Zurich-based Vontobel entered Asia only in 2012. Two years later, it had a management reshuffle after DBS Group’s purchase of Societe Generale’s Asian private banking business, which brought Fung and some colleagues over from SocGen.
The SocGen purchase, and most recently the exits of Rothschilds and Syz from the region, are part of an ongoing shakeout in private banking in Asia.
“The consolidation of the industry in Asia is going strong, demonstrated by recent examples of exits and sales of business from our peers,” Fung told FSA.
Consolidation means there is no differentiating factor in wealth management, he added. “One bank is fairly similar to another in terms of services and that means the whole industry is ready for change.”
“[Vontobel is] going back to the trusted advisor approach — a wealth manager with the status of a family doctor,” Fung said. “Why don’t wealth managers enjoy the same status? No reason why not, and we want to take the lead on this in Asia.”
Staying lean
Despite the relatively short Asia presence, the wealth management operations are earning money, Haupt said, but he declined to give figures.
According to the firm’s recent financial results, AUM in wealth management globally was $46.5bn (46.8bn CHF) in 2016, up about 11% from the prior year. Haupt did not break out Asia numbers, but said the goal is to double regional AUM by 2020 and add to the number of relationship managers, which is currently 10.
“We are looking for organic growth. The target is to double AUM in Asia by 2020 and we need to have a certain number of RMs to do that.”
The bank’s business model is seen as a plus during industry consolidation.
Vontobel’s private banking operations for Asia are based in Hong Kong with about 20 people. The bank is licensed to deal and advise in securities. It does not have a type 9 license, which permits discretionary portfolio mandates.
The bank has no proprietary booking platform outside of Switzerland, Liechtenstein and Germany.
“The majority of banks have booking centers in Hong Kong or Singapore,” Haupt explained. “It’s a lot of cost with maintenance, IT, licences and support staff. Overhead is high. We leverage many services from headquarters in Zurich so we can focus on servicing our clients.
“We don’t have immediate pressure to generate revenues because we do not have huge overhead costs.”
Along those lines, Vontobel recently announced a tie up with the Bank of Singapore that allows high net worth clients to book their assets in Switzerland.
Alex Fung
Fung highlighted the bank’s strategy of providing global asset allocation diversification across currencies and asset classes to Asian clients. He believes there is a regional trend toward portfolio diversification.
“The last 6-8 months clients have been more proactive in diversifying outside the region.”
He admits that the first generation of wealth has a strong home bias for Asian investment products.
“The second and third generation is either more involved or is taking over the family wealth. They tend to be more globalised, educated worldwide, more receptive to other companies in non-Asia markets.”
Another driver for non-Asia investment is simply that economies and markets in some parts of Asia have not done well, he said.
