Not so Bank Sarasin, which manages SFr21bn ($25bn) for clients in Asia and the Middle East, a growing part of its SFr103bn global total. The big news from the Swiss bank’s headquarters on the 40th floor of Edinburgh Tower in Hong Kong’s Central district, where Asian CEO Enid Yip holds court, is that its Basel-constructed investment model will soon be introduced to local clients.
Preparations are well on the way for a September launch date for the new approach. “Our first goal is to bring in our Asian investors and to have briefing sessions for them on our Swiss investment philosophy,” says Ms Yip, a proud, plain-speaking banker who joined Sarasin’s home-grown Asian senior management circle in 2007, after making a name for herself running the Hong Kong branch of much bigger rival Credit Suisse. “Then, we take the opportunity to add some Asian flavours to the mandate.”
Ms Yip faces the same challenge as all of her rivals: how do you change the mentality of the trade-happy Asian investor, preferring a brokerage style operation, with regular “advisory” share tips, into a loyal, annual fee-generating discretionary client?
Sarasin has long been addressing this conundrum, with regular trips to the region from group private banking boss Fidelis Goetz, who remains somewhat cynical of rivals’ plans’ to hire hundreds of bankers in Asia, concentrating on fuelling advisory business. Instead, together with Swiss-based investment chief Burkhard Varnholt – like Ms Yip both men have worked for Credit Suisse and are very familiar with Asia – he decided to concentrate on leveraging an existing, successful discretionary investment process dreamed up in the bank’s Basel base.
The uphill struggle now confronting Ms Yip involves convincing her Asian clientele about the benefits of diversification away from a growing region which they know and love. Sarasin management acknowledges the bank had a “lucky break” in 2002 when an alliance with Dutch group Rabobank gave the Swiss automatic entry into Asia with the acquisition of two retail banking offices.
She claims Asian investors have been “very receptive” to the need for diversification and to buy into the type of sustainable, environmentally-friendly assets, which Sarasin has developed a strong track record investing in.
“Despite having been through the financial crisis of 2008, and our very own Asian crisis 10 years earlier, Asian investors have come to realise that it is easy for them to make money locally. This is a fact, if you look at property prices here. But is all of this sustainable? Property prices in Asia are outrageous. Will there be a bubble? As wealth managers, we have to tell clients there are good opportunities here in Asia, but don’t put all your eggs in one basket.”
Part of the client-education process involves introducing investors to thematic concepts pioneered by Sarasin’s London-based investment funds guru Guy Monson since the 1980s. “Thematic funds are a very new concept in Asia,” says Ms Yip, admitting to some tricky conversations with potential customers for her bank’s water and commodity-themed products. “Initially, they did not understand and thought it was an abstract concept. But since the Japanese disaster, people have been coming to us and asking for more information.”
There is also a sense that many clients are looking to the future and attempting to judge which markets are likely to be most prominent. “The Dow Jones and Hang Seng will not necessarily be the centre of attention any more,” says Ms Yip, adding that this desire to understand investments also relates to the question of whether they are socially beneficial.
Reflecting Sarasin’s belief and commitment to environmentally sustainable investing, Ms Yip will be including a default socially responsible investing (SRI) option for discretionary mandates in Asia, mirroring the development for clients in Europe, where very few have opted out of the bank’s preference for investing in companies run on ethical lines.
“Once we catch their attention for an hour or so, the majority of clients are very impressed with what we are proposing,” says Ms Yip, commenting that many of the new generation of Asian investors, offspring of older entrepreneurs, have worked in financial institutions and understand the concept of global investing.
“They respect our discipline and philosophy. This is totally different to what we normally see in Asia, where everybody jumps for IPOs and placements, without knowing anything about a company’s culture.”
The popular Western image of Asians happy to live in fast growth economies, churning out environmental pollution as unavoidable by-products of rapid industrialisation is far from the truth, believes Ms Yip.
