HSBC Private Banking recently established an onshore private banking presence in Thailand as it strives to become Asia’s leading wealth manager. With a significant wealth pool and investor friendly regulations, the country is a key market in the bank’s goal of capturing a larger share of the high net worth (HNW) and ultra-high net worth (UHNW) market across Southeast Asia.
The new private bank in Thailand is HSBC’s second onshore private bank in Southeast Asia after Singapore. It will facilitate clients’ access to international capital markets by leveraging the group’s existing infrastructure in advisory, investment methodologies, controls and systems in Asia.
HSBC is focusing on Southeast Asia, which is rapidly becoming an economic powerhouse with a fast-growing HNW and UHNW population. Capgemini’s 2017 Asia Pacific Wealth Report estimated that the assets of HNW investors in the region will reach US$40 trillion by 2025, up from US$18.8 trillion in 2017.
Within the region, Thailand had the second highest growth, up 12.4% to US$548 billion in 2016. The number of UHNW individuals in Thailand will increase by 30% in the five years through 2023, it added.
“Thailand is key to HSBC’s ASEAN and Asia growth strategy,” says Philip Kunz, Head of Global Private Banking for South Asia at HSBC. “I believe we are strongly placed to meet the evolving private banking needs in the region with the group’s international and business connectivity.”
Global connectivity and expertise
Thailand’s rising affluence is driving new aspirations and changing the behaviour of investors. Against this backdrop, HSBC has a unique opportunity to leverage its global network and expertise to tap into the market’s vast potential. “Thailand has a wealth pool that is large and impactful,” says Kunz. “We need to have the right operating model to effectively manage these assets.”
Establishing an onshore presence in Thailand is crucial, with about 80% of HNW individuals’ wealth in Asia held onshore with local banks. HSBC Private Banking’s team in Thailand will cover client management and advisory services, while clients’ assets will be booked in Singapore, a preferred wealth management hub for the region’s affluent individuals.
The onshore model will allow clients to transfer their wealth to Singapore and give them access to international capital markets, with the added advantage of onshore proximity and deep relationship management at their doorsteps.
HSBC is also leveraging the Bank of Thailand’s moves to relax foreign exchange regulations and encourage greater flexibility in financial markets to better meet the needs of its clients.
“With greater flexibility in the financial markets, supported by regulations that welcome more offshore investments, we believe that now is the right time for HSBC to offer a distinctive onshore experience to serve the growing needs of our Thai clients”
– Saranya Arunsilp, Country Head of Global Private Banking, HSBC Thailand
Serving family-owned businesses
The vast majority of Thailand HNW and UHNW clients have accumulated their wealth from running successful businesses. Family-run enterprises in Thailand have a combined net worth of THB30 trillion (US$939 million), with around 80% of all businesses in Thailand family-owned or controlled, according to a study by Deloitte published in January 2020.
HSBC is well-positioned to serve the corporate requirements of family enterprises as well as their wealth management needs, particularly in succession planning. This is an area of increasing importance as owners of maturing businesses naturally start handing over the reins to the next generation.
“Most family-owned companies struggle to survive beyond a single generation,” says Tan Siew Meng, Regional Head of Global Private Banking for Asia-Pacific at HSBC. “We can utilise our expertise in wealth planning and offer advice on topics such as family governance, succession planning, even their philanthropic intentions.”
Thailand’s HNW individuals are also more inclined towards wealth creation than wealth preservation. They are shifting from traditional deposits to more diversified portfolios in the recent years, including funds, offshore investments and increasingly, ESG-linked products.
To meet these and other needs, HSBC is tapping its unparalleled international footprint and bringing the full breadth of the group’s capabilities to its clients via a “one bank” approach. These capabilities include market-leading expertise in wholesale banking, private banking, insurance and asset management.
An illustrious heritage
As the first commercial bank in Thailand, HSBC is backed by a long and trusted history dating back over 133 years. The bank supported the country throughout its economic development. It introduced the country’s first bank notes, financed the nation’s first foreign loan and most recently launched the market’s first sustainability-linked loan and green deposits.
“Our 133 years in Thailand puts us in an advantageous position,” says Tan. “Many people know who we are and the HSBC name sits well with wealthy families here. As they grow their wealth, these families are looking for a bank that they are confident will be here to serve their future generations.” Reflecting its achievements and status in the country, Finance Asia named HSBC as the Best International Bank in Thailand this year.
Looking ahead, HSBC will build on its expansion in Thailand and continue to invest in its capabilities to better serve wealthy clients in Southeast Asia. The bank will work to strengthen its UHNW proposition with specialised investment advisory, enhanced wealth planning and bespoke products for its most sophisticated clients.
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