A private bank seeking an Asian exit has found a good price for its assets, and a private bank wanting to expand in Asia is now large enough to potentially perform better in a fiercely competitive market.
The deal announced this week for LGT to buy the private-banking assets of ABN Amro in Asia (and the Middle East) appears to work for both parties. And we understand that LGT wants to integrate ABN’s Hong Kong and Singapore-based relationship managers into its own operations in the two cities.
Concerns are being raised, however, about how well RMs from the Dutch bank – there are about 140 of them in Asia – will adapt to working for LGT.
“One of the main possible disconnects is that LGT has a flatter organisational structure – it doesn’t have many managers in Asia. By contrast, ABN has team leaders, and desk heads for different Asia countries,” says Rahul Sen, an ex-Merrill Lynch private banker, now head of wealth management at search firm The Omerta Group.
“Unless LGT decides to create more management layers, within a year of the takeover many of the ABN managers might have to become revenue producers – the pressure will be on them,” says a private banking headhunter who asked not to be named and has knowledge of the firms.
“ABN has pure managers and producing managers – the later should be fine. If you’re at least covering your costs and are connected to clients you should be ok,” he adds.
Differences in the way the banks structure their market coverage in Asia could also prove contentious.
ABN typically ties its Singapore and Hong Kong-based bankers to covering one Asian market, such as China, Taiwan, Indonesia, Malaysia, and non-resident India.
“But LGT operates more of an open-skies policy,” says Sen. “As long as about 70% of your AUM is from one country, the rest of your clients can come from other Asian markets. You’re not stuck on a single country desk.”
Sen says this could lead to “culture shock” when RMs from ABN move to the Liechtenstein-headquartered bank. “LGT will want to retain ABN Amro’s bankers, but the question is whether they can actually adapt to the working style of the new bank.”
“For example, if you’re an Indonesian banker at ABN in Singapore, your desk colleagues – other RMs, assistants, compliance people – will all be dedicated to the Indonesian market and probably all speak Bahasa,” says Sen. “But while you’ll have the same clients at LGT, you won’t be on a dedicated Indonesia desk, you’ll be in a larger Southeast Asia team. It’s a totally different environment and some people prefer the desk-based approach.”
“On the plus side, LGT has good pedigree handling acquisitions after it bought HSBC’s Swiss private bank two years ago,” he adds.
Image credit: Pi-Lens, Getty