Credit Suisse Private Bank to Boost Asia Lending in Wealth Hunt
Credit Suisse Group AG (CSGN), which runs Asia’s third-largest private bank, will step up lending to first-generation business owners as it seeks to build relationships with potential wealth-management clients.
The Asian unit expects to increase such loans by 20 percent this year, Francesco de Ferrari, managing director and head of the division, said in an interview in Singapore on Feb. 21, without specifying an amount. That would be an acceleration from 2013’s 12 percent.
The goal reflects Credit Suisse’s plans to increase private banking services to the wealthiest people in emerging markets as it scales back other private and investment-banking businesses and awaits the results of a U.S. probe of Swiss lenders for helping Americans evade tax. Switzerland’s second-biggest bank is approaching Asia differently from second- or third-generation wealth in the U.S. or Europe, de Ferrari said.
“In Asia, a lot more of the wealth is generated by first-generation entrepreneurs” who are optimistic about the returns their businesses will yield, said de Ferrari, 45. “The last thing you want from a bank is for them to ask you to put funds to buy something with them. You actually want them to give you money.”
When the entrepreneur becomes successful, the bank will aim to raise equity or debt for the business and build a personal “treasure chest on the side,” said de Ferrari. The next stage is to help structure that wealth to pass on to heirs and preserve the business.
“Only after these three phases do you really seriously talk about what investments” the entrepreneur is going to make, said de Ferrari.
His comments were made four days before the U.S. Senate sub-committee that’s scrutinizing tax evasion released a report claiming 1,800 Credit Suisse employees helped Americans open 22,000 accounts, most of which were hidden from the Internal Revenue Service. Credit Suisse’s Chief Executive Officer Brady Dougan apologized and deflected blame onto a small group of employees at the bank when questioned by the sub-committee on Feb. 26.
Edna Lam, a Credit Suisse spokeswoman in Singapore, declined to comment in a March 3 e-mail on how the U.S. Department of Justice’s investigations would affect the firm’s private-banking business in Asia.
Credit Suisse’s push to extend loans through its private bank rather than the investment bank is a result of the company’s target for an even split in risk-weighted assets between the two businesses, de Ferrari said. Risk-weighted assets at the investment bank made up 62 percent of the total for the two divisions at the end of 2013, company filings show.
Credit Suisse’s private bank had net inflows of 11.5 billion Swiss francs ($13 billion) from Asia-Pacific clients in 2013, the most among all regional markets, according to the Zurich-based firm’s latest financial statement. Assets under management in the region increased 8.2 percent to 115.6 billion francs from a year earlier. That makes up 15 percent of the global total of 790.7 billion francs.
The Swiss bank opened a wealth institute in Singapore on Feb. 21 to train staff and share information with clients. Private Banker International ranked Credit Suisse as the third-largest wealth manager in Asia, behind UBS AG and Citigroup Inc., in a study released on Oct. 11.
Offshore wealth assets held in Hong Kong and Singapore jumped 20 percent to $1.2 trillion in 2012, according to a Boston Consulting Group study released on May 31. Buoyed by economic growth, Asians with at least $1 million in investable assets are expected to see their riches climb to $15.9 trillion by 2015 from $12 trillion in 2012, Cap Gemini and Royal Bank of Canada’s 2013 Asia-Pacific Wealth Report showed in September.
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