Global Private Bank Services to Affluent Asians

AILENE M. LITONJUA

Chief Representative

HSBC Private Bank (Suisse) SA

Manila Representative Office

The Market Size

Market Size Based on Total Assets • By 2015, the Philippines will be one of the largest numbers of HNI – those with

$1million or more investable assets in Asia. • The Philippines belong to the Top 10 Asian Millionaire Nations by 2015• 38000 Filipino millionaires by 2015 with total net worth of $164B (Julius Baer)

Sources: Julius Baer, Swiss Private Banking Group, www.pinoymoneytalk.com, September 2011 Asia Pacific Wealth Markets Database by Datamonitor, December 2011

The Market Size

Sources: Julius Baer, Swiss Private Banking Group, www.pinoymoneytalk.com, September 2011 Asia Pacific Wealth Markets Database by Datamonitor, December 2011

The Market Size

Source: Asia Pacific Wealth Markets Database by Datamonitor, December 2011

Market Size Based on Liquid Assets

•In terms of liquid assets, the USD3M+ band will grow from 23.9B (2011) to 35.6B (2015)•In the Philippines, the number of individuals with liquid assets of USD 3 million and up is estimated to be around2,700. Liquid assets (or also called liquid wealth) are defined as direct holdings in the typical retail savings and investment classes, including deposits plus cash outside of banks, direct holdings in quoted stocks and shares, direct holdings in government and other bonds, mutual funds and other collective investment schemes

Market Segment Psychographics

• Core Values and BeliefsNeed State: Self-actualization, building a legacy

– Optimistic about the future– Want a holistic and well-balanced life so keeps on improving self– Contented with life– Family and children are very important– Enjoy taking challenges

• Financial ManagementWealth Goal: Legacy WealthType of Saver / Spender: Compulsive and Big Savers, Frugal Spenders

– Always save money– Financial goals are long-term– Willing to pay extra for quality

Source: Quantitative and Qualitative Profiling Study on HSBC’s Customer Segments, March 2009, Ipsos

Private Bank Players in the Philippines

Local Banks offering

Private Banking Services

• Bank of the Philippine Islands

• BDO Private Bank

• Metrobank

• China Bank

Foreign Banks offering Private Banking Services

Union Bank of Switzerland (UBS) Credit Suisse JP Morgan Chase Bank of Singapore Morgan Stanley Citibank HSBC

Source: Bank Websites

Breadth of Private Bank Services

Investment Services – Offering & Approach

• Investment services make available a wide range of investment vehicles from around the world, including bonds, equities, derivatives, structured products, mutual funds and hedge funds.

Offering Offering

• Client-driven Investment Services

• Discretionary Management by Managers

• Alternative Investment Services

• Client-driven Investment Services

• Discretionary Management by Managers

• Alternative Investment Services Approach Approach

• Unrestricted access to the world’s financial opportunities through in house research & open architecture

• Selection and validation of “best of breed” investments based on your individual needs and investment strategies

• Sharing of international expertise due to worldwide network of offices & institutional knowledge

• Unrestricted access to the world’s financial opportunities through in house research & open architecture

• Selection and validation of “best of breed” investments based on your individual needs and investment strategies

• Sharing of international expertise due to worldwide network of offices & institutional knowledge

Investment Services : Strategic & Tactical Approach

Investment Services – Sample Allocation Model

Other Specialist Services & Wealth Solutions

• Addresses wealth-related personal and family situations to enhance opportunities for clients and their heirs

– Help clients preserve wealth, avoid probate formalities, enhance privacy and manage tax and succession issues

– Takes into account the international aspects of client’s life

• Trusts

• Insurance Services

• Foundations

• Family Office Advisory

• Corporate Finance Advisory

• Wealth and Tax Advisory

• Specialist Property Advisory

• Advisory on other wealth management aspects such as Charities and Foundations

Specialist Services: Family Office Advisory

• Clients with complex, international financial affairs require advice and service that is globally integrated

• The Family Office team takes advantage of both the skills and the international reach to provide expertise in three core areas:

– Wealth preservation

– Wealth management

– Special client services

Critical Path Questions – Client Profiling

• What financial and non-financial assets do you own? In what countries?

• Who do you want to benefit from your estate, when and in what proportion?

• Who would you want to manage the distribution of your estate? Do they have the time or experience to handle this task?

• Who will care for your dependant children? What provisions do you need to make for educational and living expenses?

• What are your family’s liquidity needs?

• What is your anticipated estate tax liability? How will that liability be paid off?

• Do you have any philanthropic interests?

Family Office Advisory

• In order that the client’s needs are addressed in the best way possible, they will have access to an extensive range of products and services – Tax advisers, lawyers and accountants– Trust and estate planning– Corporate finance, mergers and acquisitions– Custodians, banks and investment managers– Service providers from school advisory to art professionals– Insurance providers– Real estate advisers in both commercial and residential– Philanthropic services

In Summary

• Affluent / Hi- Networth Individuals need specialized platforms for their investment needs to diversify critical size of wealth

• Financial Services companies need to cater to their special set and growing needs

• Legacy and succession planning are key to perpetuate family enterprises

"Should you find yourself in a chronically leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks.“ Warren Buffet

Disclaimer

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The scenarios mentioned in the presentation are based on certain assumptions and have no regard to the specific objectives, financial situation and particular needs of a person.

This presentation is not, nor is it intended to be, nor construed as, advice or an offer or solicitation to buy or sell any investment or subscribe for, or to participate in, any services. PBRS is not recommending or soliciting any action based on it. The views expressed in the document are those of PBRS and may, from time to time, differ from the research views of other companies within the HSBC Group.

PBRS has based this document on information obtained from sources it believes to be reliable but which it has not independently verified. PBRS and the HSBC Group make no guarantees, representations or warranties and accept no responsibility or liability as to its accuracy or completeness. The information stated and/or opinion(s) expressed herein constitute best judgment at the time of publication and are subject to change without notice.

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