Sarasin serves up Swiss offering to Asian clients

Not so Bank Sarasin, which manages SFr21bn ($25bn) for clients in Asia and the Middle East, a growing part of its SFr103bn global total. The big news from the Swiss bank’s headquarters on the 40th floor of Edinburgh Tower in Hong Kong’s Central district, where Asian CEO Enid Yip holds court, is that its Basel-constructed investment model will soon be introduced to local clients.

Preparations are well on the way for a September launch date for the new approach. “Our first goal is to bring in our Asian investors and to have briefing sessions for them on our Swiss investment philosophy,” says Ms Yip, a proud, plain-speaking banker who joined Sarasin’s home-grown Asian senior management circle in 2007, after making a name for herself running the Hong Kong branch of much bigger rival Credit Suisse. “Then, we take the opportunity to add some Asian flavours to the mandate.”

Ms Yip faces the same challenge as all of her rivals: how do you change the mentality of the trade-happy Asian investor, preferring a brokerage style operation, with regular “advisory” share tips, into a loyal, annual fee-generating discretionary client?

Sarasin has long been addressing this conundrum, with regular trips to the region from group private banking boss Fidelis Goetz, who remains somewhat cynical of rivals’ plans’ to hire hundreds of bankers in Asia, concentrating on fuelling advisory business. Instead, together with Swiss-based investment chief Burkhard Varnholt – like Ms Yip both men have worked for Credit Suisse and are very familiar with Asia – he decided to concentrate on leveraging an existing, successful discretionary investment process dreamed up in the bank’s Basel base.

The uphill struggle now confronting Ms Yip involves convincing her Asian clientele about the benefits of diversification away from a growing region which they know and love. Sarasin management acknowledges the bank had a “lucky break” in 2002 when an alliance with Dutch group Rabobank gave the Swiss automatic entry into Asia with the acquisition of two retail banking offices.

She claims Asian investors have been “very receptive” to the need for diversification and to buy into the type of sustainable, environmentally-friendly assets, which Sarasin has developed a strong track record investing in.

“Despite having been through the financial crisis of 2008, and our very own Asian crisis 10 years earlier, Asian investors have come to realise that it is easy for them to make money locally. This is a fact, if you look at property prices here. But is all of this sustainable? Property prices in Asia are outrageous. Will there be a bubble? As wealth managers, we have to tell clients there are good opportunities here in Asia, but don’t put all your eggs in one basket.”

Part of the client-education process involves introducing investors to thematic concepts pioneered by Sarasin’s London-based investment funds guru Guy Monson since the 1980s. “Thematic funds are a very new concept in Asia,” says Ms Yip, admitting to some tricky conversations with potential customers for her bank’s water and commodity-themed products. “Initially, they did not understand and thought it was an abstract concept. But since the Japanese disaster, people have been coming to us and asking for more information.”

There is also a sense that many clients are looking to the future and attempting to judge which markets are likely to be most prominent. “The Dow Jones and Hang Seng will not necessarily be the centre of attention any more,” says Ms Yip, adding that this desire to understand investments also relates to the question of whether they are socially beneficial.

Reflecting Sarasin’s belief and commitment to environmentally sustainable investing, Ms Yip will be including a default socially responsible investing (SRI) option for discretionary mandates in Asia, mirroring the development for clients in Europe, where very few have opted out of the bank’s preference for investing in companies run on ethical lines.

“Once we catch their attention for an hour or so, the majority of clients are very impressed with what we are proposing,” says Ms Yip, commenting that many of the new generation of Asian investors, offspring of older entrepreneurs, have worked in financial institutions and understand the concept of global investing.

“They respect our discipline and philosophy. This is totally different to what we normally see in Asia, where everybody jumps for IPOs and placements, without knowing anything about a company’s culture.”

The popular Western image of Asians happy to live in fast growth economies, churning out environmental pollution as unavoidable by-products of rapid industrialisation is far from the truth, believes Ms Yip.

“Asians are a lot more clued up about environmental issues than people realise. Even when we go to Shanghai, the concept is there,” she says, referring to China’s smog-shrouded port city. “It is just a matter of educating people. When we talk to them about our themes of power, energy and water these days, it automatically clicks. Five years ago, it was just too far fetched for them.”

But she does concede that as yet, there are not enough Asian companies providing the detailed information which Sarasin’s investment staff need to include them in an SRI mandate.

“Asian companies will eventually be influenced by broader investment trends,” she says. “If they are not providing the required level of information, a lot of investors will not be prepared to invest in them, so the market will be their best educator.”

CV

Enid Yip

2011 Prepares to launch European portfolio service to Asian clients

2008 Promoted to CEO Asia for Bank Sarasin

2007 Joins Bank Sarasin in Hong Kong as Vice Chairman Asia

2004 Took over running Hong Kong branch at Credit Suisse, the first female to hold this position

2000 Promoted to market leader for Hong Kong at Credit Suisse

1998 Joins Credit Suisse Private Banking as relationship manager

Pre 1998 Banking roles at Creditanstalt, Bank Indosuez and Chase Manhattan

Cherry-picking from the top

In a tough Far Eastern recruitment market, Sarasin, still considered something of a boutique operation, will typically search for small numbers of staff from larger competitors. “We will never go out and tell the press we are about to recruit 100 or 150 relationship managers,” says Ms Yip.

“We don’t’ want to hire just for the sake of hiring, so we use the approach of cherry-picking top-notch private bankers. We are looking for those people who don’t come round every other day, so we spend a lot of time talking to them before they join. If you hope to hire seasoned bankers, they want this to be the last place they work before retiring.”

As business models have changed in leading banks, to a more commoditised, product-driven approach, some very high quality people have become disillusioned and made themselves available, claims Ms Yip. “We have to trust that our bank will support these people. They all come from very big banks and are used to efficient platforms and sophisticated products.”

Yet the “one bank” cultures of other Swiss groups such as Credit Suisse and UBS, where investment banking and asset management work hand in glove to make more money from cross-selling to each others’ clients, has alienated some of the best relationship managers, she believes.

“We became a distribution agent for captive clients of the investment bank,” Ms Yip recalls of her time at Credit Suisse. “From the P&L perspective, it makes sense, but it should be up to the clients themselves to tell us if they want to link up with the investment bank, not for us to tell them.”

Enid Yip