Julius Baer’s Meier Says Future for Advice Is Local
Veteran banker says India purchase reflects client demand for onshore private banking advice.
Julius Baer’s Asia Pacific head Thomas Meier is preparing to leave Asia after 20 years, but he isn’t leaving Asia behind. The veteran banker, who also worked at Credit Suisse and Deutsche Bank, will continue to oversee Julius Baer’s India operations, which it bought from Merrill Lynch, and Meier suspects that once he arrives in Zurich he will be the Swiss bank’s “Asia man in Europe.”
“Having a partner there than that can talk with certain expertise and authority on Asian-related issues I think is a big advantage,” says Meier, age 53, sitting down to reflect about moving on from a conference room in the bank’s Hong Kong office in the International Finance Centre. That’s not only because more than 20% of the bank’s CHF297 billion (about $277 billion) assets under management are in Asia, but because a lot of Asian money is flowing to Europe.
Jimmy Lee, most recently Credit Suisse’s market group head for Hong Kong, will step into Meier’s role in January, becoming a member of the bank’s executive board.
Ten years ago, when Meier took the reins of Julius Baer’s new Asia operation in 2006, after a brief stint as head of Deutsche Bank’s private bank in Luxembourg, there were only a couple dozen people working European hours in the former offices of Banco di Lugano in the Suntec City complex in Singapore, a bank without a single Asian client. Julius Baer had bought the small Swiss private bank as well as two others from UBS the previous year.
In size alone Julius Baer has come a long way in Asia. It now has more than 1,000 employees working in its booking centers in Hong Kong and Singapore, as well as additional staff in offices in Tokyo, Jakarta and Shanghai. In September, Julius Baer finally closed its purchase of Merrill Lynch International Wealth Management’s Indian business, with assets of more than CHF6 billion.
The Indian transaction reflects a shift in how private banks in Asia may begin to approach clients, that is, more on their home turf than in offshore hubs like Hong Kong and Singapore. As more countries require their banks to share information about their clients with other countries, the advantages of holding capital in offshore bank accounts will diminish.
“The so-called onshore and offshore relationship will become, over time, not that meaningful anymore,” Meier said at a fall gathering of private bankers in Singapore.
Julius Baer’s strategy is to be in what it considers strategic markets like India, a nation the bank estimates will experience nominal GDP growth of nearly 14% in 2016, leading to 16.4% surge in wealthy individuals.
“We want to be close to clients and that means you want to be onshore,” Meier says. “It is pretty underdeveloped, it’s very embryonic in that sense, so it will probably require five to 10 years to get to a stage where we can really deploy the same level of services that we have [elsewhere] in Asia.”
The Swiss Bank bought Merrill’s wealth management business outside the U.S. in 2013, acquiring a total of about CHF60 billion in client assets, mostly in 2014. About half the total assets were in Asia, the “crown jewel” of the purchase, according to Meier, who is credited with successfully meshing the U.S. brokerage into the Swiss private bank in Asia.
A perceived cultural gap between the banks, one that worried the bank’s shareholders, didn’t exist, Meier asserts. Many Merrill bankers had been at the firm for 20 or more years with customer relationships going back that long. “They took care of their clients, all of these years,” Meier says.
To Meier, what sets Julius Baer apart from other banks in the region is the fact it is solely a private bank. The institution doesn’t have an investment bank or a commercial bank, and since it sold GAM in 2009, it hasn’t had an asset management arm like its Swiss peers Pictet and Lombard Odier.
“If you don’t have in-house manufacturing of funds that you have, or other products that you distribute through the investment bank, it helps you be much more objective in the way you select things, and you can really look at the client’s interest,” he says.
And for clients, if you turn to an investment bank to underwrite a debt deal for your company, you may feel pressure to use its private bank services for your private wealth, a situation Meier says can ultimately create conflict in a relationship. “It’s never good if you force clients into a particular service that has nothing to do with the other, but happens to be within the same organization,” he says.
Yet, for a private bank, being part of an organization working with business owners on financing puts you in contact with potential customers. To fill that gap Julius Baer has formed strategic partnerships with Macquarie Bank, Bank of China and with Bank of America Merrill Lynch.
Over the years, Meier has experienced changes in how Asians manage their wealth. When he arrived 20 years ago, customers tended to spread their wealth across even more private banks than they do today – ten on average versus five now – and they treated the banks as vaults, places to protect their money, investing only in the most conservative of products. Today, clients have become more sophisticated about investment options, but also investment risks in the wake of the global financial crisis and the Asian financial crisis.
“The investment universe got more complex,” he says. “You need to work with clients on the fact that they understand the implications of certain investment decisions.”
But the business is the same in many ways. “You need to build a level of trust in order to win these clients, that’s still key in private banking and what has not changed is that the client expects performance, positive performance,” Meier says. “You don’t always need to be on top, but you need to be able to explain why certain things are in place. But in the end, if you consistently miss, and you do not deliver, that’s the end of it.”
By returning to Zurich, Meier will be putting an end to six years of commuting between Singapore and Switzerland, where his family remained after several years of living in Singapore and Hong Kong. And it puts him closer to Herdade da Cardeira, the vineyard he and his wife Erika own in the Alentejo Province of central Portugal. The vineyard fulfilled a dream of his “to produce something tangible,” and he jokes, means he may not need to ever retire.
But since Asia has been his second home for so long, and because he will continue to work with clients in India and with the non-resident Indian population, many of whom bank out of Singapore, his ties with Asia will hardly be cut. And, he says, “privately, I will be here quite often, this is home.”
