Swiss private bank EFG began life in 1995 in Zurich and ten years later listed on the SIX Swiss Exchange. In 2016 the bank took another leap forward by combining forces with one of the oldest private banks in Switzerland, BSI, in a nearly 1 billion Swiss franc deal. Today, the combined entity has a growing global footprint with 40 locations worldwide, and through offices in Hong Kong and Singapore is on an ambitious expansion trail in Asia. Hubbis recently met with two of their most senior bankers in Hong Kong.
EFG International in late June announced the hiring of Richard Straus as the new head of its private bank in Hong Kong. Straus moved from rival Julius Baer, where for the previous three years he was Group Head of their Greater China wealth management business.
Hubbis met up with Straus a few days later, along with the banker Straus now reports to, Kees Stoute, EFG's Chief Executive Officer in Hong Kong. Stoute is another veteran private banker with long experience in Asia; he had built EFG’s Singapore private bank operations from 2007 onwards, he then left in 2012 for a five-year ‘sabbatical’ and was enticed to re-join EFG in 2017.
The arrival of Straus coincides with the announcement that EFG's long-standing private banking head in Singapore, Eng Huat Kong, will retire at the end of 2018. Kong had been the head of the Singapore operation for seven years and had overseen the Singapore elements of the EFG merger with BSI, which was announced in 2016 and completed in 2017. Oliver Balmelli, already with EFG, has been announced as the head of private banking in Singapore.
EFG’s globalised practice
EFG’s leap forward has encouraged the top management to more proactively promote EFG’s enhanced financial, managerial and logistical strengths, which the firm believes are ideally suited to exploit the private banking and wealth management potential they see worldwide. The Asia region offers outstanding potential for the firm to further build on its already solid base in the region.
The Swiss bank’s main stake is held by Greece’s Latsis family. After the merger with BSI, the bank has evolved into one of the larger boutique private banks in the region.
Rapid but sustainable growth
Stoute explained that a key priority is growth. “We want to grow rapidly, but also healthily and sustainably. We want to increase our AUM in this region, and to achieve our fairly ambitious growth. Thus we are looking for, at least, an additional 15 to 20 seasoned, experienced bankers. The hiring of Richard is a key step in that direction – he has longstanding experience and brings to EFG a well-deserved reputation as one of Asia’s leading private bankers. His presence will support us in many of our endeavours.”
Straus joined EFG from his previous role heading up the Greater China wealth management business for Julius Baer; there he focused on Hong Kong, China and Taiwan, with a speciality in ultra-HNW clients.
Tremendous potential
“EFG has been here for 18 years in Hong Kong and has a growing footprint in Asia,” Straus noted. “I see a tremendous opportunity in terms of the business model, the platform, and the culture of the firm. I was attracted by the dedicated focus on private banking and discretionary wealth management and the fact that EFG in Asia does not practice either investment banking or commercial banking. I see a clear value proposition for our clients and a sensible balance between the entrepreneurial approach of EFG and the strong client focus of the bank.”
Indeed, one of the core appeals of working with EFG in Asia is the entrepreneurial business model the company operates, Straus added. “I have only been here a very short time but I see an organisation that empowers team members and encourages freedom of responsible entrepreneurial thinking, supported by open architecture.”
The entrepreneurial spirit
Stoute added that with the wealth of the Asia region so driven by the entrepreneurial spirit and drive, business owners and creators are naturally drawn to the firm as clients due to the culture and values EFG represents. “Moreover,” he said, “we have a deep and long understanding of the Asia mindset and culture. These are all vital ingredients.”
People for people
“In general people don’t leave companies, they leave bosses,” Stoute observed. “While senior bankers might hesitate to leave the well-known banks or firms, oftentimes they might not be comfortable with the people or structure within the organisation, and then seek an environment where they feel more valued, more comfortable, and have better flexibility to express their own business personalities.”
