart. The sudden interest in domestic decor is a sign of China's rising affluence, but it's also reflective of an increasingly sophisticated middle class inspired by a wave of new glossy magazines, television shows and do-it-yourself stores dedicated to home improvement.

Faced with a plethora of choices, the era of suburbanites modeling their homes after the Ritz-Carlton is over, says Wang Jiasheng, general manager of Homemart, one of China's leading home-decoration companies. "That was the entrepreneur from rural China trying to show off," he says. "Now decoration style is on more of a human scale."

A motivating factor in the home renovation push is the fast-moving property market. Since 1995, Shanghai has seen an unprecedented boom in housing sales. Residential sales jumped to $13.4 billion in 2003 from $1.6 billion in 1995. In Beijing, residential property sales jumped to $9.5 billion in 2003, from $737 million in 1995. While many buyers in the 1990s invested their savings simply in real estate and basic property fixtures, the latest batch are spending more time and money on their home decor. Gong Quan, chairman of China National Interior Decoration Association, estimates that $36.2 billion was spent on home decoration in China in 2003, a 30% increase over the previous year.

This decoration wave is also creating business opportunities. A string of new do-it-yourself magazines, television shows and home-decorating centers is crowding the market. Since 1999, eight new national glossy magazines devoted entirely to soft furnishings have launched, as well as more than a dozen magazines focusing on architectural design. "Trends Home," published by Trends Magazine Publishing House, was one of the first lifestyle magazines to hit the stands in 1999 shortly after the government eliminated subsidized housing. It now faces hefty competition from other glossies including the Chinese edition of "Elle Decoration," a Hachette Filipacchi Medias Group magazine that debuted earlier this year.

On television, the interiors message is being spread through new shows such as "Dotting Your Home" and "Home Decoration for the Common People." While most are sponsored by decorating companies, national public television network CCTV will soon add an unsponsored home-improvement program, "The Front Line," to its line-up.

This style drive is encouraging more home owners to think about their personal aesthetic. "For years, Chinese were educated to have no character. Everyone had to be the same," says interior designer Kay Kuo, who recently returned to Shanghai from Los Angeles to open an interior design firm MaxK Design. "Five years ago, when mainlanders were able to purchase homes, the first impulse was to copy public spaces," she says. For the wealthy, there were two looks: the hotel lobby or the karaoke bar. "People didn't think about giving their homes a personal touch," she says.

Five years ago, Zhu Siying and her daughter Xiao Ya, a renowned opera singer, fell into the hotel-lobby design trap when they moved into a spacious villa in Shanghai's Hongqiao district, one of the city's first residential areas for expats. While they regret their decorating choices today, the pair had little experience overhauling interiors at the time; for many of her 69 years, Ms. Zhu lived in tiny apartments, some as small as 11 square meters. Without consulting an interior designer for their new apartment, they attempted to create a European gentry look by hanging a three-meter chandelier in the living room and filling one corner with faux Louis XIV furniture. A mirrored cabinet for good feng shui was added, but then they got stuck. The living room was still empty. The solution was to place two dining table sets -- a traditional blackwood and an Italian green marble -- next to one another.

Stripped Bare

In homes such as Ms. Zhu's, most properties come without the basics -- from floor coverings to fixtures. Lifestyle retailers are now making an aggressive push to fill the void. In just six years, Chinese-owned Homemart opened 21 stores nationwide, and has plans to develop five others. Orient Home, a small construction-supplies supermarket based in the northeastern city of Shenyang, has transformed itself into a 22-store home-improvement chain across China in five years.

Local chains are facing stiff competition from foreign firms. The German franchiser OBI, owned by Tengelmann Warenhandelsgesellschaft, has set up 10 home improvement stores in China since 2000. While Sweden's global home-renovation success story, Ikea, had a slow start when it first entered the market in 1998, it now has a store each in Shanghai and Beijing. There's plans to open eight more, although "we don't have a specific timetable," says Ian Duffy, general manager for Ikea China. To become more competitive, the company has reduced its overall prices, generally by half but in some cases more drastically. A simple shoe rack that sold for about $15.50 in 1998 now sells for about $1.80 -- a drop of almost 90%.

U.K.-based home-decorating giant B&Q, owned by home improvement company Kingfisher, has also seen its business take off in China. When it opened its first store in Shanghai five years ago to test the market, general manager Ian Strickland says he had no idea how quickly the concept would take off. B&Q now has 20 stores on the mainland, including the world's largest home improvement center in Beijing's Haidian district, spanning 18,000 square meters. The company says it processes 120,000 paying customers a week, each spending about $73 on average on everything from ceramic tiles to stoves. Their big draw is free in-house interior design advice -- an innovation that emerged in China.

"In the past, B&Q was a DIY (do-it-yourself) store," says Mr. Strickland. But in China, it was necessary for the company to develop a "single destination" solution for home shoppers. Not only can consumers purchase tiles and toilets, they can also get help choosing the right colors and models, and have the entire package installed. The reason for scrapping the traditional DIY approach was simple: "The Chinese need their hands held," says Mr. Strickland.

Initially, this strategy was a huge risk. "There was a lot of concern taking the brand into this area," says Mr. Strickland. Not only did it require hiring in-house designers, it also meant hiring contractors, electricians and plumbers. But the gamble paid off. Mr. Strickland says the store's blueprint is being copied not only by B&Q managers in other markets, but by its main competitors in China, including Homemart and OBI.

These in-house design teams are having a palpable affect on consumer trends. Not only are mainlanders beginning to inject a little character into their homes, they are finally overcoming their fear of color. Five years ago, 90% of the paint sold at B&Q was white; today, white paint accounts for 65% of sales. B&Q even came up with its own brand of bright paints to encourage color.

Pushing Style

Zhang Wei is one of Homemart's trend pushers. An in-house consultant, he's a recent graduate of an interior design course taught at Shanghai's National Chiao Tung University. What he's learned in school, he's now packaging for the people: clean lines, tasteful tiles and intelligent layout. It was his sensibility that attracted Tan Yi and Chen Jianfeng to the store. Earlier this year, the professional couple bought a new apartment in Pudong -- an empty concrete shell without any fittings -- that was close to good schools and had green space for their four-year-old son.

Like other women at her office, Ms. Tan, a 32-year-old accountant poured over magazines and Web sites for design ideas. She even traded tips with colleagues at Siemens. "It's a hot topic in Shanghai," she says. "At lunch, when we eat, it's all we talk about."

In the beginning, the home decorating process was "fun" but the details were daunting, says Ms. Tan, who then recruited her husband, a 37-year-old deputy director of research at Alcatel Shanghai Bell Co. for the final decision. Their budget: about $18,000 for fittings and other basics and about $12,000 for the soft furnishings. Ms. Tan's biggest concern: "To make sure every kind of construction material was environmentally friendly."

