Asiamoney China Private Banking Awards 2020
Overall best state-owned private bank: Bank of China Private Banking
Best private bank for international network: Bank of China Private Banking
|Liu Min, Bank of China|
Last year was an important milestone for Bank of China Private Banking. In August, it consolidated three departments –wealth management and private banking, personal finance and internet finance – into two main business sections: personal digital finance and consumer finance.
The new private-banking centre sits under the personal digital banking department, led by Liu Min as general manager, and incorporates the private-banking team, an exclusive products team and a team of investment strategists.
Despite the ambitious reshuffling of business lines, BoC maintained its momentum, with year-on-year growth of almost 13% in the number of private-banking clients and a 13.6% rise in assets under management (AuM).
Compared with 2018 figures, that means the bank held AuM of approximately Rmb1.59 trillion ($230 billion) at the end of 2019. It has an average account balance of Rmb14 million.
There are many explanations for BoC’s continued success.
It has 63 dedicated investment advisers across 36 domestic branches, as well as nearly 1,200 relationship managers and 186 private bankers.
It has made the most of a shift in recent years among the super-rich to focus more on wealth preservation than wealth accumulation – a change that is likely to favour a safe, household name like Bank of China.
A series of product launches in its family business during our awards period has also helped.
Many of those new products are trusts: the Jiahe Yanhui trust, targeted at less wealthy families; Huixiang discretionary trust, also for the less wealthy; and complicated family trusts with beneficiaries that have no capacity for civil conduct, meaning those under eight years old or with a mental illness.
|Wang Ya, Bank of China Private Banking|
The scale of its discretionary trust business more than tripled by the end of 2019, and that has helped give a boost to its overall family-trust business, bringing the average growth for the last three years to over 50%.
Bank of China Private Banking’s unparalleled global coverage of 61 countries and territories also makes it a worthy winner of our best private bank for international network award for 2019.
For its private-banking clients, the group’s securities, insurance and investment management arms at home and abroad are now linked through its private-banking centres in Hong Kong, Macau, Singapore and London.
BoC has been helped by cooperation between units within the wider group. Last May, its Beijing-based private-banking team joined forces with BoC International in Hong Kong to launch offshore trusts aimed at onshore private-banking clients with assets overseas. By the end of 2019, the number of its private-banking clients in the Asia-Pacific region grew at double-digit speed, as did AuM.
The focus at group level on the so-called Guangdong-Hong Kong-Macau Greater Bay Area means the private-banking business naturally puts more weight on this fast-developing region.
Last year, BoC decided to take down administrative barriers within its private-banking services across nine cities located in the Greater Bay Area, giving its clients from any one of those cities automatic access to other private-banking centres.
The move could pay off handsomely for BoC: the region is seeing wealth accumulate at an unprecedented speed, thanks to China’s vision for the GBA to become an innovation and technology hub. It would be another trump card for an institution that has done so much already to grow an impressive private-banking business.
Overall best national private bank: China Merchants Bank Private Banking
Best private bank for innovation in technology: China Merchants Bank Private Banking
One of the first joint-stock commercial banks to start private-banking operations in the country, China Merchants Bank has established itself as a market leader over the years. That makes it all the more impressive that the bank was still able to expand its presence in 2019.
The number of CMB’s private-banking clients exceeded 81,000 at the end of last year, with total assets under management (AuM) over Rmb2.23 trillion ($320 billion); both up about 10% over 2018.
On top of a national network of 140 private-banking centres, CMB also managed to leverage its offshore entities China Merchants Bank Hong Kong, CMB Wing Lung Bank and China Merchants Bank International to build a best-in-class cross-border investment platform that was able to meet the growing needs of China’s high net-worth (HNW) clients for offshore exposure.
While most of its competitors still rely heavily on their retail network – the traditional route to a private-banking client base in China – CMB has explored other channels to maintain or even accelerate growth in recent years.
This includes using a number of online platforms to acquire potential clients, developing specific programmes to target shareholders of pre-IPO companies and increasing the focus on higher-spending credit-card holders.
These methods helped the bank add more than 8,000 new HNW clients in 2019.
But growth is not the only focus for CMB, which is mindful of the shifting domestic wealth landscape.
The wealth management market in China is changing: entrepreneurs from trade and industrial sectors, after years of capital accumulation, are now planning the transfer of wealth to the next generation.
In response, CMB has been growing its family-trust business, which was up almost 50% by AuM in 2019, while exploring new family-trust models such as equity family trusts, staff incentive trusts and investment-right-reserved family trusts. It also managed to expand its family office business, looking to serve clients with over Rmb3 billion.
The CMB group is known for its savviness in technology, and that innovative spirit is reflected in its private-banking business too. It is a worthy winner of our best private bank for innovation in technology award.
CMB Private Banking is one of the few Chinese players to launch a global asset allocation system, used for risk management, portfolio management and asset allocation, and localized by CMB to suit China.
It has developed a global hotline service so that private bankers can carry out instant transactions for clients from any location.
The increasing demand from existing HNW and ultra-HNW individuals to preserve and transfer wealth, coupled with the rise of the new rich in China – such as startup owners and professionals, who are less aggressive in their investment strategies – has led to a change of mindset for Chinese private banks.