EFG is now one of the largest Swiss private banks with a growing global presence. The combination of EFG and BSI has helped create a larger, more solid and more dynamic platform. EFG’s Chairman, John Williamson, had met with Hubbis in late 2017 when he outlined the firm's view that EFG’s business and market presence in private banking has been enhanced by the BSI acquisition, which represented a transformational step for the bank. He explained that the concept in Asia is to leverage the firm’s bigger international network and its powerful Swiss hub and history.
With the dramatic economic growth in Asia and the rapid expansion of the number of HNW individuals and their investible assets, Asia is naturally a key target region for rapid expansion.
Enlarging the market coverage
“We now have the scale, the reinforced position, enlarged market coverage and improved platform to further sustain our growth in Asia,” Stoute reported. “To achieve that EFG offers an entrepreneurial and highly professional culture designed to encourage talented individuals to innovate and to build their book of business, leveraging our regional and global expertise and our dynamic, team-oriented and highly client-centric business culture. We are an excellent vehicle for high-quality relationship managers as we offer a compelling value proposition, a solid platform to serve clients very effectively.”
Another key priority for Stoute and Straus is to build the EFG name and brand recognition. “We still have a lot of work to do in this regard,” Stoute observed. “We want people to talk about us in a way that attracts clients and also attracts additional talent to the bank. Local expertise and skills coupled with our global reach and solidity is a compelling combination and one that we need to reinforce in the marketplace.”
Building the brand
Both bankers are aware that EFG does not have the brand name or recognition of a global major bank, where customers literally walk in through the doors. “We have to attract clients based on the quality that we deliver, so we are really dependent on high quality, high calibre people,” said Stoute. “That is why it helps when we can hire someone of Richard’s track record and it sends a positive message to the entire industry, that we are able to attract such quality and experience, it underscores how serious a player we are.”
A third priority is the sustainability of the growth and the business model. “We need to structure and organise ourselves, so we can handle the growth consistently and with excellent regulatory compliance,” Stoute reported. “We need to ensure that the platform can cope with the expansion of client numbers and volumes. We need to ensure that we have the correct internal and external risk management expertise. We need a persistent focus on governance and sustainability.”
Focus on DPM
The firm is also targeting solid growth in the firm's Discretionary Portfolio Management (DPM) offering. "Given the ongoing low-interest rate environment," Straus noted, “this is an interesting time for our Asian clients to consider moving more of their funds to professional portfolio management. Although I am new here I am already impressed to see how well EFG’s DPM offering is performing, organised and received.”
The ongoing upgrading of the platform and EFG's digital capabilities are also important to the growth path. "We continue to make the vital investments the bank has been making in digitisation of the platform,” Stoute explained.
We are confident that with our platform we are able to offer every service that professional private banks are expected to deliver, with a very high-level discretionary management service, high-quality credit facilities, and excellent wealth planning services.”
Straus then further elucidated his vision of EFG’s role in Asia. “EFG is an important private bank with a boutique feel,” he explained. “We want to offer clients a more direct relationship with the top management of the bank and we focus on bringing the best and most appropriate resources to bear to achieve strategies and solutions for clients.”
Client-centric conversations, coordinated solutions
Stoute agreed. “We are able to do this not because we are a smaller organisation, but because we have the culture to formulate client-centric solutions in a coordinated manner. We try to focus not on the rule book, the stock responses, but on solutions that actually work for the clients and also work for regulatory compliance. And we look more holistically where possible at total family solutions so that the broadest range of structures and solutions can be incorporated.”
In conclusion, Stoute affirmed his belief that the art of private banking is to delve deeply into dialogue with clients and to help them understand what their future wealth management needs are and then how to achieve some or all of those goals.
“We must continually encourage our clients and team members to have these conversations, it is essential to the whole process,” he said. “If we provide a service that really suits the client, the solution will help engender some degree of gratitude and therefore some additional loyalty. We want a positive and also profitable relationship that works for the client and works for us. Do we always succeed? No, probably not, but it is the culture that we promote internally and externally and the culture we will keep communicating energetically to the market.”
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