Urs Brutsch of HP Wealth Management looks at some of the issues in the evolution of private banking in Asia, and discusses what is required to make the industry more profitable and sustainable going forward.

Date: Apr 2012

Tags: Education, Training, Competency, Regulation

• In many cases the average Asian client has progressed more quickly over the past 10 years than the average RM (including locals and expats) – so a lot of work needs to be done to raise the quality of RMs
• It is important to remember that it took Switzerland 200 years to build its private banking industry, with Singapore’s experience at only 25 years or so
• Everything is more transparent today, with tax authorities more determined to crack down on non-compliance
• Providers of private banking services need to base their value propositions on service quality and / or investment performance

In looking at the development of Asian private banking, Urs Brutsch said in an interview that when he first came to the region in 1986, there were very few Asian relationship managers (RMs).

The three big Swiss banks used predominantly Swiss RMs, and he said he only saw a trend towards Asian RMs emerging in the late 1980s early 1990s.

Brutsch said it is very important for employers to have a much higher proportion of Asian RMs because they are likely to have better relationship than expatriates who relocate from head offices.

However, he added, in many cases the average Asian client has progressed more quickly over the past 10 years than the average RM (including locals and expats). As a result, a lot of work needs to be done to raise the quality of RMs.

Making the industry more profitable in Asia

According to Brutsch, regulators are starting to address issues around how to ensure greater profitability and sustainability – for example in Singapore through competency assessments on RMs as a first step.

However, he added, tests cannot replace the experience RMs get on the job over time, which he said takes at least seven or eight years of experience.

So this requires constant education internally as well as across the industry.

It is also important to remember that it took Switzerland 200 years to build its private banking industry, explained Brutsch, with Singapore’s experience at only 25 years or so.

Reinventing the industry

As private banking centres like Switzerland and Singapore try to reinvent themselves to remain relevant today in the global wealth management market, Brutsch said it’s a different world today.

Everything is more transparent, he explained, with tax authorities more determined to crack down on non-compliance. As a result, markets like Switzerland and Singapore have made it clear that they do not want to create or promote an industry based on tax evaders.

This means that providers of private banking services need to base their value propositions on service quality and / or investment performance. And in line with this, smaller organisations can more realistically compete with larger players.