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Thai banks lure Asia's wealthy
Publication Date : 04-02-2013
Competition in the private-banking sector is likely to heat up as banks launch strategies to retain wealthy customers and attract the newly rich.
As global growth has been shifting from Europe and North America to Asia, the number of wealthy Asians has been rising. Of 11 million high-net-worth individuals, defined as those with assets under management of more than US$1 million (30 million baht), 3.37 million are in Asia, against 3.35 million in the United States. In Thailand, the number is estimated at 50,000. For Thai commercial banks, success in winning over these customers means success in expanding banking services in the coming years.
Weidt Nuchjalearn, senior executive vice president of Krungthai Bank, said the number of high-net-worth clients in Thailand had been rising every year and their banks must assure them that their wealth will remain intact even in fragile economic conditions.
The high-income segment is unlike general depositors. These people have more choices for investments to build their wealth, so bank staff must be financial advisers. Relationship managers and a synergy of financial subsidiaries in KTB will strengthen wealth creation for this segment, Weidt said.
"Our goal is to maximise their satisfaction in terms of return from assets allocation and privilege services," he said.
Kasikornbank is targeting individuals with net worth of at least 10 million baht, who control 70 per cent of total deposits in the banking system, said Krisada Lamsam, senior executive vice president. The bank calls this segment "The Wisdom".
Demand from these individuals for special care will only rise, said Lalitphat Toranavikrai, head of private banking at Siam Commercial Bank. One factor is the lowering of the Deposit Protection Agency's insurance limit. Currently guaranteeing deposits of 50 million baht per person per bank, the agency will soon lower the limit to 1 million baht. This will require the wealthy to make better plans for their assets.
SCB categorises its wealthy customers in two tiers: "Private Banking" for clients with more than 50 million baht in assets and "First Privilege Banking" for those with 10 million to 50 million baht in assets.
According to Kris Chantanotoke, executive vice president of Krungsri Group, banks are pursuing these clients by aiming to be one-stop services for all available investment products. "Krungsri Exclusive" is now offered to clients with 5 million baht or more. The bank believes that if it stays with these clients - mostly owners of medium-sized companies - from the start, they will find it hard to flee to other banks when they are richer.
KTB currently takes care of 18,000 "Precious Plus" customers (those with assets worth more than 10 million baht) and 10,200 "Precious" (those with assets worth 1 million to 10 million baht) customers. These are targeted to rise to 200,000 and 40,000 by the end of this year. Their combined assets would then grow by no less than 20 per cent from 450 billion baht last year.
"We will capture more clients in the provinces as many see their fortunes skyrocket after land sales. Many see better prospects due to the upcoming Asean Economic Community," he said.
The luxury lounges the bank provides its premium clients in Bangkok will be offered to provincial clients as well.
SCB recently upgraded its private-banking services, covering members of heritage-wealth families whose net worth is above 50 million baht. Lalitphat said that for highly educated clients, there was an intelligence service to study investment products whose returns match their risk appetite. This service will be in addition to relations managers and private bankers who regularly assist them with general consultation.
SCB oversees about 7,000 private-banking customers with combined assets of more than 500 billion baht.
Aside from specialised advice and services, the premium clients enjoy lavish perks in keeping with their wealth.
KBank's The Wisdom members enjoy luxury services in the lounge at the head office and another one on the 12th floor of Sofitel So Bangkok Hotel.
Krungsri Exclusive members also enjoy a lounge. The combined assets of wealthy customers at Krungsri Exclusive this year is expected to exceed 300 billion baht, from 250 billion baht last year, in line with the target to increase the number of high-income customers to 35,000 from 26,000 customers.