(For other news from the Reuters Wealth Management Summit, click here)
* Sees rich clients diversifying to Asian private banks
* Aims to take market share, plans China onshore presence
* Turned down potential U.S. clients, Swiss bank approaches
* Recommends Singapore dollar exposure, China and REITs (Recasts with new comments and quotes)
By Neil Chatterjee
SINGAPORE, Oct 7 (Reuters) - DBS Group (DBSM.SI), Southeast Asia’s biggest lender, plans to set up a domestic private banking presence in China, as it sees onshore wealth management growing in importance and new funds flowing in from Asian investors.
The bank, which earns 90 percent of its revenues from Singapore and Hong Kong, is seeing new private banking inflows from these two bases plus Indonesia and Taiwan, and aims to target China’s domestic wealth market.
“We are looking at setting up an onshore presence there in terms of wealth management,” Kwong Kin Mun, DBS head of private banking for southern Asia, told the Reuters Wealth Management Summit in Singapore.
Kwong said opinions were divided whether onshore banking would replace or complement offshore centres such as Singapore, after government moves to implement international standards on exchanging information in the wake of a crackdown on tax evasion.
“I don’t think it will scare off investors — practically every country has committed to that standard,” Kwong said. He added though that he felt onshore banking would grow in importance.
Singapore is expected to sign within months the last couple of bilateral tax agreements that it needs to be taken off an OECD “grey list” of countries that have not implemented the new standards on exchange of information.
Kwong said DBS had been approached by U.S. nationals, and by Swiss private banks asking if it was interested in taking over their U.S. clients, as the United States pursues citizens who have evaded taxes by stashing money overseas at banks such as UBS UBSN.VX.
“We got a lot of enquiries...we said no thanks.”
Kwong said the bank was still aiming to pick up business from overseas millionaires that were looking to diversify away from global banks into Asian private banks. Many of the world’s rich have been burned by the financial crisis and are now looking for strong institutions and simple products.
“If Asia is really the place that can become the driver of the whole world economy, it makes sense to have an Asian private bank in your portfolio,” he said.
“This crisis has worked in our favour,” he said, adding DBS aimed to be the Asian private bank of choice for such investors.
Singapore’s banks have weathered the crisis relatively better than their global peers due to smaller exposure to toxic debt and higher capital reserves.
DBS’s private bank, which caters to clients with over $1 million in investible assets, has close to S$30 billion in assets under management in Asia, ranking it in sixth in 2008 according to a survey by consultancy Calamander Group.
“Going forward we continue to believe we can capture market share,” Kwong said, without giving a target figure.
Kwong said the bank would look at any interesting acquisition possibilities but declined to comment if it was pursuing Dutch financial services group ING’s ING.AS assets in Asia.
Sources have said DBS has bid, while HSBC (HSBA.L) is seen as a frontrunner for the assets, in the biggest deal in the wealth management industry since the start of the crisis.
Despite growth ambitions, DBS’s private bank was still cautious on hiring, Kwong said, after a slight reduction in its headcount compared with pre-crisis levels.
“The V-shaped recovery has taken some people by surprise,” he said. “The plan is definitely to hire, but we haven’t committed on a number,” he said, adding the crisis had shown the importance of experienced relationship managers.
Kwong said the bank’s clients were also staying cautious, with portfolios holding 40-50 percent cash not uncommon.
He said the bank's recommendations during the crisis for clients to go for convertible bonds and then debt of distressed banks had paid off. He now recommended Singapore equities, especially REITs since some trade at below net asset value with good yields, plus Singapore dollar exposure and China plays. (For the summit blog: summitnotebook.reuters.com/) (Additional reporting by Kevin Lim; Editing by Muralikumar Anantharaman) ((email@example.com; +65 6403 5677) ((If you have a query or comment on this story, send an email to firstname.lastname@example.org))