In his cubicle on the shop floor, Mr. Zhang helpfully tweaks the blueprint for Ms. Tan and Mr. Chen's apartment, adding a closet in the entrance for shoes and coats, and other built-in components. He suggests furniture layout and lighting plans -- all products from Homemart -- and chooses bone-colored tiles for the master ensuite bathroom. Some of his ideas are incorporated, others rejected. Ms. Tan thinks the bone tile is too elaborate and opts for plain white. "We just want a home that's simple and comfortable," she says. Color will be minimal. Her concession: brighten the living room with yellow and green cushions.

Unformed Vision

While the pendulum is swinging from glitzy to minimalist, what's still missing is personality, says Wang Xu, editor of "Elle Decoration." While more mainlanders are willing to go the extra mile to put a personal and sophisticated stamp on their home, Ms. Wu believes it will take another decade before a real Chinese aesthetic emerges. In the meantime, to find truly individualistic homes to photograph for her magazine, she is turning to local artists such as Huang Rui in Beijing. These creative types are injecting innovative touches such as funky sculptures and glass accents into their homes to offset whitewashed walls and cement floors.

Ann New is another creative taking a risk with her personal space. When Ms. New returned to Shanghai after years of studying interior design and working for architects in Tokyo, she bought an apartment in downtown Shanghai and installed a curved wall to separate her living space from her painting studio, based on the advice of local architect and friend Ben Wood. A Japanese theme permeates the studio space. A raised platform doubles as a seating area and hand-painted screens that resemble antique Japanese prints divide the rectangular space.

Ms. New's bedroom, however, contradicts the calm of her working environment. Behind the cement wall and false pillars is an explosion of orange and pink pillows, tumbling off an unusual custom-made bed with built-in drawers for canvases and a raised table for her art books. Even the bathroom, with its muted mauve tiles and carefully arranged candles, has a colorful flair.

While Pudong home owner Ms. Sun hasn't embraced color as readily as Ms. New, she's still proud of her own design efforts -- and of the benefits a stylish space can bring. "Our home's more comfortable so we're eager to come home now right after work," she says. "I have more friends willing to come to my home now." - by Karen Mazurkewich     Wall St Journal     October 22, 2004

China's rich - so near and yet so far for banks
Scores of millionaires are created a day, but private bankers face constraints

China's booming economy is creating more than 70 millionaires a day, but foreign banks do not have enough products, client managers or offices to tap into the market for top-end private wealth services.

Banks including Citigroup Inc and Standard Chartered plc know the world's fourth-largest economy holds huge potential for private banking, but weak industry rules, strict foreign exchange controls, too few branches and a lack of expertise mean it will take years to reap profits.

'Market conditions for private banking business in China are still very immature,' Shanghai Pudong Development president Fu Jianhua told the Reuters China Century Summit.

'Almost every bank wants to get top-end customers, but no matter whether the banks are Chinese or foreign, the problem is whether we have enough professional private bank client managers to offer top-end services to customers,' he said.

The limited range of products on offer due to China's highly regulated foreign exchange system is another obstacle.

'We are just in the start-up stage,' Christine Ip, head of China consumer banking at Standard Chartered, said at the summit.

'There are not too many products we can offer, unlike in a mature market like Hong Kong, Singapore, or even Korea.' Some private banking units of foreign lenders in China act more as representative offices, as overseas lenders are not yet allowed to help individual Chinese clients invest directly in overseas capital markets.

Foreign private bankers can approach rich Chinese financial services consumers and lure them to invest in overseas stocks, but no legal contracts for private banking business involving investments in foreign assets can be signed on the mainland.

As a result, mainland Chinese typically travel to Hong Kong to do their private banking business.

China is likely to surpass Japan by 2015 as the Asian country with the highest number of wealthy individuals, predicted Johnson Chng, head of the Greater China financial services practice at Bain and Co, a global management consultancy.

Japan was home to 1.4 million high net-worth individuals - with more than US$1 million in financial assets excluding their homes - worth a combined US$3.5 trillion in 2005, according to a report by Merrill Lynch and consultants Capgemini.

By comparison, mainland China was home to 320,000 such wealthy individuals, together worth about US$1.59 trillion.

Many foreign banks, including Citigroup and Standard Chartered, set minimum asset levels for their private bank clients in China at US$1 million - a typical global threshold.

Some banks such as BNP Paribas and Royal Bank of Scotland, however, now only operate private banking offices in one or two major cities such as Beijing and Shanghai, as Chinese regulators are keen to limit aggressive network expansions.

'If they can get 20 to 30 millionaires per office, that's already good enough,' said Mr Fu of Pudong Bank, a local partner of Citigroup.

'The biggest cost for private banking services is human. If you can get enough fairly paid financial experts, the profit margin contributed by these millionaires can be much bigger than you expect,' Mr Fu said.

In mature markets such as Hong Kong and Singapore, competition is fierce for private bankers and job-hopping is rampant.

Chinese regulators are finalising regulations to boost the private banking business in China as demand for advanced and diversified wealth management services is growing rapidly.

Since the start of 2006, Chinese stocks have risen nearly five-fold, powered by double-digit economic growth.

'You can start to imagine the number of billionaires being created from the stock market. The other market is property,' said Mr Chng.

The new rules, expected to be announced in the next few months, could accelerate the rollout of private banking services in China. They may also add clarity on foreign exchange matters by giving China's foreign exchange watchdog a well-defined role in capital flows, bankers said.

'We are told that by the end of this year there will be a set of rules and guidelines,' said Ms Ip.

'So we want to set the groundwork, build the system, hire the expertise, train them up ... then we will have a clearer understanding of exactly what we can do and what we cannot do.' Mr Chng said that foreign players should focus on two key areas to win business in China: bolstering their brand, in a market where even many of the world's largest banks are unknown, and providing better service than their Chinese counterparts.

'It's not as easy as opening an outlet and telling people: 'This is our private bank',' said Pudong Bank's Mr Fu. 'You have to work hard, prepare and have patience before you begin to make profits, maybe several years later.' - Reuters   2007 September 8

Door opens for private banks in China

China is expected to approve the establishment of 10 private commercial banks in a move aimed at preparing the sector for foreign competition after the country joins the World Trade Organisation.

Analysts hailed the move as a breakthrough for an industry that claims only one private bank, and said it could foreshadow broader banking reforms and more bank listings.

Four of the banks have completed feasibility studies and were awaiting final government approval to open around the time of China's WTO entry, expected in the next few months.

They are Tailong Bank, based in Taizhou, Zhejiang province; Ruifeng Bank of Shenyang, Liaoning province; China Great Wall Bank of Xian, Shaanxi province; and another bank, yet unnamed, in Jiangyin, Jiangsu province.

Six others, in cities including Shanghai, Guangzhou and Wuhan, were conducting feasibility studies, with some expected to finish preparations within the next two or three months. "The approval of a series of private banks will be a major breakthrough," said professor Xi Junyang, a banking analyst at Shanghai Finance University.

"Such a move is likely to be followed by large-scale reform in state banks, which will see government stakes in the banks reduced drastically to help improve efficiency," Mr Xi said.

At present, the only private bank is China Minsheng Bank, set up in 1996, with private companies as shareholders.

