When Bruno Morel took on the role of Singapore chief executive for VP Bank, he assumed responsibility for creating a unique value proposition for the company in Asia’s booming wealth market. It has been a little over a year since Morel joined the Liechtenstein-headquartered private bank, which sees Asia as an important growth market with substantial opportunities.
Citywire Asia sat down with the Singapore-based executive to find out just how much the business has evolved under his leadership.
‘The business has got a lot more Asian,’ Morel says. ‘Since I joined I have made sure we have all the “Asia-flavoured” products such as structured products that were not in our platform previously.
‘We also hired a new private banking head, implemented a new structure to support our future growth targets, plus moved into a much bigger office to accommodate our ambitious headcount growth,’ he adds.
This year is a special occasion for VP Bank as it celebrates its 10th anniversary in Singapore. To meet its growth targets, especially on the credit side, recently the boutique bank completed the conversion of its banking status in the city-state from subsidiary to branch. What’s more, the bank broadened its licence from a merchant bank to a wholesale bank.
As well as Liechtenstein and Singapore, VP Bank also has major banking centres in Switzerland and Luxembourg.
Morel says that outside Europe the group is only focused on Asia as a target market, and has no plans to grow the business in the Middle East or the US.
'Asia is considered one of the most important growth markets for private banking, and Asian clients have a tremendous need for comprehensive, professional financial services,’ he says.
‘We have been in this market for 10 years, so for a bank our size, it’s easier to capitalise a market that we already know and develop the business rather than starting in another market that we don’t know.
‘Furthermore, compared with the saturated European markets, the trend in client assets from the Asia Pacific region continues to rise.
‘VP Bank is homing in on that trend by reinforcing its Singapore office with added staff.’
In the first half of 2018, VP Bank recorded group net income of CHF 29.3 million ($30.18 million). Client assets under management increased by 1.3% to CHF 40.9 billion ($42.13 billion) and the Tier 1 ratio was above average at 22.6%.
In the medium term, it is expected that the proportion of total group revenues attributable to its foreign target markets
will increase from the current approximate 30% to 50%, and Asia will play a central role in this regard.
‘Our core clients in Asia are from Singapore, Indonesia, Thailand and Malaysia,’ Morel says. 'Chinese wealth is the fastest biggest market in this continent, and we service our Greater Chinese clients from Singapore.
‘A lot of countries in Asia are still in the process of opening up their financial markets, whether in terms of accessibility to foreign business or whether in terms of availability of financial services and products.
‘China is one such country. So, we don’t plan to go domestically into China,’ he says.
VP Bank has laid out ambitious hiring plans for 2018. The group is looking to expand its staff count with more relationship manager hires in Asia, as well as doubling its size in Singapore within three years.
At present, the firm has about 50 employees focusing on banking services, asset management solutions and family office services in Singapore.
In March, it welcomed Kimmis Pun, a veteran banker of more than 30 years, as its new private banking head in its Singapore office. Pun joins from Standard Chartered, where she was the managing director and market head for Greater China.
Prior to that, Pun held various senior management roles at BNP Paribas, HSBC Private Bank, Bank of America and Maybank. She also spent about seven years at UBS Wealth Management as executive director for the ultra-high-net-worth segment.
Pun’s hire follows the recent hires of Samuel Witjaksono as Indonesia market head, Claude Chevroulet as chief operating officer and Christian Christow as head of business development.
‘Kimmis brings a wealth of experience and a great network in Asia,’ Morel says. ‘In the later part of her career she has focused on managing the Greater China market, but she also had direct experience in Southeast Asian countries.
‘She has numerous contacts in the industry with key partners such as insurance and trust companies,’ he adds. ‘As we intend to recruit up to 40 new advisers in Asia, her initial focus is on recruitment. Kimmis has already brought in a number of new employees.’
Standing out from the crowd
Asia is emerging as one of the hottest growth areas in the world, and the private banking potential in the region is also plain to see. Competition, however, is intensifying, but Morel says there are some advantages to being a smaller private bank among the big players.
In Asia, although he considers LGT a friendly competitor, the executive doesn’t see bigger private banks as rivals. He says big private banks can compete with VP Bank in terms of some products and pricing, but it is not the same type of service or focus.
Furthermore, as the consolidation of the banking landscape takes its course and consequently creates ever larger, global financial enterprises, the number of independent asset managers and intermediaries is on the rise.
These professionals, according to Morel, are seeking the exact opposite of large financial enterprises: they are looking for smaller private banks with a boutique approach that can provide bespoke solutions.
‘VP Bank’s “boutique” approach to private banking also applies to its intermediaries business, which makes up about 50%, with
the remainder coming from direct clients,’ he says.
‘On the intermediary side, we are actually big when compared with other banks where intermediaries are just a small part of their business.’
What’s more, VP Bank’s open investment architecture, Morel adds, allows it to work to the best advantage of its clients.
‘Our advisers, for example, are equipped with the ability to develop tailored solutions in the areas of asset management and investment advisory services,’ he says.
‘An open advisory approach like this is free from any conflict of interest, as we do not supply products.’
In May, Standard & Poor’s lifted VP Bank’s rating to ‘A’ with a ‘Stable’ outlook. According to Morel, the group is one of the few private banks in Liechtenstein and Switzerland to be rated by an international rating agency, as it has a Tier 1 capital base that far exceeds international standards. ‘For all these reasons, we stand out among our competitors,’ he says.
A platform for growth
In today’s highly regulated banking environment, close collaboration between intermediaries and client advisers is essential. To better support clients in this area, VP Bank introduced a new intermediaries’ platform, which offers round-the-clock information on investment and regulatory matters.
Known as ProLink, the tool offers intermediary clients a simple and speedy way to access the most important information and services needed for their daily work.
This includes extensive coverage of financial market events, regular publications on business and economic issues, the latest news on tax and regulatory developments, plus the relevant VP Bank forms.
The firm also introduced a new e-banking system this May, which allows enables trading-oriented clients to have a gateway to global stock market trading, among other things.
‘Automated and digital processes are employed by the bank’s staff to address basic client needs, and also to propose optimal solutions for more complex client needs,’ Morel says.
‘To improve the quality of our client care, a large number of digitalisation projects will be implemented, including modernising communication channels with our clients and expanding the range of online offerings in the years ahead.’
Where from here?
The next generation will pose new challenges for intermediaries, and these challenges will require more than just cosmetic adjustments to the advisory process, Morel says.
He explains that to understand these digital natives and their expectations, banks need to take a close look at the manner in which these new clients communicate and how they interact with their advisers.
‘Naturally, digital technology plays a key role in this process, not just in terms of communications but also for the decision-making process,’ he says.
‘It goes without saying that demographic changes are bringing about a more diverse client base. However, despite all announcements to the contrary, humans will not be replaced by machines.
‘Instead of competing against machines, intermediaries must consider their added value as a complement to the possibilities of the digital age. The goal is to skilfully combine digital platforms and personal advisory.’
This article was published in the September issue of the Citywire Private Wealth magazine