HONG KONG: DBS Group, Southeast Asia's biggest lender, plans to set up a domestic private banking presence in China, as it sees onshore wealth management growing in importance and new funds flowing in from Asian investors.

The bank, which earns 90 percent of its revenues from Singapore and Hong Kong, is seeing new private banking inflows from these two bases plus Indonesia and Taiwan, and aims to target the mainland's domestic wealth market.

"We are looking at setting up an onshore presence there in terms of wealth management," Kwong Kin Mun, DBS head of private banking for southern Asia, told the Reuters Wealth Management Summit in Singapore.

Kwong said opinions were divided as to whether onshore banking would replace or complement offshore centers such as Singapore, after government moves to implement international standards on exchanging information in the wake of a crackdown on tax evasion.

"I don't think it will scare off investors - practically every country has committed to that standard," Kwong said. However, he added that he felt onshore banking would grow in importance.

Singapore is expected to sign within months the last bilateral tax agreements that it needs to be taken off an OECD "grey list" of countries that have not implemented the new standards on exchange of information.

Kwong said DBS had been approached by US nationals, and by Swiss private banks asking if it was interested in taking over their US clients, as the United States pursues citizens who have evaded taxes by stashing money overseas at banks such as UBS.

"We got a lot of enquiries ... We said no thanks," Kwong said emphatically.

Kwong said the bank is still aiming to pick up business from overseas millionaires who are looking to diversify away from global banks into Asian private banks.

"If Asia is really the place that can become the driver of the whole world economy, it makes sense to have an Asian private bank in your portfolio," he said.

"This crisis has worked in our favor," he said, adding DBS aimed to be the Asian private bank of choice for such investors.

Singapore's banks have weathered the crisis relatively better than their global peers due to smaller exposure to toxic debt and higher capital reserves.

DBS's private bank, which caters to clients with over $1 million in investible assets, has close to S$30 billion in assets under management in Asia, ranking it sixth in 2008, according to a survey by consultancy Calamander Group.

"Going forward, we continue to believe we can capture market share," Kwong said, without giving a target figure.

Kwong said the bank would look at any interesting acquisition possibilities but declined to comment if it was pursuing Dutch financial services group ING's assets in Asia.

Despite growth ambitions, DBS's private bank was still cautious on hiring, Kwong said, after a slight reduction in its headcount compared with pre-crisis levels.

"The plan is definitely to hire, but we haven't committed on a number," he said.

Kwong said the bank's clients were also staying cautious, with portfolios holding 40-50 percent cash not uncommon.

He now recommended Singapore equities, especially REITs, since some trade at below net asset value with good yields, plus Singapore dollar exposure and China plays.

Reuters

(HK Edition 10/08/2009 page4)