The financial system is dominated by the four leading state banks, which largely provide capital to state firms, making it hard for private companies and individuals to borrow money and forcing them to borrow from friends or relatives or go to the grey market, where interest rates are higher.

The private sector accounts for more than 20 per cent of industrial output and nearly 40 per cent of retail sales, with its share of gross domestic product growing every year at the expense of the state sector. The new banks would help in a small way to alleviate the shortage of capital for private firms.

In its WTO accord signed with the United States last year, China promised foreign banks would be allowed to conduct local-currency business two years after Beijing joins the WTO. Only a handful of foreign banks are allowed to conduct business in yuan, and they are mainly confined to Shanghai and Shenzhen. The WTO agreement would lift geographic restrictions after five years.

Analysts see China's state commercial banks as ill-prepared for the expected competition.

The big four - Bank of China, Industrial and Commercial Bank of China, China Construction Bank and Agricultural Bank of China - are technically insolvent after lending heavily over the decades to moribund state enterprises that cannot repay them, according to industry analysts.

The new private banks would receive their investment entirely from private companies and individuals and lend to small and medium-sized businesses.

Tailong Bank, for example, has registered capital of 500 million yuan (about HK$468.55 million) raised from local credit co-operatives, strategic investors, township enterprises and individuals.

China also has 10 shareholding banks, more than 90 urban commercial banks, 3,000 urban credit co-operatives and 36,000 rural credit co-operatives.

Only two mainland banks are listed - Shanghai Pudong Development Bank and Shenzhen Development Bank.

Securities regulators last month cleared China Minsheng Bank for an A-share issue expected at the end of the month.

More bank listings are expected next year.

In deciding whether to approve the new banks, the People's Bank of China will consider the growth of the private sector in the areas where they operate and the demand for capital.

It will also consider regulations to stop corruption and malpractice and ensure loans go to creditworthy projects and that the banks follow lending objectives set by the central bank in Beijing.  - by Mark O'Neill and  Reuters      South China Morning Post

Gas-guzzling SUVs are all the rage with newly prosperous Chinese drivers 

Time was, Zhang Puhong's weekend outings to Fragrant Hills Park in Beijing were a nerve-wracking affair: Zhang, his wife, and their 2-year-old son would all climb into their Citroën Fukang hatchback to battle Beijing traffic on the 40-minute trip for weekly picnics. Since October, though, those trips have gotten much more relaxing. That's when Zhang bought a $27,800 Nissan Paladin sport-utility vehicle. Never mind that the pearl-white Nissan gulps twice as much gas as the Citroën. "This car is big, so it's much safer" in the chaotic traffic, says the 34-year-old manager for a real estate services company. "I really enjoy driving it."

China, in its determined quest to match the West in consumerism, has adopted the SUV craze. For a small but fast-growing group of mainlanders, a Volkswagen Santana, Buick Sail, or Ford Fiesta just doesn't cut it anymore. These Chinese drivers, like their American counterparts, want to hit the streets swathed in layers of heavy metal. Consultant A.T. Kearney Inc. predicts that Chinese SUV sales will surge by 30% annually, compared with 18% growth for cars. That means sales will jump from 160,000 vehicles this year to almost 600,000 by 2008. SUVs are "the highest-growth segment within the fastest-growing automotive market in the world," says Paul Alcala, CEO of Beijing Jeep Corp., a joint venture of DaimlerChrysler and Beijing Automobile Industry Corp. "What better place to be?"

A lot of companies are asking the same question -- and jumping into the market. Beijing Jeep, which began making Grand Cherokees in Beijing a decade ago, added two new models this year: the $16,000 Jeep 2500 and the Pajero Sport, a bigger SUV that tops out at $42,000 and is produced under license from Mitsubishi Motors Corp. General Motors Corp. now makes Chevrolet Blazers in the northeastern city of Shenyang. Toyota this fall started making its Prado, Dario Terio, and Land Cruiser SUVs in China. And Honda Motor Co. plans to launch its CRV in China next year, while Nissan has been making the Paladin in Zhengzhou since February. "There are big opportunities for us in China," says Tadashi Ishihara, general manager of Nissan's China office.

GREAT LEAP UPWARD. Local makers are picking up on the trend, too. Zhongxing Automobile Manufacturing Co. started selling its $9,500 Chiye in June. Yongzhou's Hunan Changfeng Group launched the $23,000 Liebao Feiteng in October. Now, Chinese manufacturers are ready to make the great leap upward into higher-end -- and higher-margin -- models. Since June, 2002, Great Wall Automobile Holding Co., in the central city of Baoding, has made the $10,000 SAFE SUV -- so named to reinforce the message that bigger vehicles are safer for drivers in a crash. Now, it plans to develop an even heftier, more expensive model. "We feel pressure as competition is getting much fiercer," says Shang Yugui, a director at Great Wall.

That competition is great for buyers. Sticker prices have fallen 10% to 15% in the past two years, a trend likely to continue, according to A.T. Kearney. And with roughly 30 companies licensed to make SUVs, some producers are getting nervous. "The SUV market is overheating," warns Sun Jian, deputy managing director of A.T. Kearney's Shanghai office. "There is lots of idle capacity."

An added challenge for SUV makers will be pollution and fuel-consumption standards set to take effect by June, 2005. While the emissions limits are similar to those in the U.S. and Europe, the fuel-economy rules would be among the world's strictest -- and fewer than half the SUVs now made in China comply with them. With eager customers such as Zhang pacing the showroom floors, though, carmakers have every incentive to get their road hogs up to snuff and on the market.  -
By Dexter Roberts in Beijing
Business Week article    29 Dec 2003

China's New Tycoons
They make their fortunes in property and manufacturing

BEIJING - China's booming property market and 'factories of the world' have given birth to a new generation of tycoons who have made their fortunes in commercial housing and the manufacturing sector.

PROFILE
Age 46

Fortune
760 million yuan (S$165 million).

Background Grew up in China. A self-made businessman.

Education
At least a university degree.

Business Core business in China. Built business empire through acquisition of other companies.
TOP 400 RICHEST
Total combined wealth of 303.1 billion yuan. The oldest is 80 and the youngest is 22.

Those in their 40s form the largest group - about 44 per cent.

There are only 12 women, not including eight couples who run the same company.

Half of the richest tycoons are from Zhejiang, Guangdong, Shanghai, Beijing, and Jiangsu. The largest number - 62 - come from Zhejiang.

These tycoons dominate a new ranking of China's 400 richest businessmen, whose combined fortune of 303.1 billion yuan (S$65 billion) is slightly more than Beijing's 2001 gross domestic product of 284.5 billion yuan.

Almost half of them are in their 40s, and the eastern province of Zhejiang leads the pack, providing 62 of the tycoons on the list.

The list of Shenzhen-based New Fortune magazine, published in its latest issue, took 18 months of research to produce and required whittling down the initial list of 2,000 to the final 400 Chinese entrepreneurs.

Citic Pacific's Rong Zhijian, whose personal fortune is estimated at 6.11 billion yuan, topped the list. He was also ranked No 1 on a recent ranking of China's richest by US magazine Forbes.

