When the Bank of East Asia (BEA) originally set up its wealth management division a few years ago, its purpose was to provide investment services for more affluent clients. Soon, though, the bank realised there was huge demand for such services in the broader market and it has therefore been expanding to meet the needs of the full cross-section of potential investors.
"The economy has regained its strength after SARS and the market is gradually maturing," says Grace Chow who, as BEA's head of private banking, believes the business environment in Hong Kong will only get better. "We are now placing greater emphasis on wealth management and exploring the opportunities for customers in both Hong Kong and China," she adds.
With its background in commercial banking, BEA can now offer integrated services and cater for clients with the full scope of commercial and wealth management needs. The products now on offer include discretionary portfolio management, investment advisory services, structured and treasury products, investment funds, securities financing services, and insurance.
"Our team of specialists can develop our own products or look for third-party products available in the marketplace," Ms Chow says. "Most banks nowadays offer similar things; that's why we are looking at what can make us more competitive, so that we can help our customer base."
She notes that, at present, no bank can claim to have the largest share of the wealth management market, and that even the most established may only have a penetration rate of five to six per cent. "Many Hong Kong people still keep their money in savings accounts, so there is a long way to go," Ms Chow says. "We definitely stand a good chance, but it will still take time to build our share."
The speed of the bank's expansion requires a great deal of talented people
BEA opened its first branch in Shanghai in 1920 and has maintained a continuous presence there ever since. According to Wendy Wong, head of branch operations and development for the China division, this long history is now seen as a major advantage.
A stable workforce is also vital, so it definitely helps that all the Hong Kong senior staff stationed in the mainland have been with the bank for at least ten years. Their experience, contacts and knowledge of the local culture are regarded as invaluable. Each person receives clear guidelines and great support from the head office management team, allowing them to make decisions quickly and ensure that things get done.
The bank has won approval from the China Banking Regulatory Commission to conduct renminbi business in cities and provinces now opened to non-mainland financial institutions. "When the market further opens later this year, we will be able to cover a much wider range of customers," Ms Wong says.
Having launched its first QDII product last month, the bank is already working on a second and is optimistic about the prospects. "There are all sorts of restrictions at the moment," says Ms Wong. "For example, an investment product for the China market cannot be equity-related and there has to be fixed income. We put together the most suitable products given those circumstances."
Meanwhile, it has been possible to develop personal banking services in the mainland quite steadily in the last three years. The essential thing is to make detailed preparations and take time to build up the necessary infrastructure. In due course, BEA will diversify its range of products available on the mainland and also offer insurance. As a prelude to that, strategic partnerships have been formed with local insurance companies, and many of the bank's personal banking representatives have obtained the necessary licences. Ultimately, branches in the mainland should be able to offer the same one-stop wealth management services now available in Hong Kong.