The growing entrepreneur community in the region is driving referrals between the corporate and private banking divisions of global players.

In Asia, where wealth is driven by a growing community of high net worth entrepreneurs, there is a greater need for advice on both a corporate and personal level.

Global banks with Asian offices are
seizing the opportunity to manage both their clients’ businesses and the family
wealth – and establish a relationship with them early on. As fees from selling
products remain depressed and investment revenues continue to wobble, it is a
way for the bank to profit from existing clients by recommending them to
another part of the firm.

“All the banks in Asia are trying to
increase the relationship between the corporate and private bank,” said Chris
Wheeler, an analyst with Mediobanca.

“Banks are doing it everywhere but Asia
has the ideal combination of a young high net worth community, many of which
haven’t established relationships with wealth managers, and a high proportion
of entrepreneurs who have a clear need for corporate advice,” added Wheeler.

Shayne Nelson, chief executive ofStandard Chartered Private Bank, told WealthBriefingAsia in an interview last
week that cross referrals between different parts of the bank was one of its
biggest growth areas. He said last year 17 per cent of new private banking clients
came from internal referrals of existing corporate clients. Already referrals
this year are on track to overtake last year’s total.

“Collaborations between the private bank
and Wholesale Banking, and SME Banking have been very strong. Particularly
in Asia where 63 per cent of high net worth individuals have their
own businesses, this is an area of increasing focus for us,” Nelson toldWealthBriefingAsia on a conference call.

In April the StanChart launched the High
Value Client Coverage business, which brings together its private banking,
priority banking, Small Medium Enterprise banking, international banking, and
Islamic banking client offerings.

He said the rationale to form the group
lay in the growth of SMEs, the growth of local corporates in wholesale, and the
massive wealth creation in the region.

“We have long term multi generational
relationships with our clients. We needed to cross-sell across our own
strengths. We already had the relationships but before we didn’t meet all
their requirements. For us it was easier to gain market share from clients we
already have than go cold calling and looking for new clients,” he added.

Other banks are focusing on
cross-referring too. Earlier this year Citi became one of the first global
banking groups to appoint a head to oversee cross-selling between its
investment bank and its private bank in Asia. Ted Teo was appointed a managing
director in the Business Development Group in the region, focused on
facilitating cross-selling between Global Banking and Citi Private Bank. 

His
job is to refer private bank clients seeking investment banking solutions to
Global Banking and introduce Global Banking clients to the private bank for
wealth management solutions. As part of his cross-selling role, he encourages wealth management clients to make use of
Citi’s equity and debt capital market trading expertise.

Of course, staff need an incentive to
recommend staff to their colleagues. Increasingly banks are rewarding employees
who recommend clients to another division.

Last month, UBS followed its rival Credit
Suisse be extending a financial incentive to all staff who successfully
cross-refer from one part of the bank to another, with a scheme called the Group
Referral Incentive Program.

Other banks, including Deutsche Bank, HSBC,
JP Morgan, RBC and Barclays, have been looking at implementing similar schemes. StanChart says it does reward staff who cross-refer as part of their annual bonus. 

But the model has its drawbacks too. With
everything under one roof, clients are more at risk should a calamity occur.

Yogesh Dewan, a former private banker who
now runs multi-family office Hassium, believes there are risks involved to
one-stop banking. He believes there is no guarantee of Chinese walls between
departments at banks, which could result in information leaks.