The Swiss boutique model is perfectly suited to today's transparency-obsessed climate, Asia-Pacific wealth management chief executive Claude Haberer told WealthBriefingAsia.

Security, stability, secrecy (for offshore services) and
seamless banking services were highlighted in a recent survey by Boston
Consulting Group as “crucial” when it comes to winning Asian high net worth
accounts. Swiss private bank Pictet & Cie reckons it is succeeding on the first
three at least, Asia-Pacific chief executive of wealth management Claude Haberer told WealthBriefingAsia.

Two months after the Geneva-based firm was granted a Hong
Kong banking license, business is going well, Haberer said at an interview
at the bank’s office in The Landmark Building. “It has been exciting building a
'Pictet Asia'. Until now Pictet had a very traditional Swiss approach, mainly
marketing to Asian clients who wanted to have their assets in Switzerland. But
the partners recently decided to set up a proper Pictet Asia that looks for
Asian clients who have their account in Asia and invest in Asia assets.”

Jostling for market share

The difficulty Pictet – and its peers – face, is
differentiating in what is an increasingly overcrowded marketplace. As the economy
in the West continues to droop, the world’s private banks have turned their
sights on cash-rich Asia, where the population of millionaires last year
overtook that in Europe to hit 3.3 million, according to a report from Merrill
Lynch and Capgemini.

Pictet was not the first into Hong Kong, nor will it be the
last. Sarasin & Cie, initially gained a license in 2009, followed by
Julius Baer in 2010, and Banca della Svizzera Italiana, which was given the green light last December.

It has close competition. As its strongest rival, Julius
Baer is the only pure-play private bank to have been issued a qualified
foreign institutional investor licence by the Chinese government – which allows
it to invest directly in A shares (although Pictet's asset management division also has one of these). Julius Baer has called Asia its second home
market and has made big strides, hiring large teams from Clariden Leu and
Sarasin and bringing on top management, like Kaven Leung from Goldman Sachs, to head its North Asia team. Last December Julius
Baer also formed a partnership with Macquarie Private Wealth, absorbing the
division into its private banking ranks and opening the lines to Macquarie’s
investment banking research capabilities. If HNW clients are in need of
investment banking services, Macquarie is where Julius Baer will send
them. 

Indirect competitors like Switzerland’s largest banks UBS
and Credit Suisse, can also point to to the Swiss mantra of security, stability
and secrecy. But in addition they have investment banking facilities which they
say, through their ‘One Bank’ or integrated bank model, allows them to best
service HNW clients at every stage in their wealth cycle.

As a relative newcomer to Hong Kong (new in terms of license, Pictet has had a representative office in Hong
Kong for 26 years and a booking centre in Singapore for as long), with a little-known brand
and no investment banking capabilities, how can Pictet hope to win market share?

Cutting conflicts

The answer, believes Haberer, lies in the fact that it
does not have an investment banking arm, so it does not suffer from a conflict of interests. In its 200 year-old history, an investment bank is something it has never considered - and never will, said Haberer.

"As an absolute principle, Pictet will never have an investment bank. We believe that when you add investment banking and private banking you have a conflict of interest. At Pictet,
whatever advice we give, is independent and authentic based on our own
analysis. We don’t have an investment banker looking over our
shoulder to tell us what to say. And that is very important."

He points out that after the 2008 crisis clients became wary of big banking groups which they thought
missold them products. Clients are now shying away from products - which is exactly where big banks are building up - as revenue dries up from other avenues like investment banking or asset management.

Haberer said this is causing a lot of distress in the industry: "A lot of senior bankers are in an uncomfortable situation,
because their clients want more independent advice and their employer wants
them to integrate with the investment bank. The Pictet model, being the
traditional Swiss model, is also an up-to-date model, as it is the most aligned with clients’ needs."

But don't clients in Asia have a need for investment banking advice, given their early stage of wealth?

Haberer admits that the bulk of clients in Asia are first or second generation
entrepreneurs, many in the market for IPOs or M&A. But that is not Pictet's realm. "We don’t pretend to be best of class for all people in all
issues. We aren’t the bank supplying the biggest IPO allocation to clients.
Asians don’t have one pocket of money, they have several. Our specialty is
sound investment, independent advice, it is wealth planning and trusts, it is
strong advisory capabilities."

Unique model

Three other factors are at play for differentiation in the
region, said Haberer.  Firstly, its
"unique" partnership model, said Haberer. "We are unique in several respects. For instance, out of the world's top twelve private banks, we are the only one not to be publicly listed. Pictet is owned by eight partners - physical persons- who have unlimited liability on the bank's balance sheet." Partners are chosen in their late thirties or early forties and are about half and half insiders and outsiders.

This helps when talking to ultra high net worth business owners, which make up the bulk of Pictet's clients in Asia. "There is a very strong entrepreneurial culture here, which is
ideal for us, as we are run by business owners," said Haberer. "The eight partners have the same
issues of succession, of large investments, of wealth creation, as our clients. When a
client meets a Pictet manager they are on the same level."

Secondly, it is helped by it strong investment fund range, which it has recently invested in heavily. “Moving from a
traditional Swiss model to an Asian private bank, means that you have to
develop beyond the classic Swiss expertise of discretionary products, and you
have to develop a large and consistent advisory offering, which we did.”
Product teams are pan-Asian in Singapore and in Hong Kong, and Pictet Asset Management recently opened an office in Taiwan to distribute its products.

And lastly, Pictet is taking a modern
approach to communication channels."We have invested in a lot of functions, operations, compliance, middle and back office, IT, to have a full-scale operation." With its AA- rating, it is also one of the world's most stable banks.

So has its approach paid off? Haberer is coy about mentioning net new money growth and will not even disclose assets under management in Asia, although it is reported to be around $5 billion. To put that in context, it has nearly $400 billion in assets under management globally. To quantify growth, Haberer does say that since he came on board 18 months ago, the number of relationship managers has grown from 10 to 25. Top hires include Sharon Chou, as chief executive of North Asia, Richard Mak as head of advisory services Asia, Mourad Tahiri, head of discretionary portfolio management Asia, and in Singapore, Anuj Khanna, CEO South Asia.

They are also reportedly on the verge of signing the hire of a team from Credit Suisse, although Haberer will not comment on this, only saying that although Pictet is on the lookout for experienced relationship managers, the bank is not joining the war for talent. 

As a discreet Swiss player, Pictet is not keen on big
marketing campaigns or loud statements. It runs the odd advertisement in the Financial Times, or the Economist.  So how is it getting the word out? Haberer agrees that this is something the bank needs to work on, especially outside of Hong Kong and Singapore. This is the second time it has run its well-known Prix Pictet photography
exhibition, in Asia as well as in London and Switzerland. This is a good
opportunity for discreet marketing, both to clients and press. “It’s nice to be
in a bank and not talk about banking for a while," said Haberer.

'aod 45', by Michael Wolf, a shortlisted finalist of the Prix Pictet

It is coming up to Haberer’s 18 month anniversary in the
role, after nearly thirty years spent at French investment bank BNP
Paribas. He has been in Asia for over 24 years. What are his future ambitions, perhaps to become one of the small number of limited Partners at the venerated Swiss bank one day? "That would be an aspiration for any senior manager."