BNP Paribas Wealth Management in Asia Pacific will launch its mega-wealth initiative dedicated to its ‘mega wealthy’ client segment later this year. Meghna Mukerjee speaks to the bank’s chairman and chief executive in Asia Pacific (APAC), Mignonne Cheng, about the new project, the bank’s growth strategy and competitive positioning
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By GlobalDataPrior to meeting Mignonne Cheng, chairman and chief executive, Asia Pacific, at BNP Paribas Wealth Management, you know she is a lady with 35 years of experience in the financial world, having held a number of senior management roles. She has been decorated with prestigious awards, not only in APAC but also globally such as the Chevalier de la Légion d’Honneur in France. She is also one of the top 100 people in BNP Paribas Group which has more than 189,000 employees worldwide.
Meeting at the BNP Paribas offices in Hong Kong, Cheng is everything she is felicitated for. Refreshing and approachable, she has intricate knowledge and understanding of the wealth management landscape in the region, which comes from her decades of hands-on experience, her time serving as a member of the Banking Advisory Committee and of the Consultative Committee of the Basic Law, and her leadership of BNP Paribas Wealth Management in Asia Pacific.
Cheng spent most of the time in her career on corporate and institutional banking before taking the helm at BNP Paribas Wealth Management in 2010. She was brought into the wealth management side of the Group to potentially increase integration between BNP Paribas’ corporate and institutional banking (CIB) and wealth management arms. She is, thus, the ideal person to speak to about the bank’s new mega wealth initiative.
However, before understanding the mega-wealth project, it is important to review what BNP Paribas Wealth Management’s growth mandate under Cheng has been.
“APAC is a vast region and in order to get ahead with our business development here we need to be focused. Therefore a couple of years ago we identified six markets as our focus areas in the region – Hong Kong, Taiwan, China, India, Singapore-Indonesia-Malaysia as one market, and emerging Asia that is the Philippines, Thailand and Korea.
“The other strategic decision we made is to map out the right type of coverage model for the right type of clients. In that respect, the ultra high clients, who we call the key clients, are the most important segment, not only because of their size but also the growth rate among this segment of clients in APAC. Therefore we have created a Key Client Group focusing on this segment and on-board and train relationship managers to cater to these clients,” she says.
From the product angle, Asian clients are still “trading oriented”, says Cheng. “We have to make sure that we are able to offer niche products. Our CIB business has a strong presence in Asia Pacific. We can do a lot of cross selling with our CIB colleagues to offer our clients solutions they are looking for.”
Mega-Wealth focus
The mega-wealth initiative, to be launched later this year, is based upon taking the dedication to key clients further and enhancing interactions between the CIB and the wealth management arms.
“After a couple of years of dedication to our key clients we realised that among that segment there is another universe of ‘mega wealthy’ clients. They are billionaire clients in terms of their wealth or the sizable assets under management (AuM) they hold with us. These clients often have highly sophisticated family offices or hedge funds servicing them. Therefore they have extremely distinct needs to invest and grow their wealth.”
Cheng aims to improve the bank’s client franchise in the mega wealthy space with the new initiative.
“We know that wealth in Asia is growing fast – almost every day there are billionaires being created. We want to enhance our relationship with the mega wealthy clients and at the same time increase assets, trading and revenue. However, we want to make sure the clients are happy with our service. They have multiple needs beyond wealth management so we are happy to work with our CIB colleagues to make sure that we cover all that.”
During the course of her years of experience with wealthy clients, how have the investment appetites and behaviours of Asian billionaires changed and what further transformations does Cheng anticipate?
“These billionaires have always been sophisticated and at the same time prudent,” says Cheng.
“I think this is a good philosophy and I don’t think this will change dramatically going forward. As far as the financial investments are concerned, I don’t anticipate significant changes either. Areas of investments will be properties, hotel and lifestyle.
“That being said, I have seen a clear trend of ultra wealthy clients’ needs moving from local to regional to global. We are in a good position to serve clients with that increasing need. BNP Paribas Group is a leading financial institution in Europe with an extensive global reach and set up. We are present in 75 countries. For instance, we recently helped an Asian client complete a hotel project in France. In that respect we are well positioned to give the mega wealthy clients the support they require,” explains Cheng.
Ahead of competition
So far, BNP Paribas Wealth Management’s offering stands out in the market for its strategic focus on the mega wealthy client segment, and gives the bank a competitive edge.
“I’m sure our peer group is also looking at how to serve the mega wealthy clients. We all know that Asian wealth is growing from high-net-worth individuals to ultra high-net-worth individuals to the mega wealthy. What makes us different is that we have now mapped out how we want to serve these mega wealthy clients and have people dedicated to serving them. I have not come across this move being made by any of our competitors yet. I’‘m sure eventually other players will come, but we are pretty advanced.”
Despite the robust growth of wealth and the wealthy across APAC, the challenges prevalent in the region are potent. The private banking and wealth management industry on the whole has been riddled with myriad pressures around costs and competition, but Cheng says BNP Paribas Wealth Management’s achievements have been “significant” over the last few years.
“Wealth management in APAC is particularly interesting as the market is giving us huge potential. At the same time, we fully acknowledge that the competition is very intense – competing for clients and talent are some of the challenges we need to deal with every day.
“Particularly over the recent years, increasing regulatory requirements that we need to follow have also brought in additional challenges to the way that we do business. It’s different from what it was years ago.”
However, a clear focus and strategy for growth has led BNP Paribas Wealth Management to garner notable achievements in the region. “We have doubled our AuM since the end of 2012. Revenue has also been growing at an interesting pace – not quite doubling but it’s almost more than 50% increase over the last three-and-a-half years.”
Additionally, BNP Paribas Wealth Management has reinforced its client franchise by having the right coverage model for different types of clients. “We are closing our product gap vis-a-vis our peers in the market or in the world. To name a few, we only started focusing on philanthropy a couple of years ago and now we have an interesting offer. Credit is vital to Asian clients and we are able to offer it in a robust manner. These are a few examples of the successes we have achieved over the last couple of years,” she adds.
Talent and suitability conundrums
Going forward, however, it will be crucial for wealth managers in APAC to appropriately manage the regional talent pool that is notorious for being limited and highly competitive.
“In order to retain the talents and attract new ones, we need to offer a clear strategy for them to understand we are totally committed to growing this business in APAC. We also have to offer them robust training programmes – technical, risk and compliance related and more.”
BNP Paribas Group has set up a training campus in Singapore providing various training programmes that meet different business needs across APAC.
“We want to make sure the talents feel like they are part of the bank and we try to ensure they visit our head office in Paris. In May, we had an on-boarding seminar to welcome all the recruits who have joined the bank in recent months. This global on-boarding seminar was well received. We make a lot of efforts to ensure our new talents are developing their skills and needs, to make them feel like they are part of the organisation, and that there is a clear set up whereby they want to stay with us.”
Looking ahead at the next five years, Cheng is confident that the business potential for wealth management will continue to be interesting in APAC.
“The pace of wealth growth will still be substantial in the region. However, we are fully conscious that with growth comes challenges. Also, we have to be more mindful about the type of clients we can deal with and make sure that we on-board them in a robust manner, to understand the origin of their wealth and avoid potential AML risks. We have to tackle reputational risk daily, which is highly important.”
Protecting clients’ interests is a principle that needs to be respected as well, adds Cheng. “We have to ensure that whatever we offer our clients matches their risk profiles. We should not just be looking at the bottom line of the revenue. We have to pay a lot of attention to client suitability.”
