Bank of Singapore has had a
quick-fire start since its launch in January 2010. Shubhreet
Kochhar speaks to Bank of Singapore’s chief executive Renato De
Guzman about doubling assets under management in 2011, its growing
presence in Asia and Europe, and hiring plans for the next 12
months.
Go deeper with GlobalData
Renato De Guzman has plenty on his
plate. Widely known as Bing, the Filipino heads up the newly-formed
Bank of Singapore, formerly known as ING Asia Private Banking
(IAPB), which is still less than a year old. Launched on 29 January
2010 after it was acquired by OCBC, De Guzman is handling the
bank’s post-acquisition integration at the same time as plotting a
course to harness Asia’s accelerating high net worth (HNW)
growth.
“After the acquisition, we
stabilised the asset base and now it is growing. The investment put
in by OCBC is yielding the desired results,” says De Guzman.
“Post the acquisition, both
entities continued business as usual, supporting their clients with
expanded capabilities, products and services from OCBC Bank. Among
the three Singapore banks, we are the largest private bank by
assets under management (AuM) of $31bn to 31 October 2010.”
“We have been quite successful in
cross-selling OCBC products and that has contributed to our income
growth. The loan book had shrunk after the crisis, but has started
to grow again. In fact, mutual funds surpassed the $1bn mark by 15
October 2010 – back to the pre-crisis level,” he adds.
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By GlobalDataBank of Singapore aims to be the
number one private bank in South-East Asia and among the top three
wealth managers in Greater China, both of which it considers key
markets.
Targeting double-digit
growth in 2011
The bank is
targeting double-digit growth in AuM and profit in 2011. It
estimates profits and client assets will grow by 20% next year. De
Guzman also expects the bank’s loan book to grow about 20% to $6bn
in 2011.
It plans to further strengthen its
advisory platform and focus on discretionary portfolio management.
The bank will also look at generating income from multiple revenue
sources in addition to brokerage, particularly in insurance, credit
and trusts, SME and mortgage financing.
“We want to leverage Singapore’s
position as a growing banking hub. We are an independent entity
focused on private banking and that makes it easier for us to react
to the market and, at the same time, we have the backing of a
strong banking group,” says De Guzman.
He stresses the importance of
tapping OCBC’s branch network and being able to provide a range of
consumer, investment and corporate banking products and
services.
“It gives us the ability to tap
into an established regional footprint in key markets such as
Malaysia, Indonesia and China. Having the backing of OCBC has been
instrumental for us in terms of delivering solutions to not just
the private wealth of clients but also towards the business needs
of clients,” he says.
Bullish on Asia
business
De Guzman highlights the private
bank’s ambitions to grow in its ‘home’ markets of Singapore,
Indonesia and Malaysia, and boost its focus on India and China. The
bank plans to leverage on OCBC’s branch network in terms of client
referrals and product cross selling across Asia-Pacific in
2011.
“We see strong growth opportunities
in China,” says De Guzman. “OCBC has presence in seven provinces in
China and we will be working closely with OCBC as there are a lot
of local products there that we can deliver to clients. Having a
well-established branch network will help us drive growth in
China.”
India, and the Non Resident Indians
(NRIs) market, is another segment the bank has its eye on. Besides
India and China, the bank will also be increasing its focus on
Dubai, Hong Kong and South-East Asia.
“We want to improve our clients’
experience with us for a bigger share of clients’ wallets. It is
very important especially in markets such as Asia where the private
and business wealth of clients is the same in many cases.
Therefore, as a private bank, you need to provide a broader range
of offerings,” De Guzman says.
European market to be a
focus area
Not just content with expanding its Asia-Pacific
presence, Bank of Singapore also wants to double its European
client assets next year, although De Guzman does not give specific
targets. The bank wants to expand its footprint in Europe and
capitalise on the recent trend of European assets seeking
diversification – especially into Singapore. It will also hire more
bankers in Europe to service new clients.
Investors outside Asia are looking
for opportunities to park their money in the region. People are
looking for an alternative, and a very viable alternative is
Singapore, he says.
“There are potential clients in
Europe who want to diversify their funds to Singapore and they
prefer a Singaporean bank,” says De Guzman. “We already have a team
in place servicing European HNW clients, so we are well positioned
to expand there. We are looking for quality hires on the European
desk to expand our business there in 2011.”
The bank currently hosts a staff of
over 600 people with 220 relationship managers (RMs).
BoS to hire 30 relationship
managers
It plans to hire another 30 RMs in
2011. About 60% of staff recruitment in Bank of Singapore is from
leading global private banks.
“Our staff have been recruited from
leading global private banks such as UBS, Citi, Standard Chartered
and HSBC. The key is in offering bankers good value proposition,”
explains De Guzman. “We give them the ability to deliver more to
clients and thus generate more income for themselves. At the end of
the day, it is an attractive package.”
De Guzman prefers a business model
where RMs manage fewer clients. The current client to RM ratio is
around 35-40, in line with industry standards.
“35 clients per RM is pretty much
the ideal number that we are looking at,” he says.
De Guzman says a stable management
team and strong leadership is what makes Bank of Singapore stand
apart. He has led the IAPB team since 2000 and the core management
team has been in place since then.
“We have all gone through a lot
together – the financial crisis, the sale of IAPB, new owners – but
the team has stayed the same and that is very rare in the private
banking industry,” he says.
Recruitment: the toughest
challenge
Recruitment issues
have been a hot topic in the private banking industry, particularly
in Asia. De Guzman acknowledges there is a recruitment bubble
forming which results in “overpaid and under-performing
bankers”.
De Guzman agrees recruitment is one
of the chief challenges for Bank of Singapore.
“Hiring new bankers is always
difficult and we have to be able to differentiate ourselves. They
need to see that we have competitive advantage and they would be
able to do well for themselves if they join us,” he says.
“Every private bank has to take
that risk. There is always a risk of paying ‘over the top’ salaries
to under-performing bankers. Therefore, it is crucial to have a
clear selection process in place,” he says.
De Guzman explains that the first
thing they look for when hiring RMs is their industry knowledge.
This is particularly important when an estimated 75% of active
portfolio managers underperform their index. This can rise to 90%
in emerging markets.
“Every banker says they
outperformed the market, but as a bank, we can not be desperate.
Hiring the wrong people can build up costs. We need to be
cautious,” he says.
“We offer bankers more avenue, more
products to sell and, thus, they generate more revenue. Having
multiple sources of revenues is an attractive proposition for
in-coming bankers.”
De Guzman adds that the bar is set
quite high to be a good private banker.
“You need talent, knowledge about
markets and portfolios, as well as good personal skills to deal
with different clients,” he says.
According to De Guzman, a private
bank needs to have the facilities to make a banker more productive
by sharing best practices, regular training and communication.
De Guzman’s outlook on Asia is
extremely positive despite the growing pains of recruitment and
cost challenges that threaten Asia’s rapidly expanding private
banking industry.
“The future for private banking is in Asia. There is a lot of
money flowing into Asia from across the world,” he concludes. “We
are in the right place at the right time to tap into the massive
opportunities that this market offers,” he says.
