This publication recently spoke to the man now at the helm of the private banking arm of Standard Chartered, a business that is hoping to make a bigger contribution to group results in future.

(Editor's note: This is a repeat of one of the big interviews this publication carried with industry leaders in the Asia-Pacific market.)

Earlier in 2014 Standard Chartered named Michael Benz as group head of private banking. More recently, group CEO Peter Sands has said he wants the wealth management part of the UK-listed bank to play a bigger role in driving results. This means that for a bank that earns the lion’s share of its revenues outside the UK, Asia is a crucial private banking opportunity – if the bank can seize it effectively. Already, Standard Chartered has one of the widest pan-Asian private banking networks; its brand is well known.

This publication spoke to Benz at the bank’s Marina Bay headquarters in Singapore. Benz is a person with plenty of experience: before his move to Standard Chartered, he was chairman for Asia at Julius Baer, the Swiss private bank that likes to call Asia its second home market. Before Julius Baer, Benz was chief executive of Bank of America Merrill Lynch's Asia-Pacific wealth management division, where he led the bank’s wealth management business spanning Hong Kong, Singapore, Taiwan, California, India and Japan. He also held various roles at UBS and Swiss Banking Corporation. He is based these days in Hong Kong and reports to Anna Marrs, the firm’s head of commercial and private banking clients. His full title is global head, private banking clients, Standard Chartered Private Bank. He filled the slot left vacant by Shayne Nelson, now CEO of Emirates NBD.

How do you see the profile of the private bank at Standard Chartered developing in terms of its contribution to group revenue and profits? Is this something that the group wants to see rise and if so, how?
Our private bank’s performance in the first half of 2014 saw operating income increase by 4 per cent year-on-year to $314 million. Client assets under management grew 13 per cent YoY to around $60 billion driven by higher investment balances.

While private banking is relatively small in the scheme of the broader bank, this segment will become an increasingly important source of growth. We have a great opportunity to grow our private banking business as our footprint - Asia, Africa and the Middle East - coincides with some of the fastest-growing wealth pools in the world, and these are where we also have deep knowledge and extensive networks.

Our commercial clients, which are largely family-owned businesses, are a perfect fit for private banking. However, most of them are not yet clients. We have the right capabilities and DNA to address the needs of these clients from business to private wealth.

To put it in perspective, we believe the private banking wallet of our existing commercial client base is about four times the size of our current private banking business. In order to leverage these opportunities, we are making introductions, doing joint meetings and showing clients how we can support them in both their business and private wealth.

I believe that Standard Chartered Private Bank differentiates itself from the other players through its disciplined focus on our footprint regions of Asia, Africa and the Middle East, our long legacy and expertise in these markets, and our brand promise for good with the associated philanthropic programmes.

Where do you see the biggest opportunities for growth in Asia; Africa; other?
Asia: It is a well-known fact that wealth in Asia has been growing at an exponential rate and is expected to overtake Western Europe as the second-wealthiest region in 2014, and North America as the wealthiest in 2018. Within this region Singapore and Hong Kong stand out as international wealth management centres. They account for about 16 per cent of global offshore assets. These two cities continue to benefit from the ongoing creation of wealth in the region and are expected to account collectively for 20 per cent of global offshore assets by 2018.

Africa: The African landscape is attractive with its favourable demographics: six of the world’s ten fastest growing economies (Angola, Nigeria, Ethiopia, Chad, Mozambique, Rwanda) are in sub-Saharan Africa, while half of the world’s most populous countries will be in the continent by 2100.

According to RBC Wealth Management/Capgemini’s 2014 World Wealth Report, the size of Africa’s high net worth population increased by 3.7 per cent from 2012 to 2013 to 140,800, while wealth increased by 7.3 per cent in the same period to $1.34 trillion.

Additionally, South Africa UHNW population is projected to expand by 6.2 per cent over the next five years, while Tanzania and Kenya will lead the growth of UHNW population in the African region. We thus expect double digit wealth growth in the next five years for our key markets of South Africa, Nigeria, Kenya and Tanzania.

Another growth area lies with Islamic banking, especially in East and West Africa, where the Muslim population is particularly concentrated and expected to grow by 37 per cent to 386 million.

The industry has had to contend with a great deal of regulation and other cost pressures. In the Asia region, for example, what is the biggest challenge at the moment and what are you doing about it?
The key drivers of the new market reality are regulatory changes and client behaviour, which have resulted in rising costs and falling incomes. Sustainability, and by extension profitability, depends on enhancing client experience, improving efficiencies, having a focused segmentation of clients and/or geographies, in addition to having the right business model.

We continue to focus on improving our asset base and the quality of our revenue mix. The reorganisation which grouped our commercial clients with our private banking business will allow us to more effectively facilitate cross-referrals.

We are also committed to continuously improving the experience of our people by investing in systems and streamlining processes to materially improve productivity, and in turn, enhance client service levels.

