BDO Unibank grew to be the biggest bank in the Philippines thanks to a dizzying series of acquisitions, acquiring assets from institutions including Citi, Deutsche Bank and UOB. The private bank was born out of this acquisition drive, being acquired when BDO bought the licence of Banco Santander Philippines in 2003.
The firm’s management decided to keep the private bank as a subsidiary, rather than integrate it into the universal bank. At the time, BDO Private Bank’s assets under management was about P7 billion ($139 million); by February, its AuM had grown to P453.73 billion.
It is clear that the long-term growth story for BDO Private Bank’s assets is eye-catching, but its annual growth is also impressive. Its February AuM figures represented a rise of 10.5% on the previous year.
Philippine banks and their international rivals face an uphill challenge building a focused, profitable private banking operation. The first hurdle is choosing the right client niche.
Although the country has some ultra-high net-worth families, they are likely to be covered by private bankers from every firm around the world. The Goldilocks zone for most domestic private banks in Asia is the high net-worth area: big enough to make a real impact on revenues, small enough to fly under the radar of foreign rivals.
BDO Private Bank, run by president Albert Yeo, has struck a neat balance. It targets the emerging wealthy, which it defines as those between $200,000 and $2 million; HNW individuals, who have between $2 million and $30 million; and some of those UHNW clients, who have more than $30 million.
The minimum amount to on-board a typical client is P10 million, but the bank’s average AuM is about P49 million ($964,700). HNW business represented about 33% of its revenues at the end of February.
BDO has managed to position itself as the go-to firm for wealthy Filipinos, partly by focusing on the extra security offered by its trust business, which covers about 82% of its AuM.
It also offers a family office service, customer lounges in Manila, Cebu and Davao, and investment opportunities that include mutual funds, exchange-traded funds, physical commodities and the usual mix of bond and equity investments.