Bespoke Banking

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Although the current scramble for Asian clients is driven by the region's growing wealth, the seeds of the boom were sown not by prosperity but by adversity. In the past, Asians have tended to manage their money without professional help, and to stash a lot of it conservatively in cash, savings deposits and real estate. "The Asian rich have had a high propensity to hold cash," says Scott of BCG. "That was why private banking didn't take off for a long time in Asia." But several economic shocks?including the tech-stock crash of 2000 and the 9/11 terrorist attacks the following year?prompted the world's central bankers to slash interest rates in an effort to revive economic growth. With returns on savings deposits falling to around 1% (or even lower in Japan), Asia's wealthy were roused to seek alternatives. Today, they tend "to expect a lot more return from their investments" than investors do in other regions, says Shih of UBS. Clive Bannister, the London-based CEO of HSBC Group Private Banking, notes that Asians are more "hands-on" in their investment decisions than the bank's European clients?and less willing to wait for returns to be realized. "There is no doubt that the investment time horizon for many of our Asian clients is shorter than it is for our European ones," Bannister says. Asia's wealthy also tend to be younger and to have made their money through their own entrepreneurial efforts, while there is more inherited wealth in old-world Europe.

To meet the demands of this growing demographic of impatient and increasingly sophisticated Asians, private banks now offer a slew of new investment products. One of the most popular: so-called structured notes, which are complex derivatives that often pay a guaranteed minimum return like bonds, or pay above the minimum depending upon the performance of other asset classes, such as stock-market indexes or commodities. "The beauty of structured products is you can tailor them to clients' needs," says Gary Tiernan, head of product management for Deutsche Bank in Asia. It's a buoyant enough business that Deutsche now has a structured-product team of five or six people in Singapore alone, catering to private-banking clients there.

Some banks go even further in offering products that provide not only profits but that aura of exclusivity and sophistication that the client with everything may be inclined to prize. One vehicle with almost irresistible snob appeal is the "Ultimate Wine Fund" offered by the private-banking arm of the French giant Socit Gnrale Group. Available primarily to customers of SocGn's Asian private bank, the fund is linked to a specially created Cayman Islands firm that, acting on the advice of wine experts and auction houses, buys and stores select vintages. Investors wanting to cash out after the minimum one-year holding period may redeem their shares for actual bottles of wine, which can be drunk or resold at a profit (or loss) by a wine broker. "It's a physical fund, and it's very liquid," quips Daniel Truchi, the CEO of SocGn's private-banking operation in Asia. The minimum investment in the fund: $300,000.

Such offbeat offerings indicate the growing need for private banks to distinguish themselves from competitors in a fragmented market that's ferociously competitive. The largest global private banks in Asia are UBS, Credit Suisse, HSBC and Citigroup, but there are scores of others, and no single player is dominant?Citigroup, which manages roughly $70 billion in Asian private-banking assets, is one of the top-three regional players, yet it still controls just 3-4% of the Asia market. With customers up for grabs, selling services can be about marketing the sizzle?bragging rights and a sense of privilege?as well as the steak. Thomas Meier, head of Asian private banking at Bank Julius Baer, one of Switzerland's oldest private banks, argues that his institution's classic pedigree gives it a particular edge in Asia. Headquartered in Zurich, the firm started out more than a century ago as a simple foreign-exchange office on the city's exclusive Bahnhofstrasse, where Switzerland's largest banks?and costliest jewelers?are housed. "Asians love history," says Meier. "If you can show them 120 years of history, it gives them an enormous level of comfort." Other firms find their own ways to impress, not least with a seductive patina of opulence. A stark, cool modernism pervades Credit Suisse's Singapore office, while the Persian rugs and somber oakwood in Citigroup's office across town convey a reassuring, grandfatherly solidity.