New Fortune's rich list is believed to be the first such attempt by the Chinese media to do this sort of ranking. Some observers also see it as a response to Forbes' ranking, whose credibility has been questioned by many people, especially those in China.

Ms Feng Yu, an assistant editor with New Fortune, played down comparisons with the Forbes' list.

'Our research methodology is different from Forbes. Maybe it's just a coincidence that both magazines have the same person as China's wealthiest man,' she told The Straits Times.

By its own admission, New Fortune has acknowledged that its list did not capture everyone they thought ought to have been on the it, 'given the lack of transparency in declaring personal wealth'.

Ms Feng added: 'Ultimately, we wanted to go beyond the rankings and the figures on personal fortunes to explore the stories and lessons gleaned from their struggles, as well as the successful business models they adopted.'

Though it's still early days to judge New Fortune's list, it offers an interesting portrait of China's most successful entrepreneurs.

A typical entrant in New Fortune's top 400 ranking is a self-made businessman aged 46 with at least a university education. Only five businessmen had inherited their fortunes from their parents.

The successful Chinese entrepreneur is most likely to have built his business empire through acquisitions of other companies, riding on the back of the maturity of the Chinese capital market and the falling influence of state-owned enterprises.

Those who first set up business in 1985 or earlier are likely to have gone into manufacturing, while those who started in or around 1990 are mostly involved with the property market.

The younger set who launched their businesses after 1995 are likely to have gone into the multimedia and information technology industries.

On average, a businessman on New Fortune's list has a personal fortune of about 760 million yuan. About four in 10 are property tycoons or run major manufacturing plants, though the next rising stars could come from the pharmaceutical, telecommunications and petrol-chemical industries.

Significantly, almost a fifth - or 17.5 per cent - of the 400 businessmen sit on national-level government advisory bodies, including 32 legislators with the National People's Congress and 38 members with the Chinese People's Political Consultative Conference.

Ms Feng said the ranking would become an annual affair. Expect enough new additions next year for a top 500 list.    - by Chua Chin-Hon    Singapore Straits Times   6 April 2003

Elitism is proving to be a boon for some banks in these troubled times

With commercial lending flat and mortgage demand low, private banking - the range of services aimed at the affluent few - remained one of the sector's few bright business spots.

``In the last three years, we've seen double-digit growth in terms of assets under management, number of clients and revenue generated,'' Greater China head of Citigroup Private Bank Kaven Leung said.

Private banking involves the high end of the burgeoning wealth management business, which consultants McKinsey & Co says may surge to US$1.3 trillion (HK$10.14 trillion) in assets under management by 2010.

Besides investment, private bankers help the rich set up family trusts and obtain business financing. Clients are also feted with more exotic services such as art investment advice, wine-tasting classes and seminars focused on raising wealthy children.

"There's still a lot of wealth in this region," Leung said.

Citigroup said its private banking unit generated a ``record income for the third consecutive year'' of US$115 million in the third quarter of last year.

But Citigroup's performance reflected market share gains rather than new wealth, Leung said.

Indeed, private bankers say wealth creation has slowed in recent years.

Figures are being tallied but regional private wealth growth last year is likely to be flat.

The last survey conducted by the Boston Consulting Group recorded a 4.4 per cent drop in global managed assets over 2001. The same year, net investment by wealthy households in Hong Kong fell 17.6 per cent while Asia, excluding Japan, suffered a 3.2 per cent drop.

Fee competition is harsh and transaction volumes are low, sending some smaller European names fleeing the region.

``Some banks are aggressively cutting fees to grab market share. The problem is once you've discounted fees, it's impossible to bring them back up,'' Greater China head of UBS Private Banking Allen Lo said.

Others among the more than 80 institutions operating in Asia are letting hard-hit customers maintain accounts even when net assets fall below the banks' stipulated minimum, often set at US$1 million.

Private bankers have also noticed increasing funds inflow from Taiwan and the mainland. The mainland remains legally grey given Beijing's regulatory restrictions on offshore funds transfer and investment.

``There are all sorts of ways for Chinese nationals to establish assets overseas and many can be legal. Most banks will insist that their mainland customers go offshore to open accounts,'' Giles Brennand, head of Boston Consulting's Greater China financial services, said.

He estimates that investment assets of US$450 billion to US$700 billion from wealthy households may be up for grabs once the banking market is fully open in 2007.

In the last two years, Citigroup's Leung said the bank had seen ``double-digit growth'' in private banking business from mainlanders who had their assets offshore.

``In the north, we have so far focused on Shanghai and Beijing, in the south Shenzhen and Guangzhou,'' he said.  - Sebastian Tong    Hong Kong Standard   20 January 2003

Tycoon with $1.3b tops China's first rich list

SHANGHAI - When late paramount leader Deng Xiaopeng decreed that 'to get rich is glorious', it seems many in China took his advice to heart, amassing personal fortunes which rival tycoons around the world.

No doubt such is the case, according to local publication New Fortune, which has put out the nation's first domestically published rich list, the 'Top 400 Richest Chinese', the state press reported yesterday.

Topping the list of China's wealthiest is Citic Pacific's Rong Zhijian with a fortune estimated at 6.11 billion yuan (S$1.3 billion), reported the People's Daily, the flagship paper of the ruling Communist Party.

Mr Lu Guanqiu of the Wanxiang Group followed with 5.24 billion yuan. Next came Mr Chen Lihua of Fu Wah International with 3.85 billion yuan and Mr Liu Yongxing of East Hope Group with 3.5 billion yuan.

To make it to the list, each candidate had to have at least 200 million yuan in liquid assets. They were also selected from an initial list of more than 2,000 people from more than 10 cities and provinces.

Together, China's 400 richest boast a fortune worth 303 billion yuan, almost three times the gross domestic product of China's south-western Guizhou province in 2001, the report said.

The average fortune of those on the list is 760 million yuan, of which 41.1 per cent is derived from real estate and traditional manufacturing.

For the past few years, the only list available on China's richest was one drawn up by British magazine Forbes, which ranked only the top 100.

The list was, however, considered not credible by many in China, who claimed that the compiler, a British researcher based in Shanghai, did not know the country well enough.

In Hongkong, there is also a list which is largely ignored by the media in the mainland.

But on that list, Mr Rong, whose business is largely based in Hongkong, also takes the top position. -- AFP       April 2003

China's New Identiikit Leaders

The apparatchiks emerging as the "Fourth Generation" of Chinese leaders -- the First being Mao's; the Second, Deng Xiaoping's; the Third, that of Jiang Zemin -- have never heard of contact lenses, let alone laser eye surgery. Every man among them sports a determinedly unstylish pair of bifocals.

Clothes-wise, the situation is even more dire: identical white shirts and single-breasted dark suits are the uniform. Vanity and panache, evidently, are not qualities cultivated by the Middle Kingdom's peer-pressured mandarinate.

But these men, who range in age between 58 and 68, were talent-spotted some 20 years ago precisely because they resembled IBM Company Men circa 1952. Deng, then Party Secretary, ordered his officials to scour the land for college-educated administrators who were good Party members with sterling bureaucratic records and the dullest of technical backgrounds.

