Singapore trust levels very high: UBS

Sinagpore may not be UBS's biggest booking centre in Asia, but the city is very important for many of the Swiss bank's clients who are not based here.

Singapore domiciled clients account for close to 10 per cent of UBS's Asia-Pacific assets under management, said Raymond Ang, regional market manager Singapore, UBS Wealth Management, in a recent interview.

Asia remains the growth engine for onshore markets both for the industry and for UBS Wealth Management, the world's biggest private bank, he said. UBS is also the largest private bank in Asia, and Hong Kong and Singapore are the top two booking centres for UBS Wealth Management in the region. In 1970, UBS was the first Swiss bank to establish a presence in Singapore. In fourth quarter 2015, UBS Asia Pacific had total invested assets of 272 billion Swiss francs (S$385 million), up from 269 billion Swiss francs a year ago. Net new money in 2015 from the Asia-Pacific was 15.7 billion Swiss francs.

Mr Ang said that Hong Kong accounts for a disproportionate amount of the Asia-Pacific AUM (assets under management) due to its proximity to China. But Chinese clients often also have homes and families in Singapore. "Reputation, legal framework and governance of Singapore is very important to them," he said. Safety is the other consideration, and many didn't go to Hong Kong for the recent Chinese New Year holidays, he noted. He was referring to the violent riots that erupted in Hong Kong on Feb 8, shocking the city which is accustomed to peaceful pro-democracy protests. Police fired warning shots in the air, while demonstrators hurled bricks levered up from pavements, charged police lines with homemade shields and set rubbish on fire.

Hong Kong's tourism industry has taken a hit, with a 2.5 per cent drop in arrivals last year. Some mainlander day-trippers who travel to Hong Kong to buy essentials have been heckled.

"Many have their personal money here (in Singapore) and their family trusts structured here while corporate accounts are in Hong Kong," he said. "The trust level is extremely high."

Mr Ang looks after the Singapore domestic market, or those with homes here. Some 65 per cent of Mr Ang's clients are Singaporeans, the remaining 30 per cent are Chinese, Indians and resident foreigners.

UBS clients must park with the bank a minimum two million Swiss francs though many are in the ultra high net worth (UHNW) bracket, that is, with at least 50 million Swiss francs. "Wealth creation has been very, very strong," said Mr Ang referring to the Singaporean clients.

Many are UHNW, fuelled by the boom in Singapore's real estate of the past 10 years.

On clients' investment behaviour, he noted that as most of the wealth is still first generation or early second generation, they tend to do their own thing, rather than leave it to be managed by private banks.

In Europe where wealth is often already in the second or third generation, wealth preservation is the top concern of clients. Close to 35 per cent of invested assets in Europe are "in contract" or under discretionary management while it's only 15-17 per cent in Asia, up from 10 per cent three years ago, he said.

Tough financial markets are showing the worth of private banks, Mr Ang said. Successful investing requires staying fully abreast of developments across key asset classes and highly different financial markets - a task most clients would have difficulty achieving on their own, particularly during market volatility, he noted.

More clients are choosing investment mandates because they recognise the significant benefits of diversification and are looking to reduce home bias. "Another reason why many clients are preferring investment mandates is because they help clients avoid the pitfalls of emotional investing."

UBS's flagship fund, the PM Classic is driven by a structured and disciplined process centred on the bank's house view which draws on the expertise of more than 900 economists, research analysts and strategists from around the world.

"We believe this approach is something unique to UBS and has benefited our clients," he said.

In the period from July 2012 to December 2015, for instance, only 5 per cent of UBS's non-mandate client portfolios in the Asia-Pacific managed to outperform PM Classic (US dollar, net of fees/taxes) on a risk-adjusted basis, he said.

In January this year the PM Classic was down 3 per cent; "if you had minus 3 per cent, you'd be relatively good," he said.

The MSCI World Index was down 6 per cent and the STI fell 9 per cent.

Another strength of UBS is its global network and the ability to connect clients, he said.

For instance early last year, some Asian clients had invested in shale oil and wanted to know if oil prices would hold up. UBS got a shale analyst based in the US to meet with its clients, he said.

The bank holds forums for clients in different industries including IT, healthcare and consumer sectors.

Last year, close to 1,000 clients attended a healthcare forum to hear professionals from the US and Europe, he said.

It also has a "B connect" when it brings some 200 billionaires from around the world together to network. Asia sends about 10-15 per cent to the B connect; this year it'll be held in Lisbon.

"We could have gotten more from here, a lot of billionaires are from China, but many are not comfortable in English," he said. Beijing has now surpassed New York City as the billionaire capital of the world, with 100 resident billionaires to the US city's 95, according to a Hurun Report released last week.

UBS employs about 1,000 relationship managers in the Asia-Pacific of which close to 300 are in Singapore. It has some 2,000 staff in Singapore and over 1,000 work in the wealth management business.

UBS has offices in 13 territories across the Asia-Pacific with approximately 7,300 professionals.

This article was first published on Feb 29, 2016.
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