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OCBC eyes fund flows from foreigners relocating to Singapore

Jovi Ho
Jovi Ho • 7 min read
OCBC eyes fund flows from foreigners relocating to Singapore
OCBC’s Quek: Singapore has a pretty good name in Greater China. What they like is really the Singapore connection, which I think appeals to people in general. Photo: OCBC
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Oversea-Chinese Banking Corporation’s (OCBC) brand refresh was not just a marketing campaign. At the July 3 announcement in Hong Kong, the bank’s leaders announced plans to double assets under management (AUM) of its premier banking and premier private client (PPC) segments for Greater China.

OCBC says AUM for these segments has doubled over the past five years. For 1QFY2023 ended March, the group’s wealth management income, comprising consolidated income from insurance, private banking, premier banking, PPC, asset management and stockbroking, was $1.1 billion, 33% higher q-o-q, and contributed 33% to the group’s total income.

As at March 31, OCBC’s group wealth management AUM was $270 billion, up from $258 billion a quarter ago.

OCBC’s brand refresh aims to rejuvenate its premier banking and PPC segments. OCBC premier banking hopefuls must either deposit or invest $200,000 in fresh funds to qualify as a client, while those who wish to join OCBC PPC must do the same with $1 million in fresh funds and qualify as an accredited investor.

As accredited investors, PPC customers are likely to want products that are “a little more sophisticated”, says Sunny Quek, head of global consumer banking at OCBC. “They don’t mind some private equity funds.”

Speaking to The Edge Singapore in Hong Kong, Quek says the number of relationship managers serving this segment has tripled. “[The number of] customers has grown tremendously for us; the take-up was really good in the last four years.”

See also: Unlocking the Asean premium

Demand for these services appears to be strong. OCBC’s premier banking and PPC segment contributed 62% of the bank’s wealth management fees last year, an increase of 2.5 times since 2013. OCBC’s premier banking customer base in Hong Kong has doubled since 2020.

As part of OCBC’s new targets, the bank says it will double its number of relationship managers serving high-net-worth customers in Greater China by 2025.

See also: OCBC gunning for $3 bil revenue boost from Asean-Greater China focus

The bank’s PPC is currently only available to Singapore and Malaysia customers and not in Greater China. Quek says the most exclusive tier in OCBC’s consumer bank could be launched there in “maybe a year or two, or when the opportunity is right”.

As the bank rolls out its brand alignment strategy, Quek and his team will look at how to replicate “all the good stuff we do in Singapore” overseas.

OCBC’s “twin hub” approach has been touted to “capture the rising wealth flows in Asia”. Quek says most of his customers have business interests in Hong Kong and Singapore, “which is why I think we are sitting in a very nice sweet spot”.

Minimum thresholds for global private banks have shifted to between $5 million and $10 million. Most PPC customers divide their funds across multiple banks, says Quek, which means some high-net-worth customers park a “typical $2 million to $3 million” with OCBC.

He adds: “To be fair, we also have a lot of customers with $10 million to $20 million, and a certain percentage have $100 million to $200 million. They say: ‘I am comfortable here; I like it here. I won’t go to a private bank.’”

Opening an account from overseas

In June, OCBC’s attempts to capture foreign fund flows saw the bank becoming the first Singapore bank to enable a “fully digital” account opening for foreigners, specifically those still overseas.

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Targeted at people planning to relocate to Singapore, those in Malaysia, Indonesia, mainland China and Hong Kong can now remotely open Singapore-dollar and multi-currency accounts on the OCBC Digital app.

OCBC, citing data from the Singapore Department of Statistics, notes that the number of foreigners moving to the city-state grew by 6.6% from 2021 to 2022. “As borders reopen post-pandemic and given Singapore’s strong infrastructure and status as a financial hub, this growth is likely to continue. Consequently, OCBC expects the monthly average of foreigners who open an OCBC Singapore bank account in 2024 to be four times that of 2022.”

The response has been “above our expectations”, says Quek. In two days, OCBC notched twice the number of account openings it typically sees in an entire month.

These customers, especially businessmen, may not be living in Singapore, but could visit every month or so, says Quek. “[They think:] ‘I want to have an account there; I don’t want to keep swiping my credit card. For Singapore, I want my credit card charged to my Singapore bank account.’ Now you can do it.”

To avoid fall-below fees, the minimum deposit is $20,000. For non-residents, OCBC levies a $10 fee per month if the average daily balance for the month falls below this threshold, though this is waived for the first year for new accounts opened from May 23.

Granted, customers are subject to local regulations around funds transfer. Chinese citizens and companies can convert and remit up to US$50,000 annually. However, no such limit exists for those living in Singapore and Hong Kong, adds Quek.

In Singapore, OCBC is a local bank, says Quek. Outside of Singapore, however, OCBC “pales in comparison” to the number of branches that local banks boast, “which is why our obsession and our investment in digital in Singapore help us a great deal”.

Quek adds that Singapore has a “pretty good name” in Greater China. “Singapore has a good reputation as a wealth management centre. I think we also have a very good reputation as a financial centre. They like the Singapore connection, which appeals to people in general.”

Trust issues

Following OCBC’s account opening announcement in June, the Standard Chartered and FairPrice Group-backed Trust Bank contacted journalists, insisting that the digital bank was the first to allow foreigners to open an account in Singapore.

Trust’s savings account is open to Singapore citizens, Singapore permanent residents and foreigners aged 18 and above. Foreigners in Singapore must also upload a copy of their passport for verification.

In response, OCBC tells The Edge Singapore that Trust’s offering targets foreigners already in Singapore. In contrast, OCBC allows foreigners outside the country to set up an account.

This is not the first episode between OCBC and Trust, which launched in September 2022 with a credit card, savings account and family personal accident insurance.

With Fairprice Group’s backing, Trust’s debut ended OCBC’s 18-year partnership with the supermarket NTUC FairPrice on co-branded cards.

Quek, then OCBC’s head of consumer financial services in Singapore, thanked NTUC “for the great partnership [and] we look forward to deepening our working relationship as we continue to support NTUC’s banking needs”. He said consumers in Singapore are “hyper-banked”, and the new digital banks face a “hyper-competitive environment”.

No surprise, then, that Quek says OCBC has no intention of creating another digital bank, unlike Standard Chartered’s Hong Kong digital bank Mox, launched in 2020 with PCCW, Hong Kong Telecommunications and “If you have our mobile banking app, we [already] have so much more functionality than any digital bank in the market.”

The OCBC Digital app offers access to digital wealth products and services, including bancassurance, robo-investment services, trading of precious metals like gold and silver, credit card control services and retirement and financial planning, consolidated with SGFinDex.

OCBC will still offer credit cards, but the bank focuses “really more on the wealth management space”, says Quek. “The credit card is part and parcel [of banking]. It is still important in helping us acquire customers and complete the consumer banks’ products suite, but we probably want to play more to our strengths. We’re also looking at how we can then leverage some of the best practices in Singapore and [bring them] into Greater China.”

Photo and infographic: OCBC

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