To pass the revolutionary torch from generation to generation in a most unrevolutionary way, these cadres were intended to inherit the Politburo Standing Committee, China's supreme authority. Early this summer, the short list was finalized and slots on the Politburo allotted according to each man's qualifications (and the quality of his connections). Within the next decade, the Fifth Generation -- comprised of new men mostly educated in U.S. and European universities -- will come of age. And so the process will continue.

Deng's recruiters dug up some rum characters. Hu Jintao, who is almost certainly ascending to the post of Party General Secretary (eventually to be followed by appointments as State President and Central Military Commission Chairman, thus completing the Holy Trinity of Chinese politics), was discovered diligently toiling as a hydro engineer for the provincial construction commission in the Middle of Nowhere (actually, Gansu, a barren northwestern region).

Cherry-picked for greatness, Hu vaulted to the chairmanship of the Communist Youth League (he was 42) before volunteering for thankless duty as Party secretary in Guizhou, another backwater. Eventually, he was promoted to become gauleiter of Tibet. Aiming to suppress the independence movement, Hu declared martial law in Lhasa in March, 1989, thereby setting a precedent for another such declaration two months later in Beijing, during the Tiananmen Square demonstrations.

Three years later, he made it to the Politburo as its youngest member and Jiang's heir apparent. As ever, Hu avoided offending anyone or stepping out of line. Hu's colleagues are likely to include Wu Bangguo (a vacuum-tube specialist from Shanghai), Luo Gan (a metallurgist who spent some time training in East Germany) and Zeng Qinghong (an automatic-control systems engineer). China's next government, it seems, will consist of boffins.

The Vision Thing will be in deliberately short supply. The Fourth Generation resembles nothing less than H.G. Wells' fantasy in The Shape of Things to Come of technocratic, autocratic elites guiding the government for "the benefit of all mankind." Caution, half-measures and safety first will be the watchwords of this Politburo, whose task is to plot China's slow, steady course toward modernization without running aground on the reefs of Westernization or torn asunder by storms whipped up by global capitalism. To the Chinese way of thinking, such a titanic task calls for a cultivated dullness; there can be no room for imaginative prima donnas. A Cabinet of Brezhnevs is far preferable to one of Gorbachevs.

Radical economic and political reforms will be abjured at least until the Fifth Generation can take over. Hu, for instance, "is more colourless than I would like to say, but then you don't want someone too flashy with one billion people," counsels Ercel Baker, founder of Ottawa's Baker Group International, a firm focusing on expanding business ties with China.

For partly this reason, these up-and-comers are congenitally averse to the public politicking and purging that accompany most transfers of power, in which violent conniptions are produced by the clash of individual egos grasping for the glittering prizes. Within a consensus-obsessed Politburo, "disagreements" never leave the room and ruthless internal dogfighting comes disguised as "frank discussions within Party circles."

Considering the Identikit backgrounds of the Fourth Generation, there are more such "disagreements" than one might expect, but they are generally divergences of degree rather than of principle. One of these individuals, for instance, may be marginally more favourable toward privatizing some of the unprofitable State-Owned Enterprises (SOE) than another, but the wisdom of retaining the government's hand on the economic tiller remains unquestioned dogma.

Until now, owing to the Politburo's mania for presenting a united front to outsiders, dissecting its institutional thinking and predicting likely policy was guesswork. We are fortunate in having a Chinese-language book, Disidai ("The Fourth Generation") -- translated by two China experts, Andrew Nathan and Bruce Gilley -- apparently written by a highly-placed Party insider. The book is based on classified Organization Department (OD) documents. The OD is the Communist Party's secret office that collates dossiers assessing candidates for promotion, based on their previous experience, written memoranda and internal comments and speeches. We can derive from this, and other sources, a picture of the new Politburo's collective mind and its views on a range of subjects.

The Chinese leadership is -- in a sentence -- painfully aware the country is in big trouble, making them still more wary of approving such radical reforms as mass democratization and introducing Western-defined standards of rights that might blow the place apart. The basic human figures are frightening: there are 150 million semi-literate (if that) migrant workers, 100 million or so unemployed and 200 million (out of 400 million in total) agricultural labourers thought to be "surplus to requirements."

Ercel Baker believes there are two Chinas nowadays: the one Westerners see, which comprises 400 million quasi-bourgeois, educated, relatively prosperous Chinese mainly residing in the coastal areas; and the other one, of 800 million peasants, whom Beijing sees as one big Boxer Rebellion just waiting to happen if things go wrong, much as happened back in 1900. Owing to massive over-capacity combined with over-supply of goods destined for export, there is retail price deflation and corporation profits are stubbornly low. So it is that last year, in spite of China's oft-cited spectacular GDP growth (7.3% in 2001), the country's 174,000 SOE suffered a 0.8% decline in profits. That's quite a remarkable feat, but not one the incoming Politburo would wish to keep repeating.

And then there's the stratospheric level of non-performing bank loans, the huge unfunded social welfare obligations and, of course, the pervasive corruption, not only within the SOE but also in the Party. In 2000 and 2001, it is believed that one-third of all government revenues disappeared. Of the Communist Party's 64 million members, fully 780,000 have been punished in the past five years for corruption, and even that significant figure is a fraction of the real number of bent officials. One estimate states that only between 6% and 10% of corrupt members are detected and charged.

Given the magnitude of the problems, to the incoming Politburo, the mantra that "China must undertake serious reforms immediately" is infantile. According to Christopher Marsh, writing in an online foreign policy journal, www.inthenationalinterest.com (an offshoot of The National Interest), the Chinese have been studying the effects of economic and political reform in the former Soviet Union in order to avoid similar mistakes. In their view, while Hungary and the Czech Republic are counted as success stories, "the fate of Yugoslavia provides a much more pertinent and troubling analogy."

The consensus view in China, borne out by Disidai, is that the Politburo will pursue what Nikolas Gvosdev (in a recent issue of World Policy Journal) has nicely termed "managed pluralism"; another name for the process might be "controlled liberalization" -- in the interests of strengthening, not eradicating, the Communist Party. In other words, people will be given the right to choose, but the government, in the interests of "national unification, ethnic cohesiveness and social stability" (in the words of Zeng Qinghong, the probable Secretary of the Party Secretariat), will carefully limit their choices. In decades to come, then, China is planned to move away from ideological despotism toward a post-ideological authoritarianism of the sort once found in Taiwan and South Korea. The danger, from the Politburo's vantage point, is that liberalization snowballs, leading to a Polish-style "democratic revolution" but perhaps shattering territorial unity into shards of rival fiefdoms (viz. Yugoslavia). For this reason, unleashing Western-style democracy, adds Baker, "would be the worst thing for China."

According to Disidai, in order to cement the hold of the Communist Party over a united China, the new Politburo will focus on binding the people to the government while keeping foreign relations (with the United States) on an even keel. It is believed the economic turmoil and the rampant corruption are causing threatening levels of alienation.