Banks have been consolidating booking centres and embracing technology to streamline business models. How many booking centres does the PB have in the areas under your oversight, and do you intend to increase/reduce this number?
We currently have booking centres in Singapore, Hong Kong, China, Jersey, India, UAE and the UK.

Standard Chartered acquired the American Express private banking business back in 2007. How does the private bank think about further possible acquisitions and joint ventures? Globally, there has been a lot of M&A in the sector over the past year or so, such as the SocGen deal with DBS. What is your stance on M&A and the type of deals you might be interested in?
We continue to prefer organic growth to inorganic, but we do look in particular at revenue accretive acquisitions that enhance our franchise and geographic or product capability. For example, in May 2013, the Bank signed an agreement to acquire part of Morgan Stanley’s onshore private wealth management business in India, which increased our India private banking AuM by approximately 20 per cent.

There remains a lot of talk about a lack of talent in the WM industry in Asia, for example. Can you lay out what your firm is doing about this? What do you think needs to happen?
Talent and expertise is critical to the success of private banking business. The war for talent today is just as intense as before. However, the name of the game has changed in that the focus is now on quality rather than quantity. Across Asia, there is a shortage of experienced talent to match growing demand and expectations. Many private banks are now focusing on training and coaching of RMs instead of hiring externally.

As part of a universal bank, we are at an advantage in being able to recruit from within our own ranks. For example, we have the option of promoting our most experienced Priority Bankers to the private bank. Faced with a shortage of experienced RMs, this allows us to “grow our own”. This also contributes to client retention as we can upgrade RMs and their client portfolios simultaneously.

When it comes to the training and development of our existing RMs, we have a structured learning and development programme in place. Powered 2 Perform is a year-long programme which consists of two components: product knowledge, and the softer skill sets of becoming a high performing RM. This is complemented by workplace learning through improving/professionalising coaching and people management capabilities of line managers/team leaders. Access to a specialist level of expertise is also very valuable to the client, hence our RMs are supported by a team of investment strategists and product specialists.

In our footprint, personal and business wealth needs are often inextricably linked as the majority of our clients are business owners/entrepreneurs. Our RMs must be cognisant of this and have a deep understanding of their clients’ overall financial requirements. They must be knowledgeable about our universal banking platform and have a close working relationship with the corporate and commercial banking segments, as well as our credit teams since financing is a key demand from our client base. This is a key strategy for us to optimise the quality of our bankers.

Can you explain how you see the private bank works with the rest of the group, such as how much cross-selling do you do or want to do? What are the limits on this sort of activity? How much "in-house" product/service do you provide as opposed to external sources?
Functioning as part of a wider universal bank is central to our strategy. The recent reorganisation gives greater strategic profile to the private bank by more effectively linking us to the commercial banking clients. At the same time, all our clients have access to global product groups such as corporate finance, financial markets, transaction banking, wealth management solutions and retail products such as mortgages and credit cards. What all this means is an even greater opportunity to support both private and business needs of our clients. Overall, our bank has a strong balance sheet and the appetite to use it appropriately to support our clients in their personal and business capacity.

At the same time, we maintain a broad, open architecture investment platform, with some outstanding investment capabilities and a comprehensive product suite which continues to be expanded with specific investment content from its geographic footprint. This allows us to adopt a more holistic approach in developing solutions tailored to our clients’ needs, as well as ensure that clients have access to a wide and unbiased range of financial solutions.

Can you talk a bit about how RMs work with clients at the bank? What is the structure - is it team-based? What is the typical ratio of RMs to client that you aim to have for clients at a certain level? What sort of targets in terms of client acquisition and retention do you have?
RMs are part of the major market teams, within which there are smaller teams, where there is typically a primary market focus. They lead the client engagement and ensure that the right services are brought to the client. First, they combine the expertise of the Investment Advisors to understand the clients’ needs holistically from an individual wealth perspective, all the way to understanding their business and succession planning. This is a critical step for us as many of our clients are entrepreneurs or second/third-generation business owners. Thereafter, the RM will introduce the most appropriate specialists to provide solutions, which can range from investment or wealth solutions, fiduciary or insurance, commercial banking or cross-border solutions.

On average, we aim to focus on no more than 25 client relationships at a very senior level and most of our client directors would typically manage no more than 30 to 40 client relationships. This enables us to provide sufficient time to each client relationship and ensure service levels are always maintained.

Client acquisition is typically driven by the AuM held by clients and the complexity of the relationships the RMs are managing within their portfolio. We ensure all RMs have the ability to manage their client portfolios with sufficient time to spend nurturing each relationship, while also making sure that the client’s entire financial needs are addressed with an appropriate solution.

Client retention is a critical indicator to us that the clients are happy with solutions and service. We measure this key indicator on a monthly basis, in addition to engaging a third party for annual client surveys to obtain direct client feedback.