SCB’s rich clients bullish on major pound rebound

Following the British pound’s retreat triggered by anxiety over Britain’s vote to leave the EU, demand from high-net-worth customers at Siam Commercial Bank (SCB) for dual currency deposits has jumped significantly as they bet on a pound recovery.

Demand for the product, which potentially yields a better return than regular deposits as it could offer an extra gain from its foreign currency exposure, has surged to 300-500 million baht a week from 200-300 million ahead of Britain’s historic referendum result, said Lalitphat Toranavikrai, executive vice-president for the private banking relationship management division.

But the bank’s wealthy clients have taken a wait-and-see attitude regarding investments in British equities and property markets, though the sterling weakness has created an opportunity for foreigners to pile up assets there at lower costs, she said.

Investors want to digest the development of Brexit impacts, Ms Lalitphat said, as one outcome could be a further slide in asset prices in Britain.

Last week the pound dipped to a 31-year low against the greenback at US$1.3122 in the aftermath of Britain’s shock decision to depart from the EU.

SCB classifies its wealth management clients into two groups: SCB First for those with assets under management (AUM) of 10 million to 50 million baht and Private Banking with AUM of higher than 50 million.

The AUM of the bank’s high-net-worth customers amounts to 800 billion baht and SCB aims for 10-15% AUM growth this year, reaching 1 trillion in the next few years propelled by a higher number of wealthy people.

Asia overtook the US for the largest amount of wealth last year, and that wealth gap between Asia and the US is expected to widen by 20% in 2025 because of increases in wealth in China, India and Japan.

In Asia-Pacific, the growth rate of wealth management businesses was 9.9% in 2015, with a projection of 13-14% growth this year.

With the current global market environment, the bank overweighted US and local bourses, Ms Lalitphat said.

The US Federal Reserve and the Bank of Thailand are expected to stand pat on their policy rate throughout this year, which could fuel the SET index to hit 1,500 points at the end of 2016.

However, SCB underweighted the bond market.

Yesterday the bank partnered with the Singapore-based Wealth Management Institute to introduce SCB Wealth Academy. The goal is to develop around 100 wealth relationship managers.

SCB shares closed yesterday on the Stock Exchange of Thailand at 144 baht, an increase of five baht, in trade worth 3.81 billion baht.