Coutts mil­lion­aires make Asia pri­vate bank prof­itable

The Pak Banker - - COMPANIES/BOSS -

Union Ban­caire Privee, the Swiss pri­vate bank and as­set man­ager, will lean on its ac­qui­si­tion of Coutts In­ter­na­tional to spur growth in Asia, where it's mak­ing a loss from serv­ing mil­lion­aire clients.

Af­ter build­ing a prof­itable busi­ness with in­sti­tu­tional clients on the con­ti­nent, the Geneva-based firm ex­pects the ar­rival of Coutts clients to re­verse the for­tunes of its Sin­ga­pore­based unit serv­ing Asia's most-af­flu­ent, ac­cord­ing to Ni­co­las Faller, co-chief ex­ec­u­tive of­fi­cer for as­set man­age­ment.

"The ac­qui­si­tion of Coutts will help us reach a crit­i­cal mass in Asia," Faller, 46, said in an in­ter­view this week. "If you want to be suc­cess­ful you need to in­vest a lot of money. My gut feel­ing is that there aren't many peo­ple mak­ing money in Asia."

UBP, founded in 1969 by Edgar de Pic­ciotto, is among a dozen Swiss banks vy­ing with U.S. and Euro­pean wealth man­agers for riches in Asia, where pri­vate wealth out­side of Ja­pan will surge to $75.1 tril­lion by 2019 from $47.3 tril­lion at the end of 2014, ac­cord­ing to Bos­ton Con­sult­ing Group. Firms in Switzer­land are also look­ing east as they face tighter reg­u­la­tion and probes into their role in tax eva­sion in the U.S. and Europe.

The Swiss have shown more "stay­ing power" in Asia than com­peti­tors such as Bank of Amer­ica Corp. or France's So­ci­ete Gen­erale SA, who've sold busi­nesses, said James An­der­son, founder of PAM In­sight, a re­search firm based in Lon­don and Geneva.

"It's an im­por­tant step for UBP," An­der­son said. "Un­like some of the other Swiss banks in Asia, UBP has the cap­i­tal avail­able to make deals and as a closely held fam­ily busi­ness it's able to take de­ci­sions and act quickly."

UBP over­saw 7 bil­lion Swiss francs ($7.1 bil­lion) of as­sets in Asia, mainly for in­sti­tu­tional clients, prior to its ac­qui­si­tion of Coutts. It's ex­pect­ing to ab­sorb 60 per­cent to 70 per­cent of the 11 bil­lion francs of Coutts' client as­sets in Asia un­der the deal struck with for­mer owner Royal Bank of Scot­land Group Plc in March.

Switzer­land's largest banks UBS Group AG and Credit Suisse Group AG rank first and third among wealth man­agers in Asia, ac­cord­ing to Asian Pri­vate Banker. UBS over­saw $272 bil­lion at the end of 2014, while Credit Suisse had $154 bil­lion. Other Swiss banks have used a mix­ture of deal-fo­cused and in­ter­nal growth strate­gies to chase the top firms in the re­gion.

The in­te­gra­tion of Coutts' Asian as­sets may take at least a year, dur­ing which bankers from other firms will at­tempt to lure clients away, UBP has said. In Hong Kong, the com­pany plans a sec­ond book­ing cen­ter to at­tract af­flu­ent fam­i­lies, pro­vided the lo­cal reg­u­la­tor grants ap­proval.

For­eign firms in Asia with less than 5 bil­lion francs un­der man­age­ment are un­likely to be prof­itable, ac­cord­ing to Faller. "The cost of en­ter­ing Asia is huge," he said. "The ques­tion fac­ing some com­pa­nies is: how long can they stay and burn cash?"

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