While many, if not most, private banks around the world, and in the Asian region in particular, are suffering an outflow of assets under management, Singapore’s DBS Private Banking arm is seeing unprecedented inflows.

Since 2003, whenDBS refocused its private bank more towards the high net worth segment, it has positioned itself to be the Asian private bank of choice.

Kwong Kin Mun, managing director & head of DBS Private Banking (South Asia) told WealthBriefing that DBS Private Bank has long been seen as an important portion of many Asian investors’ portfolio of banking relationships but, after doubts expressed about liquidity of many foreign players, net new money inflows increased substantially year-on-year. Many wealthy investors regarded DBS, which is 25 per cent state-owned, as a secured and stable financial institution for them to bank with.

“The constant influx of assets from other banks during last year reached its climax in the fourth quarter,” Mr Kwong told WealthBriefing. “But now that deposit guarantee schemes are in place at other banks the anxiety has died down, and these inflows aren’t in the same order of magnitude. We are still benefiting from clients wanting to have deposits in Singaporean dollars as a proxy to the range of Asian currencies” he said.

“Our Asia focus is an advantage because our approach to private banking is not just asset gathering and investing the assets, we actually approach it from an asset liabilities management perspective, which is leveraging off of our strength as a lender in Asia.”

The global credit crisis has hit Asian private banking particularly hard. Many high net worth clients in the region have been highly leveraged and have tended to have suffered disproportionately as a result. They’ve lost trust in bankers and confidence in the concept of financial investments, and have withdraw many of their remaining assets out of the system leaving banks to make paper-thin margins on cash deposits on a significantly lower asset base.

And the cadre of bankers hired within the last few years, often from the retail or priority banking spaces, represent a cost burden on many players in the industry – adding pressure to margins already squeezed by massively declining revenues.

At DBS, though, the recently cash inflows have served as a boost to morale to the bank’s relationship managers, according to Mr Kwong. “During the good times, retaining relationship managers was a concern,” he said. “But that certainly isn’t the case at the moment. With all the problems within the wealth management industry at the moment, at least our staff can see one positive outcome for us which is a hugely increased AUM base, even though it’s being held mostly as cash.”

“Getting clients to regain confidence in the markets is key and I’m sure some of them will never return after recent losses. The whole concept of long-term investment is being challenged at the moment; people have seen that holding onto investments in declining markets expecting to make back losses may not be the best choice. Basic investment principles are being challenged. Previously, fixed income products were thought to be less volatile – that’s been shown not to be the case. In most equity portfolios, bank stocks were held to be amongst the safest.”