That is the general principle with which all agree, but within the Politburo a small split exists. On one side is the comparatively liberal Li Ruihuan, slated to take over as the National People's Congress chairman, who favours semi-competitive provincial elections (i.e. non-Party members might run for office) and a limited degree of private media ownership to check abuses of power among low- and middle-level officials; on the other is Hu Jintao, who argues that Party members ought to be recruited, monitored and evaluated more stringently to weed out slackers.

Regarding the economy, the Politburo is less divided. We can be quite confident the Second and Third Generations' solution of export-led growth fuelled by foreign investment will be slowly phased out by the Fourth. In the words of Wen Jiabao, the likely Premier of the State Council, the Politburo will concentrate on the "expansion of domestic demand" by "raising the people's standard of living." Though Western imports will necessarily rise as a consequence, better-off people are less likely, it is believed, to seek succour in democracy and to entertain thoughts about ousting the Party. Local businessmen seem taken with the idea, resulting in the paradoxical scenes of capitalists earnestly filling out their Communist Party membership forms.

As Western companies come to rely on sales to the gigantic Chinese market, and China in turn becomes less reliant on Western countries buying its exports, Beijing will be allowed to dismiss outsiders' demands that impinge on China's sovereignty. In particular, the new Politburo's views on Tibet, Xinjiang (a partly Uighur Muslim province in the far north-west) and Taiwan are not calculated to reassure independence movements. In Disidai, Hu Jintao, formerly of Tibet, is quoted outlining his plan to deal with separatists in Xinjiang:

"We have to send our best people to the front lines, the village and township Party committees have to play a core leadership role, the village Party branches have to become fortresses in the battle, the police precinct offices, People's Armed Police and basic-level militia must develop their roles as core cadres along with the advanced peasants."

A free hand in Tibet and Xinjiang, and something of an overbearing influence over Taiwan, have long been Chinese aims that the Fourth Generation believes it can achieve once China has modernized sufficiently. An economically strong China, in other words, can afford to ignore Western mores. That is the Very Long-Range Plan, which Hu Jintao and his colleagues are dedicated to helping execute in their methodical, plodding way. According to Disidai, the new Politburo is convinced the United States uses these issues as moral bargaining counters to put Beijing on the diplomatic defensive, but in the future, Washington will hesitate before risking its trade connections. The Politburo has no intention of picking a fight with the United States, and so long as Washington stays out of what Beijing regards as its business and co-operates with it on "matters of mutual interest" (i.e. anti-terrorism and non-proliferation), the two Great Powers should rub along in a civil enough fashion.

Welcome to the Fourth Generation.   -  by Alexander Rose      National Post    9 Sept 2002

Forbes' list of China millionaires swells in 2001

BEIJING (Reuters) - The ranks of Communist China's super-rich swelled this year and two brothers running pig-swill king Hope Group stand at the top of the pile, Forbes Global magazine said on Friday.

In the very year the Communist Party finally proposed opening its doors to entrepreneurs, Forbes has enlarged its annual list of China's richest to 100 from 50 and raised the bar for entry to $60 million from $42 million in 2000.

The top 12 are estimated to be worth more than $300 million each and 60 are believed to have amassed more than $100 million.

All this in a country of 1.3 billion people where around 10 percent survive on less than a dollar a day and annual per capita income stands at just $1,100, Forbes says.

Fortunes have swelled since late paramount leader Deng Xiaoping launched market reforms two decades ago but never before in China's modern history has Deng's well-worn phrase "to get rich is glorious" had quite so much resonance.

In July, President Jiang Zemin suggested giving entrepreneurs the right to become party members, acknowledging the growing role at least 1.5 million private firms are playing in the economy and absorbing workers laid off by state-owned enterprises.

Fewer than 10 percent of this year's list are party members, but nearly three quarters of them had their education interrupted by a decade-long Cultural Revolution beginning in 1966 which persecuted and at times killed intellectuals and capitalists.

Six are delegates to the National People's Congress, China's parliament, and 16 are part of the Chinese People's Political Consultative Conference, the government's largely toothless advisory body, according to Forbes.

RAGS-TO-RICHES

Topping the list are the Liu brothers who run East Hope and New Hope, part of the Hope Group, one of China's first private companies to engage in foreign trade independently and which feeds the millions of animals devoured by ordinary Chinese.

Liu Yongxing, 53, came in second place last year while his brother Liu Yonghao did not appear on the 2000 list at all.

Built from an initial outlay of just 2,000 yuan (US$240) in 1982, the Hope Group is now one of China's largest private conglomerates and a major shareholder in the only private bank, Minsheng Bank.

Another example of modern China's new found wealth is Seastar's 44-year-old Rong Hai, who has made $300 million from a diversified concoction of information technology, fruit juice and real estate.

Rong did not make the list last year. This year, he ranks 12th.

Many on the list are young, averaging just 45, and seven are women, Forbes said.

Many of last year's successes linked to the now burst Internet bubble have slipped off the list.

Telecom firm Huawei's Ren Zhengfei failed to make the grade despite ranking third last year with a fortune of $500 million.

Chinese Web portals Netease.com Inc's William Ding and Sohu.com's Charles Zhang were also conspicuously missing. In 2000, Ding, aged 29, ranked 20th and Zhang was 37th, at the age of 37.

Embattled Netease.com's share price has fallen to under $1 from a closing high of $14.75 since its listing on the Nasdaq stock exchange in July 2000.  - YAHOO!   26 Oct 2001 

PROFESSION

Golf, charm and private banking
In this follow-up to last week's piece on career prospects in private banking, Jason Low talks to a veteran who shares with Young Investors' Forum what it takes to be successful and how to survive along the way

Having qualified as a professional accountant in London, David Loh has ditched crunching numbers for a job as a wealth adviser to high net worth individuals - an occupation more commonly termed as a private banker.

Backed by more than 20 years of experience in the business, the man is now a senior private banker and managing director of Citi Private Bank, managing a select group of 'mega wealth' clients - those with a net worth of US$250 million or more - from the Philippines, Singapore and Malaysia.

Mr Loh believes that cultivating the trust of his clients is one of the most important factors in a highly successful client-banker relationship.

'Your clients are very bright people and they are always assessing you throughout your interaction with them,' he said. 'Thus it only makes sense to be very aware of your role and respect the relationship and time that they grant you.

'Only when you respect the relationship will you be able to gain their respect and trust in return. This will in turn enable you, the banker, to foster closer ties with your client and members of his family which is pivotal in managing a successful relationship.'

Backed by more than 20 years of experience in the business, the man is now a senior private banker and managing director of Citi Private Bank, managing a select group of 'mega wealth' clients - those with a net worth of US$250 million or more - from the Philippines, Singapore and Malaysia.

Mr Loh believes that cultivating the trust of his clients is one of the most important factors in a highly successful client-banker relationship.

'Your clients are very bright people and they are always assessing you throughout your interaction with them,' he said. 'Thus it only makes sense to be very aware of your role and respect the relationship and time that they grant you.

'Only when you respect the relationship will you be able to gain their respect and trust in return. This will in turn enable you, the banker, to foster closer ties with your client and members of his family which is pivotal in managing a successful relationship.'