CMB has been at the forefront of every trend in the ever-changing China market, with custom-made wealth management plans to suit the shifting needs of its clients. That willingness and ability to adjust will likely ensure that the bank leads the domestic private-banking competition for years to come.
Best private bank for inter-generational wealth transfer: China Construction Bank Private Banking
Despite competition not only from its ‘big four’ peers but also increasingly from joint-stock and regional players, China Construction Bank Private Banking picked up over 12% more private-banking clients in 2019, lifting its client base to 143,000. That brought a similar 12% increase in assets under management, which rose to Rmb1.5 trillion ($215 billion).
And it is all thanks to CCB’s success under general manager Liu Jianzhong in building a first-class family wealth business. According to a 2018 survey conducted jointly by CCB and Boston Consulting Group, nearly 50% of high net-worth (HNW) individuals in China will start planning for wealth transfer within the next three years. Some 40% had started planning already. That survey is now two years old, so it is clear that opportunities abound for private banks focusing on wealth management.
Given that family trusts are widely considered the right tool to preserve and safely transfer wealth, CCB’s established trust business, CCB Trust Co, gives CCB Private Banking something of an advantage over the competition.
CCB’s family-trust advisory business reached Rmb28 billion of AuM by the end of 2019, after the bank successfully expanded into insurance trusts.
A breakthrough for CCB last year was the successful launch of its family-office business in Beijing, Shanghai, Guangzhou, Shenzhen and Jinan, covering private-banking clients with over Rmb500 million in assets.
The bank has invested in technology, including developing its own independent advisory system.
While providing a full range of products across different asset classes for its family wealth management clients, CCB also dedicates itself to investor education, such as holding a family wealth forum last year in Hangzhou, home to some of China’s wealthiest families.
Best private bank for family offices: Ping An Bank Private Banking
|Cai Xinfa, Ping An Bank Private Banking|
Ping An Bank is the dark horse of private banking: it has quietly raced ahead despite fierce competition in China’s growing wealth management market, and at a time when growth at many of its rivals has moderated.
Having absorbed the wealth management team at Ping An Trust Co in the second half of 2018, Ping An Private Banking’s assets under management (AuM) jumped more than 33% in the six months to the end of June 2019 – whereas many competitors saw lower increases of between 10% to 17% during the same period, according to Asiamoney’s calculations.
At the same time, the number of clients rose almost 28%. While the asset threshold at Ping An Private Banking is relatively low at just Rmb6 million ($860,000), its private-banking clients have one of the highest average account balances, at nearly Rmb16 million.
By the end of 2019, Ping An Private Banking provided will-planning, family-trust, insurance-trust and other inter-generational wealth-transfer services for some 1,000 high net-worth clients. The size of the family-trust business at Ping An exceeded Rmb10 billion. Its vice-president of retail is Cai Xinfa.
The recent transformation of its wealth transfer business to a comprehensive family office business puts Ping An even further ahead of its peers. That team now has close to 20 dedicated members, includes legal and tax experts, and is supported by Ping An Private Banking’s more than 60 investment advisers.
Its dedication and professionalism are what made Ping An stand out.
The household brand of Ping An Insurance in China also meant Ping An Private Banking can easily transition some insurance clients to private-banking clients, and from private-banking clients to family-office clients.
Ping An’s insurance trust business exceeded Rmb4 billion by the end of last year, not long after launching; it has grown to be one of the largest in the market.
Another secret to Ping An Private Banking’s success has been its focus on making the most of technology and artificial intelligence. In 2019, the bank moved its insurance trust business fully online, a first for the market, and did the same with some of its family-trust business.
Best private bank for product development: China Citic Bank Private Banking
Joint stock commercial bank China Citic Bank’s private-banking business has been growing quickly. With a team of 216 specialists, Citic picked up over 8,100 clients in 2019, up 24% and taking the total to nearly 42,000. Assets under management amounted to Rmb574 billion ($82 billion), up 22.3% over the year.
What is more impressive is Citic’s determination to continue expanding the range of products it can offer. That is not an easy task under China’s new asset-management rules, announced in 2018, and further changes last year that were designed to regulate banks’ wealth-management products. The new rules were part of a broader effort to contain risk in China’s financial system.
Before the new regulations, retail investors who purchased wealth-management products from Chinese banks enjoyed implicit guarantees from the banks on both the principal and the expected return of their investments.
Now China is shifting to products under so-called ‘net-value’ principles, where the yields for products are not advertised, but returns can be calculated based on a regularly announced net asset value.
Regulators are also stricter when it comes to the funds raised from the sale of asset-management products being used to invest in what were considered non-standard fixed income assets that lack both transparency and liquidity.
Against that backdrop, China Citic Private Banking still managed to sell Rmb847 billion worth of net-valuation products in 2019, with a further Rmb258 billion still outstanding by the year end – better than many of its peers.
It also accelerated the shift away from non-standard products as was required by Chinese regulators: standard products made up 34% of all products in 2019, up from 14% in 2018. But that was not at the expense of the private-banking products’ profit-making ability: Citic ranked as one of the most profitable among its joint stock peers in 2019.
Having developed a number of new products in cash management, fixed income, equities and private equity, Citic was also innovative in expanding its family-trust business. It accelerated a move into discretionary trusts and managed to increase the number of such products five-fold and the scale by more than three-fold, to Rmb35 billion by the end of 2019.