UBP is seeing a marked shift towards larger client portfolios, with 80% of assets attracted in the last five years coming from clients who have placed more than CHF 10m ($11m) with the bank.
For Michael Blake, head of region and CEO Asia, these are exciting times.
‘UBP’s asset base has more than doubled in Asia over the past five years and we continue to grow profitably,’
he tells Citywire Asia.
‘Today, we manage around CHF 30bn ($33bn) across our wealth and asset management businesses in Asia, around 18% of UBP’s global asset base. Our ambition is to increase that share to 30% over the medium term,’ he says.
Blake joined UBP in 2016 and is responsible for the development of the bank’s wealth management business in the region. He came from Coutts where he was CEO leading its international wealth management business and overseeing its integration with UBP in Europe and Asia.
The Coutts integration ballooned UBP’s assets under management to CHF 14bn (US$16bn) in Asia, which was managing just $1bn before the deal.
Blake says five years ago, most of the UBP Asia team joined from the acquired business. Today, that proportion is less pronounced, because the Swiss boutique has welcomed new colleagues from many different organisations.
He sees this as a sign of success. ‘Organisations thrive on fresh ideas and, for me, our ability to integrate new talent with existing teams has been key to business growth,’ Blake says.
‘While we have a long way to go, I think it’s fair to say that we are today more focused on investment solutions, more focused on speed of delivery and singularly focused on the importance of agility in winning new clients.
‘2020 was a solid year considering the challenges of Covid, with intense client activity offsetting the impact of reduced net interest income.
‘Overall, our regional profitability improved, which reflects an expanding client base and an increasing number of senior relationship managers joining the UBP team in Hong Kong and Singapore,’ he adds.
Portfolios and fees
The majority of UBP’s clients are first- and second-generation entrepreneurs. Its ultra-high-net-worth clients come from its focus markets, including Greater China, Southeast Asia, and the global non-resident Indian segment.
The bank is seeing particularly strong growth from founders who are looking to complement their company shareholdings with a diversified investment strategy.
What’s more, there is also an increased demand for customised investment solutions, such as private market investment exposure, because it provides different return and volatility profiles to public market investments, Blake points out, adding ‘we also see continued strong demand in Asia for strong tactical advisory capabilities across all asset classes.
’ Given the shift towards larger client portfolios, the wealth management team works closely with the asset management team to deliver solutions. UBP plans to broaden its sustainability agenda and strengthen its impact investing proposition globally and in Asia.
When asked how UBP is changing its fee models and private banker commissions in response to regulations, Blake says that three years ago 70% of UBP’s assets in the region were execution only, but today 70% are managed under advisory or discretionary mandates.
‘Our advisory clients have the option to choose the fee arrangement that works best for them. Some choose a transaction model, some an all-in flat fee model and others a hybrid approach.
‘Our approach to relationship manager compensation is anchored by a balanced business scorecard and combines qualitative and quantitative factors, as well as giving our relationship managers transparency about potential compensation outcomes,’ he explains.
The family-owned private bank sees single family offices as an area of new growth. In fact, it counts a number of single family offices as key clients, where it provides wealth planning, customised investment strategies, credit solutions and alternatives, including hedge funds and direct investments.
Blake, who is expecting this part of the business to continue to grow, is seeing strong interest from international family offices in establishing structures in Asia to manage their portfolios and take advantage of the investment opportunities in the region.
‘Our teams have supported families through the process of establishing governance structures in the region,’ he says. ‘We see a similarly attractive opportunity with multi-family offices, or independent asset managers.
‘IAMs are a core part of UBP’s business, with around 15% of our global assets coming from this important segment. Recognising the opportunity in Asia, we extended our offering to Asia a couple of years ago and assets have since trebled.’
The bank recently established a new IAM desk in Hong Kong to complement the existing desk in Singapore. According to Blake, clients just want speed of execution and efficiency in their dealings with banks.
‘We are working closely with IAMs and adjusting our services in response to their requirements, whether it’s night desk access to structured products trading, direct access securities trading or white labelled fund solutions.’
UBP’s focus right now is on building its international wealth management proposition in Hong Kong and Singapore. When asked if the bank is planning to venture into new Asian markets, Blake says it is ‘not currently a high priority for wealth management’.
He believes the costs are prohibitive and there are ‘not many success stories where foreign players have established meaningful market share in domestic markets.
‘Partnerships remain an interesting idea – we have a long history of partnerships on product strategies and remain open to onshore-offshore partnerships to support client relationships,’ he says.
The bank has built momentum in hiring new talent and is looking to expand further. It is talking to senior relationship managers, with expertise in Greater China, Southeast and non-resident Indian markets.
….For China too
Blake adds that the group is also expanding its China-focused discretionary portfolio management team as a priority this year, with a focus on institutional portfolio managers who have an interest in advising ultra-high-net-worth private clients.
Greater China has been UBP’s biggest growth driver over the past five years.
‘During the early 2000s, Chinese entrepreneurs invested excess capital in their business and domestic stocks. As wealth increased, we transitioned to “China 2.0,” where clients became more attuned to the benefits of international diversification and risk-adjusted returns, but often relied on only one or two relationship managers to deliver,’ Blake says.
‘We now arrive at a new stage of development, “China 3.0.” Clients are international, often with offshore businesses and kids at school overseas. They - or very often their family office -have a sophisticated understanding of the international investment landscape. They need no help, for example, in getting access to world class private equity names.’
Competing in this environment, Blake adds, requires a clearly articulated proposition. ‘Waving an international private banking flag and account opening documents won’t cut it.
‘Wealth managers need to think carefully about their added value and build a platform accordingly. Of course, relationships remain key, which is why we focus so much on working with senior, experienced relationship managers.’
Last year, UBP focused on enhancing its FX advisory platform with a new regional head of FX advisory, a new FX margining system and the addition of several new products.
The bank plans to continue this work in 2021 with the addition of desktop tools for FX and structured products, as well as a richer OTC equity advisory capability.