The wealth management award is in some measure a decision about a model as much as a bank. For the last few years, we have tended to reward the big Swiss houses, UBS and Credit Suisse, who have scale, history and the advantages of being part of a larger bank. In other years, we might consider the Swiss pure-play model, the ultra-high net-worth-only model, the mass-affluent approach.
For some time, we have watched with interest the growth of what you might call the local model: banking entrepreneurs on the ground in Asia, and serving their needs, from wealth to succession planning to capital raising to corporate finance, as seamlessly as possible, growing as they grow.
Add in excellence in family office and digital innovation and you have a very strong offering, which is best demonstrated by Singapore’s DBS.
If there is ever a year to reward that model, it is this one, as China and Hong Kong’s isolation has led to increased business and flows for Singapore as a wealth centre – not necessarily as a replacement for Hong Kong (the data on flows just don’t support that) but certainly as a diversification effort. This has been a handy era to be considered geopolitically neutral.
In this environment, DBS’s wealth business has been booming. Fee income was up 18% year on year during our review period on the back of higher client activity; assets under management grew 13% year on year on the back of strong net new money, despite the negative underlying market performance. That net new money figure was up 39% year on year, and a compound annual growth rate of 35% from 2019 to 2021 through a pandemic.
And the pandemic is partly the point. It brought about a flight to quality and trust, from which DBS has benefited.
One insider says: “It’s like a fire hydrant coming to us.”
Delivering the whole bank is key to making the model work, since most of DBS’s private banking clients are also business owners. Relationship managers are trained across corporate banking disciplines, private equity access and anything else a client might need.
The world is coming to DBS
Much of DBS’s institutional banking and capital markets strength comes from putting the right transactions into the hands of the right investors, typically private-wealth clients and, in particular, family offices. It creates a virtuous circle when done well.
The growth and sophistication of family offices in Singapore plays to DBS’s strengths, and it has experienced a more than threefold increase in the number of established structures and a more than doubling of assets under management in this segment in 2021 alone. It estimates it has more than S$1 billion ($727 million) of family office structures in the pipeline, not just from Singapore but from China, north Asia, Asean and increasingly the US and Europe.
“The world is coming to DBS,” says Joseph Poon, group head of DBS Private Bank.
DBS is all about tech as a differentiator, and its new DBS Digital Exchange, launched in December 2020, will allow accredited investors (which, in effect, means DBS’s private banking client base, for the moment) to tap into a tokenization ecosystem for digital assets. These include crypto, but the more interesting bit is when things such as private debt or Series B or C pre-IPO funding rounds are tokenized and democratized, allowing clients to buy in at lower minimums than has historically been the case. This is a work in progress but DBS already has over S$800 million in digital assets under custody as of the end of 2021.
More broadly, digital wealth revenue doubled in 2020 and had grown a further 25% year on year by November 2021. DBS’s work on sustainability – which we expect to hear much more of in the year ahead – is also a differentiator for private wealth.