Print this article

EXCLUSIVE INTERVIEW: Societe Generale Aims To Win Big With NRI Client Segment

Tom Burroughes

5 August 2013

The non-resident Indian client segment is an important growth market in the Asia-Pacific wealth management market. One of the banks that has cultivated the NRI audience is Societe Generale Private Bank. An important hub for handling such business is Singapore. This publication recently spoke to Balakrishnan Kunnambath, managing director, global market manager for the Indian Subcontinent at the bank, about his firm’s strategy.

What is SocGen Private Bank's broad strategy in how it seeks to tap the NRI market in the Asia-Pacific region?

The South Asian diaspora is one of the largest and most dispersed segments in the high net worth community. In growing this market it is important that we understand their values, backgrounds and priorities. We have dedicated teams who work closely with this community across the region and globally. With scale, insights on best practices, expertise and solutions tailored to their specific needs, we are well placed to expand in this market. 

What would you say are the main characteristics of NRI clients in terms of their needs, wealth management characteristics, sources of wealth, challenges and risks?

South Asian clients are sophisticated and astute investors. They hail from diverse backgrounds and range from professionals to executives to business promoters. They are hands on in tracking markets closely and are very savvy about investing. They require frequent updates on markets and ideas on investment opportunities globally as well as in India, where they have a keen interest. 

How important would you say are NRI clients to the overall business that SocGen conducts in Singapore?

The South Asian client segment is a key area of our business and we have had a strong focus on this segment for the past eight years.

What sort of trends have you seen in the NRI market in recent years?

South Asians generally have taken a strong interest in India-centric investments, property, and in many instances sustainable and socially conscious investment strategies. They have been risk averse after the financial crisis, and had partially de-leveraged their fixed income portfolio holdings. With confidence in the global economy coming back slowly, we are seeing South Asians moving back to risky assets.

How fast has the growth of SocGen's NRI business been? Even if you cannot give precise numbers, are there any indicative measures of growth you can share with us?

We do not breakdown our numbers by markets and segments. However for a sense of India’s HNWI growth, in the latest World Wealth Report 2013, released by Capgemini and RBC Wealth Management, HNWIs population in India recorded the second fastest growth of 22.2 per cent in 2012, after Hong Kong.  This was attributed to positive trends in equity market capitalisation, gross national income, consumption and real estate.

What sort of regulatory/tax/other challenges are associated in particular with NRI clients? How do they compare with other expatriate groups of clients, such as expat Britons, or Americans?

NRIs do not have any Indian tax obligation on their non-India assets. However they need to be fully tax compliant to their country of residence or tax residence as deemed applicable. The biggest difference with US investors is, US individuals are subject to taxes on their worldwide income. In any case this comment should not be construed as tax advice and taken as a matter of general opinion only as individual tax liabilities and circumstances may vary from person to person.

How many people at the private bank work with NRI clients?

We have about 45 staff in the South Asian team globally.

In what way does SocGen typically handle a NRI client? Are there a certain ratio of clients/RMs, or do you use a team-based approach in serving clients?

We have a strong team based approach where a South Asian client is supported by a team comprising the relationship manager and specialists in investments or wealth planning where appropriate. We have more than 40 investment specialists based in the region. In addition, wealth planners from our Singapore registered trust company, and from various other major jurisdictions advise wealthy families on succession and estate planning matters.    

What sort of segmentation do you employ (minimum sizes of investable assets, other characteristics)?

As a client segment by itself we tend not to further segment this market. A client needs to meet a certain minimum threshold in terms of investable assets, otherwise it will not be mutually viable.  As the global market manager, I work with our teams globally to develop this segment and employ best practices across markets. South Asian clients may have their businesses and families based in various countries, and they can choose to book their assets where it suits, be it Singapore, Luxembourg, London or Geneva.  

How does SocGen PB get its message out to potential clients?

South Asians are a close-knit community who often consult with family, friends and business contacts on decisions. It takes time to build relationships and gain their trust. It has helped that we have been able to develop long term relationships with our clients and they have referred others from their network to us.

What sort of products and services do NRI clients typically ask for and why?

Like any other segment, it is not possible to generalise South Asian clients. Their personal needs, preferences, risk tolerance etc determines the type of investment solutions and portfolios. It differs from individual to individual or between families.  Some common themes are their affinity towards India-centric investment opportunities, real estate and bias towards fixed income with real cash flow.

SocGen is well known as a firm with a strong investment engine, with expertise in areas such as structured products, derivatives, trading strategies and the like. Are these things that NRI clients look for in Asia?

South Asian clients understand and follow markets very closely. With access to strong buy side research and information they tend to remain ahead of the curve.

This means we need to have a full suite of products and innovative ideas to support their needs. At Societe Generale Private Banking our wide range of products and solutions addresses most of their needs and demands.

What would you say are the main challenges/opportunities in the NRI space in Asia for the next few years?

The South Asian market is growing rapidly, particularly the ultra high net worth individuals. This is a great opportunity and we have over the years, built up a dedicated team of bankers for this segment. However there remains a shortfall of banking talent who have the necessary experience and expertise to manage increasingly demanding clients. 

Are NRI clients a costly group to serve?

As with most clients, we need to spend time in nurturing relationships and understanding their needs.  As we generally say, we are here for a marathon and not for a quick sprint.  It requires investment of time and resources to build long lasting and mutually beneficial relationships.

Are there other points you would like to make?

One point I may want to highlight to wrap up the discussion is,  as you may have noticed, the South Asian/NRI client segment is an area most banks are investing heavily, with anticipation to scale up down the road.  The diaspora is growing; they are extremely mobile and amassing wealth. The numbers in terms of such population are very exciting, that makes the NRI client segment a compelling story with very high growth potential.