By Abby Schultz
Here’s one reason Union Bancaire Privée’s private bank clients in Asia may be sticking with their new bank — entry to an institutional strategy for investing in hard-to-access corners of the fixed-income markets like subordinated debt from leveraged buyouts or infrastructure debt.
At the start of this year UBP teamed with the investment manager Partners Group to create the fund, UBP PG - Active Income, which also invests in more liquid public debt markets across the globe. It’s the kind of alternative investment UBP can offer private bank clients in Asia given its relationship with UBP Asset Management. It’s also the type of offering that wasn’t available via Royal Bank of Scotland ’s Coutts International, which UBP bought last year, says Michael Blake, the 42-year-old CEO of UBP’s Asia private bank.
New investment opportunities, and the fact Blake, who was the former chief executive of Coutts International, based in Singapore, remains with the firm probably explains why UBP was able to retain 80% of Coutts’ Asia clients since the acquisition was announced in 2015. “You always expect some asset attrition in these kinds of situations,” Blake says, but instead, the bank’s assets under management rose 10%-to-11%.
Overall, UBP’s Asia assets banked out of its branches in Hong Kong and Singapore have ballooned ten times from about $1 billion to about $12 billion post-acquisition as of the end of 2016. UBP CEO Guy de Picciotto’s goal is to reach $15 billion in the short-term and $20 billion in the medium-term, says Blake, a goal he’ll facilitate by boosting UBP’s number of relationship managers from about 60 to 100.
What’s attractive about the UBP Partners Group offering is it gives clients a way to invest in a part of the fixed income markets - private debt - that’s increasingly desirable to institutional investors for the diversification it offers, but has been out of reach of many private clients. Under UBP, the bank’s private clients can now also invest directly in various enterprises, which in the past year has included European student housing and commercial aviation. “For a number of clients in the region, particularly ultra-high-net-worth or family office clients, those are very relevant and sought-after products we’ve been able to offer,” Blake says
The private bank’s affiliation with UBP Asset Management, which has about $30 billion in assets and a 20-year presence in Asia, also allows it to devise customized solutions. This could mean creating a personal investment committee for a client who has a particular strategy to pursue. The asset management team will manage it as if the client was a mini-institution. “That’s an extremely powerful proposition, particularly for family office clients and some of our ultra-high-net-worth clients,” Blake says. About 40% of UBP’s Asia clients are family offices or the ultra-wealthy, a percentage Blake intends to grow. You need at least $3 million to be a UBP client.
One way to spur growth is to introduce UBP asset management clients to the private bank. Recently a Hong Kong family office client who had invested in UBP’s UBAM funds and utilized the firm’s hedge fund advisory services met with the private bank to hear about a range of services, from loans that can be used as leverage, to structured products, foreign exchange and private investments.
Michael Blake - CEO of UBP's Asia private bank
The private bank is also talking with the client about how UBP can assist the family with its philanthropic aspirations.
Another reason Blake says clients have stuck with UBP is that it’s a private, family-owned firm. “It gives us stability — the family continues to be the owner of the bank and provides that leadership,” he says. “And secondly, it enables us to make fast decisions. Ultimately we have a flat structure, and it enables us to meet the needs of our clients…in a very responsive way.”
Lately that’s led to a lot of conversations with clients about how to manage their portfolios for rising rates, rising inflation and corporate earnings surprises on the upside, he says. He was making the case, too, that private banking continues to be relationship-driven, despite advances in technology designed to provide clients with more real-time data and advice. “There’s a need to sit around a table and talk about all the various scenarios each of those factors can lead to over the course of this year,” he says.
Blake, who grabs time with his daughters, ages 3 and 5, whenever he’s not traveling or at the bank, has lived and worked in Asia much of the past 18 years, since he was in the British Diplomatic Service in Beijing. He continues to be fascinated by the region.
“No matter where I go, whether it’s to China, to Indonesia or any country in-between, I see people who are by and large interested in building and developing their economies. That’s what took me to Asia in the first place,” Blake says. “Nothing I see in Asia tells me that that’s going to stop.”