But trust can only be built over the long term by consistently following up in delivering services, asking for feedback and asking good questions.

'Ultimately, the choice lies with your client in deciding whether to allow you to manage his wealth, so a good amount of trust is always essential in developing a strong partnership when it comes to wealth management,' he said.

After-sales service is also critical, he added. New recruits should bear in mind that relationships are developed for the long term - quite unlike deal closures in investment banking, which tend to be on a project basis.

'Hence, being attentive to your clients' needs and taking the initiative to provide solutions for your clients will undoubtedly help to cultivate trust for the long haul.'

While mastering the technical aspects of private banking - such as the ABCs of trust services, investment products, credit and lending - is not difficult, the challenge is in mastering the softer skills required of the job such as effective communication and making others warm up to one readily.

'It is important in this business to be able to warm up to others, especially your customers, so as to facilitate effective communication,' he said. 'Even when you are in a restaurant, the proficiency of your soft skill-set comes into play. You are expected to be able to handle yourself well by behaving politely when you are ordering food and display a competent knowledge of dining etiquette.

'Of course, some of this can be trained for and practised but a portion of it is also determined by a person's character and upbringing. This is the skill set that is the most difficult to train for, especially within a short period of time.'

For undergraduates wishing to prepare themselves for a career in private banking, Mr Loh suggested picking up golf, a game often associated with the high net worth.

'Many people often like to play golf both for the love of the game as well as the character building aspect of the game,' he explained. 'Your behaviour on the golf course speaks volumes of your ability to control yourself and evidently shows your level of emotional maturity. Thus a head start on the golf course will always be very helpful for one aspiring to be a private banker.'

Playing golf as part of a job may sound like a luxury for many. However, there are many challenges that private bankers face as well, especially when their clients' portfo-lios are not performing up to expectations. When that happens, a good private banker should not be afraid to address and discuss the issue with his clients.

'Most of the time, portfolio underperformance might be due to the poor global economic environment which the private bankers have no control over,' said Mr Loh. 'Therefore, it is important to talk it out with your clients to enlighten them about the situation. For them to give you 'face time' is a privilege; you should appreciate and make the best use of it.

'It also helps to talk to your clients in terms that they understand when explaining the underperformance. For example, you might relate investing money in a new product to investing in a new business where economic conditions play a large part in determining the success of the venture, to enable them to understand the situation better.'

The bottom line is to engage clients and maintain regular communication. 'Dedication and commitment in serving your clients is one of the cornerstones of private banking, something which every private banker- to-be should possess even before considering a career in private banking,' he said.

When not working, Mr Loh enjoys working out in the gym, reading and trekking. 'I prefer the open to the cities and I like to travel to unique places, places where tourists seldom frequent,' he added. 'It is there that I find peace and quiet and it gives me time to reflect and put things into perspective. I always seek to live my life to the fullest by trying out things that are different from the ordinary.'

His final piece of advice for aspiring private bankers: 'This is a glamorous and prestigious job but you have to be prepared to work hard for the rewards that come along with it. It is a great career for someone who enjoys interacting with people as private banking is an extremely client-centric business. Live your life to the fullest because clients will appreciate you more if you have a very interesting lifestyle. Through you, they may also see an interesting world and life.' -   2008 June 16   SINGAPORE BUSINESS TIMES   

A new breed of private banker

The corridors of Singapore’s Command House once resonated to the sound of British officers barking orders. Last month, though, the former military headquarters of a colonial power was reincarnated as a “management campus” for UBS. Here the Swiss bank’s newest recruits in the Asia-Pacific region embarked on a mission to become the continent’s private bankers of the future.

What the world’s biggest wealth manager has initiated in Singapore is being replicated to varying degrees elsewhere, as leading banks including Citigroup, HSBC and a clutch of Swiss companies react to a shortage of talented individuals to look after rich people’s money.

“The traditional image of the private banker has altered as the business has undergone a transformation,” says Christian Machate, head of human resources for private banking at Credit Suisse. “Lunching, dining or playing golf with clients may still matter. But they are no longer enough to meet our customers’ needs.”

Spiralling wealth, especially in high growth regions such as Asia and eastern Europe, has created thousands of customers for the world’s wealth managers. UBS, which reports its second-quarter results today, attracted SFr113.3bn (£46bn, $89bn) in net new money to its international wealth management network last year – more than the balance sheets of many banks.

In Asia, excluding Japan, UBS expects the liquid assets of wealthy people to grow almost 10 per cent a year up to 2009 compared with almost 6 per cent globally over the same period.

Many leading banks want a piece of this action. But while customer numbers are growing, finding suitable staff is increasingly problematic. The Swiss, who dominate wealth management because of their reputation for reliability and discretion, are particularly exposed to shortages. And what the Swiss banks face today, those eyeing private banking will contend with tomorrow.

Gery Bruederlin, group head of human resources at UBS, says its private bankers have grown in number by about 20 per cent a year in Europe, excluding the mature Swiss market, and by about 30 per cent in Asia. Boris Collardi, chief operating officer of Julius Bär, a smaller rival that is expanding fast, puts growth in “double digits” across the board.

The sense of urgency is heightened by the fact that the ideal private banker of today is strikingly different from his predecessor. Where charm, the right accent or family background and a foreign language once guaranteed a job in an undemanding backwater of the banking business, requirements have changed.

Once, clients were happy to have safe but low-yielding fixed-interest bonds in their portfolios. But the better informed clients of today demand better performance. And that requires a new breed of private banker with improved financial skills.

The first response has been to step up recruitment. Advertising and, increasingly, staff referrals play a part. Headhunters now get involved at the highest level. But traditional apprenticeships remain central for the bulk of appointments in Switzerland, which is home to an estimated one-third of the world’s offshore wealth.

Many of the more than 1,000 private bankers who work for UBS in Switzerland, for example, left school at 16 or 18 and trained on the job, Mr Bruederlin says. Mr Collardi agrees: “Apprenticeships have been a traditional way of building staff, and will remain so.”

But the sheer rise in demand have led banks to start recruiting more graduates. That trend has been accelerated by the fact that, as in most developed countries, more school leavers in Switzerland are opting for higher education. Another factor is that traditional bank apprenticeships are largely unknown in the other markets into which the Swiss have expanded.

UBS has invested heavily in neighbouring European countries to create small networks of branches that are exclusive to richer customers. But local social patterns and recruitment numbers have not warranted tailor-made apprenticeships.

“In the UK, France, Spain or Italy, we hardly have any client advisers who have been trained the traditional Swiss way,” Mr Bruederlin says. “So we have hired from the universities.”

If hiring in Europe has required a broader strategy, the push into Asia has called for altogether more ingenuity. Countries such as Korea, let alone China, have no tradition of private banking. The absence of any idea about the levels of service that Swiss bankers and their clients take for granted makes training raw recruits more important than ever. The banks are starting from scratch.

UBS’s Singapore campus represents the most conspicuous response. But Credit Suisse’s business school, set up in 2004 for training throughout the bank, has also been active in wealth management. Young Asian recruits attend long courses either at the Zurich headquarters or at the school’s regional outposts in Hong Kong and Singapore.

