Bank zeroes in on high net worth

British banking giant Standard Chartered will expand its wealth-management business in the Philippines to take advantage of Filipinos’ rising affluence and increasing appetite for investment products.

Standard Chartered’s wealth-management arm, which is being expanded alongside a global relaunch of its “priority banking” unit, may take up as much as 50 percent of the foreign bank’s Philippine business in the next five years, said Stanchart general manager for wealth management Marion Kohchet-Chua.

The bank executive believes that this particular market “will grow by leaps and bounds.”

“It makes a lot of sense for this kind of program. Focus on that high net worth market has become quite important in the Philippines,” Kohchet-Chua said.

The bank’s target is to acquire 2,500 new priority banking customers within the next six months, said Stanchart general manager for lending and transaction banking Supratim Pandey.

To qualify as a “priority banking” client, an individual customer must have P2.5 million or $50,000 worth of banking relationship with Stanchart.

This segment targets mostly entrepreneurs and professionals in their 40s. But there is an increasing focus to reach out to the younger age bracket or those in their 30s, said Stanchart general manager for premium banking Abigail Del Rosario.

The wealth-management unit offers an array of peso and foreign currency investment products such as government securities, corporate securities, mutual funds managed by Sun Life of Canada and Philam Asset Management, special deposit accounts and other trust services.

This unit is small relative to other businesses of Stanchart in the Philippines, accounting for less than 10 percent, but is expected to grow briskly in the years ahead alongside Filipinos’ improving purchasing power and risk appetite.

In the past year, the business has doubled from a year ago.

“We’re on a rebirth mode,” Del Rosario said.

She added that the foreign bank’s small branch network, only six at present, was not a limiting factor to the growth of the wealth-management business as high net worth clientele typically don’t go to branches to conduct transactions.

“It’s our RMs (relationship managers) that go to their houses or to their offices,” she said.

Over the last 10 years, Del Rosario said Filipinos’ mindset has changed as many have opened up to marked-to-market investment products as well as a longer time horizon, as opposed to a previous bias for guaranteed products and shorter tenors.

In the past, Del Rosario said Filipino investors would consider as a “long-term” investment placements of one year while short-term investment was defined as having 30 days in tenor.

She said the acceptable horizon for “short-term” investing was now at 12 to 18 months while “long-term” would be five to 10 years.

“Clients who come into this product now understand that in order to get the most out of their investments, they have to ride it out over the medium to long term. They can’t look into this anymore as a churning mode,” Kohchet-Chua said.