At in Hong Kong, getting a good understanding of what Next-Gen clients want is one of the largest, if not main, tasks for managers such as Lemuel Lee, head of the Hong Kong Market. He spoke to this publication recently about how the business is faring. 

“We are on the cusp of an intergenerational change, where the first generation plans to pass the baton to the second generation. The challenge is intensifying for private banks in Asia to maintain relationships, even potentially as far down as the fourth generation of families,” Lee said. “We have to look broadly across the generations, to maintain these relationships and to help them build the proper succession and planning structures. It is essential to always start as early as possible, to engage with as broad a range of family members as possible, to understand their viewpoints and how they might want to be covered.”

Lee knows that even with a firm such as BNP Paribas, with roots in Asia for more than 150 years and in Hong Kong for over 60 years, it cannot take client loyalty for granted, given competition from other international players such as UBS, Credit Suisse, Citi Private Bank, Indosuez Wealth Management and RBC Wealth Management, as well as local players such as DBS and OCBC, for example. Within the past decade, several foreign firms such as ING, Societe Generale, Barclays and ANZ have sold off their Asian private banking arms. Making money in Asia hasn't been the easy stroll some might have assumed. And the rise of external asset managers - sometimes formed by breakaway teams of bankers - keeps competition tight.

A track record of longevity is a strong selling point amid uncertain times, Lee said. “We have built up a lot of trust and that is reflected by the size of our assets under management. And we are very stable,” he said. 

The share of market is impressive. 

“When we are introduced to ultra-high net worth clients, we often ask the question – if 70 per cent of the top Hong Kong business families have fruitful private banking relationships with us, aren’t you curious about what you’re missing?” he said. 

The Paris-listed firm has one of the largest wealth management organisations in the eurozone and a substantial one in Asia. As at the end of September this year, its wealth management arm held €380 billion ($460.2 billion) in AuM. There have been some headwinds amid the COVID-19 crisis, of course. Wealth and asset management’s revenues (€2.155 billion euros) slipped by 8.8 per cent in the first nine months of this year compared with the same period for 2019. Higher wealth management fees were more than offset by the impact of the low-interest-rate environment, the slightly unfavourable market impact on the whole on asset management revenues, and the health crisis’ very significant impact on real estate services revenues, the group said in its Q3 results statement. 

There have been a number of senior changes at the bank which affect Asia. For example, in October BNP Paribas appointed Paul Yang as its Asia-Pacific head, taking over from Eric Raynaud, who retired after being at the firm for more than four decades. Yang’s new role added to his position as CEO of corporate and institutional banking for Asia-Pacific. In another senior move, BNP Paribas Wealth Management appointed Edmund Shing (pictured) as chief investment officer, taking over the helm from Florent Bronès, who moved to a new role outside the bank. 

In Lee's own case, he joined BNP Paribas’ wealth management division in August 2017 as deputy head of investment services, Asia-Pacific and head of investment services, Hong Kong. He has more than 15 years’ investment banking and wealth management experience. Prior to joining BNP Paribas, he was head of equities, Asia for JP Morgan Private Bank. Before joining JP Morgan, he was with Bear Stearns and Bank of America Merrill Lynch in capital market roles across Hong Kong, Japan, London and New York.

Covering the whole waterfront
Lee argues that one important strength is the wealth management business's ability to cater for so many client needs, and indeed, those of all family members.

“Today, our Hong Kong Clients are surrounded not just by investment ideas, but also by multi-faceted dialogues touching many aspects of life. We are the most prolific player at serving the high-end needs of Hong Kong’s top families, who have each found within BNP Paribas the right combination of offers, skillsets, and delivery,” he said. 

With such a large group, an inevitable complaint arises about big banks being able to pump out services and products to clients – an issue that critics say explains why some customers defect to boutique, more “independent,” players.

“The bank does not `push’ its own products to clients. To ensure our clients enjoy the advantages of competitive pricing and trading efficiency, we have one of the widest open architecture platforms in the market,” Lee said. The bank works with more than 150 brokers/dealers across equities, foreign exchange, bond and asset managers on the platform…An example would be forex, where traditionally banks only trade this in-house.  We offer open architecture across all products and currencies,” he said.

A mark of success is a low client attrition rate, Lee said. “I rarely sign off clients who are leaving.”

“What clients look for is consistency. People can count on us during tough times such as have been going through. We were very patient and held clients’ hands during that process,” he said.

The past 12 months have been stressful in Asia, as in other regions. 

The firm worked with clients, such as those whose assets were affected by the news of COVID-19 earlier in the year, switching their individual securities into a diversified portfolio mandate. By doing so, it helped clients’ relieve their overall credit position, Lee said. “It has been a challenging time with waves of uncertainty and to generate returns in public markets and where there are low rates.”

Asked about talent management, Lee spoke about the firm’s work with Singapore Management University to develop in-house talent. The firm works at building talent internallly and when the suitable people come up, makes external hires as well.

“Our premise is that people will stay with us and know that they have a good place to work here. We’ve grown organically and we have to attract the right talent. We look for selective talent that complements our existing offerings. Eight bankers have joined us in Hong Kong during 2020. We have been successful in hiring this year,” he said. 

“The way we interact with clients has changed and shifted. Private banking is, after all, a high-touch business. We have been successful in interacting with clients in a hybrid manner. We have been able to move a lot of services online. Going forward we are going to strike a balance.”