But no matter how hard they train, the growth in demand means most banks need people on the ground today. This has produced some lateral thinking among employers still attached to traditional on-the-job training.

Asia abounds with stories   of luxury goods stores, estate agencies and Ferrari dealerships being raided by private banks desperate to recruit good staff. The Swiss banks deny resorting to such measures but admit that they have widened their selection criteria.

“In Asia, the growth is faster and the competition for talent even fiercer than elsewhere,” Mr Bruederlin says. “The clients are different too. So you have to adapt; you have to take different routes.”

UBS now hires more people who are making “lateral” career moves, notably young lawyers or consultants, he says. No longer is private banking deemed socially or intellectually inferior – not to mention less well paid.

Credit Suisse is going down the same path. “We want to identify people with certain basic competences, who can be trained to learn specialist skills,” Mr Machate says.

Such competences include not only intelligence and a basic interest in private banking, but also good personal skills and what Mr Machate calls “an interest in services” – a sales mentality. A bulging address book – whether of penthouse owners or Ferrari drivers – is not so important. “It’s good if it’s there but is not a selection criterion for us,” he adds.

Julius Bäer has also been looking beyond traditional sources, Mr Collardi says. Breakneck expansion into Asia has even prompted the bank to start recruiting at the famous hotel school in Lausanne. This graduate-level institution, which was set up in 1893 to train the Swiss hotel managers of the future, today attracts bright young people with wealthy backgrounds from around the world.

“We are determined to develop the service component of our brand,” Mr Collardi says. “These are talented people, often with the right international backgrounds and language skills.”

 A COCKTAIL OF SKILLS TO SUIT CLIENTS’ TASTES

UBS’s Asia-Pacific campus in Singapore divides trainees into two streams: new graduates and those already in employment.

The alternative – mixing graduates, apprenticed school leavers and “lateral hires” such as consultants or lawyers – would create a cocktail of talents that would be hard to absorb. With existing private bankers also undergoing periodic retraining, the mix could even be queasy.

Swiss banks claim that rapidly evolving recruitment practices have not damaged the fabric of their private banking operations. Most even argue the mix of talents has stimulated fresh ideas.

Not all the changes were assimilated without pain, however. Traditionalists accustomed to wining and dining clients may be suspicious of new financial jargon, such as for complex structured products. Older clients who shifted assets to Switzerland primarily to avoid onerous domestic taxes may still be more interested in stability than maximum returns.

The banks say their training programmes are geared as much to existing bankers as to their new recruits and, while some employees may be hostile to courses, most participate willingly.    -  2007 August 13   FINANCIAL TIMES 

A new wave in Asian private banking

Financial intermediaries (FIM) represent a middle ground between the private bank and the client, and in Asia they are a consequence of a milestone shift for both bankers and advisers. Just as many Asian individuals - often the first generation in their families to achieve significant wealth - are approaching a crucial period of transition to the next generation of their family, so too a crop of leading private bankers are reaching retirement age after a lifetime spent building trust with their clients. These bankers are setting up small businesses servicing the clients and families they have known for decades, while often linking back into the products and services of the big banks.


The idea has a lot to recommend it both from an adviser and a client point of view. Both sides get to maintain continuity in relationship - one of the most vital commodities in private banking. The banker can step down from the rigour of a global firm, while remaining closely involved in client affairs. And the client is dealing with someone they know and trust, while still having access through them to global-standard services.

Clients can receive holistic and independent advice, from asset allocation to estate planning, from someone who knows their risk profile; they can have access to a whole spectrum of services through a single, vetting party; they enjoy transparency in their investments, with arguably better management of costs; and can engage specialists from tax to trustees, hedge funds to private equity managers, through their FIM.

In Europe, the appeal of this model has been apparent for quite some time, particularly in Switzerland, where it has been entrenched for at least 30 years. There, it is estimated that FIMs account for 15 to 20 per cent of the assets under management and revenues for the entire national private banking industry. In Asia, the penetration is far lower, which is hardly surprising as the whole idea of private banking is rather newer here: perhaps 2-3 per cent of private banking assets in the region are handled by FIMs.

Nevertheless, it's a segment that is growing fast, with vast potential. The European banks with FIM business which have flourished in their home market - again led by the Swiss - are leading the charge, setting up Asian hubs in Singapore to take advantage of the well-regulated environment, excellent infrastructure and government support. And global banks like Standard Chartered believe that FIMs represent an important strategic growth segment which will serve to increase banks' assets under management exponentially. Better still, they will do so in the least capital-intensive manner possible, since they remove any need to hire new relationship managers in order to bring in the assets.

The merits of the approach - increase in assets under management, the loyal 'stickiness' of client business, increased geographical reach - suggest that FIM business will rapidly take off in Asia as it has in Europe. New entrants, from Europe and elsewhere, are looking for alternative booking centres in Asia, particularly Singapore. Standard Chartered estimates that the FIM industry in Asia could account for 10 to 15 per cent of the market over the next decade, as the private banking market here matures. Indeed, many private banks are already positioning themselves for the influx, bringing in teams of FIM professionals with experience in the area - in Standard Chartered's case, eight professionals to set up an FIM-focused business in Singapore and Hong Kong.

Developing FIM business requires a nuanced understanding of the pros and cons of this new and growing area. From a bank's perspective, one strong positive is asset retention. If a relationship manager leaves to become an FIM - as more and more are likely to do - then the client and their money do not automatically leave with them. Set against that is the fact that the bank's relationship with the client is naturally diluted by the fact that an intermediary has been placed between them. Ultimately private bank services, and custodian services too, are exchangeable assets.

That means it is all the more important for banks to offer best-in-class advice, products and services, so that even in an environment of choice a client will still opt to stay with the same bank. Managing FIM relationships is an extension of managing client relationships; as well as ability and network, it is largely about trust.

FIM clients tend to be very wealthy, and so fit within the ultra high net worth segment of private banking - which for most banks means total assets in excess of US$30 million, and sometimes much more. Many international private banks have made great effort to bolster their capabilities for this segment of the market in recent years, in several cases setting up dedicated family office units to handle those wealthy clients who have sought to put their wealth within a sophisticated corporate structure.

FIMs are a natural group for this segment of the market to trust, since they can act as an external but closely-linked manager who screens banks, products and services, ensuring high quality and negotiating the best pricing and execution. This is the area where the line starts to blur between individual and institutional wealth, and it takes a carefully differentiated offering from private banks to cater for it.

Underpinning the likely growth of FIM in Asia is an unarguable dynamic: There are more and more wealthy people in Asia. They are graduating from high net worth to ultra high net worth, they are in the most vibrant economic region in the world and they are becoming far more sophisticated in their investment and planning needs. Bankers who see this, and identify FIMs as an opportunity rather than a threat, will thrive in this changing environment.

The writer is head of relationship management, Southeast Asia, The Standard Chartered Private Bank     --     2011 February 23    BUSINESS TIMES 

 


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