The private banking arm of the Singapore lender, one of the "Big Three" firms in the Asian jurisdiction, talks to this news service about its progress to date and future strategy.

When United Overseas Bank was crowned best private bank in Southeast Asia by this news service in 2016, it helped to cement how far this lender has come in developing its wealth management business.

Building blocks of this process included developing a discretionary investment offering and bringing a head of investment solutions and chief investment officer (Dr Neo Teng Hwee, who joined in June 2014) on board to present a strong viewpoint to clients and the wider world. In addition, fostering strong relationships with entrepreneurs and their companies was another vital part of the jigsaw, Ong Yeng Fang, managing director and head of UOB Private Bank, told this publication in an interview at her office in Singapore.

UOB’s footprint across Asia - more than 500 offices in 19 countries - and history of working with individuals and firms gives the private bank a great advantage; the firm can connect with wealthy individuals at different stages of their financial lives, Ong said.

“It is important to understand the Asian culture and mindset in order to serve the region well. For example, in Asia, it is important for a private bank to have a physical presence. Clients want to bank with someone familiar. There are those who may be of the opinion that a physical presence can be very expensive and digitalisation is therefore the way to go. However, clients still want the familiarity of a brand that they can see, know and trust. For example, we have branches in all the major cities in China. Over the years, this has helped to foster brand recognition and has also contributed towards the trust our clients have in us. This is a big plus for UOB,” she said.    

The private bank’s contribution to the group’s profits is growing. While the amount is small in relative terms, the direction is upwards, she said. 

UOB Private Bank’s assets under management have grown by 50 per cent from September 2013 to September last year. Within the group’s wealth management segment, total assets under management stood at S$93 billion ($65.4 billion) at the end of 2016. Last week, the overall UOB group reported net earnings of S$3.10 billion for the full year of 2016, down slightly (3.5 per cent) from the figure in 2015. Net interest income rose by 1.3 per cent to S$4.99 billion.

“More importantly, the private bank will be grown carefully to ensure that we are always led by values of prudence and vigilance not just in managing risks but also in pursuing business opportunities. We take a long-term approach to investing and managing our client’s portfolios, just as we do with managing our own business. It is this guiding principle that has allowed us to steadfastly support our clients through economic cycles, help realise business ambitions and build legacies for future generations”, Ong said.

The private bank now more than 115 relationship managers. This is more than double the number of bankers it had just over two years ago, Ong continued. 

“While we have invested in headcount to grow the business, we also ensure that we manage our costs well,” she said.

UOB has a highly visible presence - this bank has been a fixture in Singapore, and the wider region, since 1935. Outside its imposing headquarters in Raffles Place is a plaque marking the opening, in 1995, of UOB Plaza by Lee Kuan Yew, who was senior minister at the time, marking the 60th anniversary of UOB. 

The group is in robust financial shape. In August last year, Fitch, the rating agency, said UOB, along with its rival local lenders, DBS and OCBC, was robust enough to withstand a re-run of a 1997-style property price slump. 

Ong has been at UOB for more than two years, having joined from Julius Baer, where she had the task of integrating the Swiss bank’s acquired Merrill Lynch international wealth management business, sold to it by Bank of America. Her experience also includes the role of market managing director at BoA Merrill Lynch, overseeing a team of wealth managers in Indonesia, Philippines and Thailand. 

She says her time at UOB has been satisfying, as well as having its “tough” moments, adding that markets have not been easy and the pool of talent available has been “limited”. This remains a regular concern in the local private banking industry. 

However, UOB’s progress has not gone unnoticed. It now attracts top bankers with clients who seek safety in Singapore banks. 

Building up the private bank requires focus on three elements, she said: people, product platforms and advice, and the need for technology and the benefits of a digital age. 

Credit, lending and business
Clients appreciate UOB’s heritage and DNA in credit. After all, it started out banking traders along the banks of the Singapore river and "till today is well known for being a bank for entrepreneurs,” she said.

In a competitive business, it is difficult for banks to differentiate over product, which makes service quality and attention to clients all the more important, she said. 

She lauded the private bank’s CIO, Dr Neo, for the fact that he has “done pretty well with his forecasts” through translating intellectual sharpness into actionable ideas for clients. “That’s a tough process,” Ong said.

A recent development has been the build-out of a discretionary portfolio mandate team.

“So far, early results have been positive. Asian clients are warming up to it as they are realising that market conditions are more volatile than ever and may not be able to react in time. For clients who are extremely busy, discretionary portfolio management turns the overseeing of a portfolio to an investment manager, who selects and manages the best investment opportunities based on the client’s broad wealth management strategy. In volatile economic times - as is the case now - the need for professional, discretionary investment management is particularly important,” Ong said. 

A bank for business leaders
The private bank has a clear and obvious route for obtaining many of its clients – those who already are served in their capacity as business leaders on the commercial side. “The majority of their corporate wealth is with us,” she said, noting that there are large opportunities for cross-referrals across different segments of the bank. (The divisions of UOB are Group Retail, which includes the private bank; Group Wholesale Banking; Global Markets and Investment Management.)

One benefit of having clients who are already served by other parts of the bank is that it removes the need to take them on board from scratch, thus speeding up the process. It is a sobering fact that, on average in the industry, it takes around two months to onboard a private banking client, as there are a number of regulatory processes involved. It takes between two weeks to a month to onboard a client at UOB Private Bank, based on how complex the requirements are. 

With so much wealth in the Asian region resting in the hands of businessmen and women - most of it family-controlled - a close link to enterprises is, as Ong said, not just good strategy, but essential. As the Southeast Asia market develops, Ong and her colleagues will be keen to maintain the positive momentum of recent years.