Asia’s banking industry achieved a record number of assets under management last year, according to a report by
Bloomberg’s Alfred Liu. He cites data from an
Asian Private Banker report that says that assets managed by 20 of the region’s top private banks rose by 6.1% to reach $1.55tn, compared to a contraction of 4.7% in 2015 as a result of sluggish economic growth and increased regulatory pressure.
The record figure was supported by Bank of Singapore’s purchase of Barclays’ wealth management assets in Singapore and Hong Kong, boosting its managed assets by 44% to $79bn, and Union Bancaire Privée’s acquisition of Coutts International, which saw a substantial rise in the business’s managed assets, from $774m in 2015 to $11.8bn in 2016.
UBS Group AG retained its leading position in the ranking, holding $286.4bn in assets, while Citigroup came in second with $218bn.
“Private banks have been seeking to expand in the Asia-Pacific region, where individual wealth surpassed that of North America for the first time in 2015,” says Liu, referencing research by Cap Gemini SA. Merger and acquisition activity and heavy hiring also “had a positive effect on a number of banks in terms of scale,” he adds, quoting
Asian Private Banker editor Sebastian Enberg.
Bloomberg article
Boosting bondsSingapore, in particular, is an attractive market for those wishing to tap into the developing financial sector and affluent population. The International Bank for Reconstruction and Development (IBRD), part of the World Bank Group, recently announced that it was “working with arranger DBS to find a suitable structure for a retail bond offering” in Singapore, according to
Reuters’ Daniel Stanton and Kit Yin Boey.
The IBRD has been considering selling Sustainable Development Goals (SDG) bonds, “which support the UN drive to end poverty, protect the planet and ensure prosperity for all”, says the report.
In March, the World Bank raised €163m from the sale of 15 and 20 year, capital-protected SDG bonds – where return on investment is linked to the performance of stocks in the
Solactive SDG World Index – to institutional investors in France and Italy. However, the Singaporean target market may not be so simple, with “only plain vanilla structures” allowed. In Singapore, current regulations only allow private wealth to purchase these bonds, not retail.
$1.55tn
The value of assets managed by 20 of Asia’s top private banks in 2016
But, according to George Richardson, director in the capital markets department at the World Bank treasury, who is quoted in the article, the organisation is in talks with the Monetary Authority of Singapore (MAS) about a “potential exception”.
Debt bankers have welcomed these efforts to boost the Singaporean market, but remain doubtful about the feasibility of a retail bond. “It is simple: Singapore investors want yields,” says a syndicate banker, who is also cited. “A World Bank bond will pay a very low yield, probably lower than deposit rates.” While negotiations are ongoing, it remains to be seen if these efforts will reach fruition.
Reuters article
Going greenGreen bonds, used to finance projects that have a positive impact on the environment, are also making waves in the region. After a thorough investigation into how they could support Singapore’s wider agenda of becoming the principal Asian financial hub, as well as ensuring a supportive regulatory environment and co-ordination among all stakeholders, the MAS has decided to proceed with setting up the green market. To boost this new asset class, the MAS will be offering grants to issuers to offset up to S$100,000 of green bond costs from June onwards, writes Judith Tan in
The Business Times.
China has powered the growth of the green bond market in recent years, with its latest five-year plan focusing heavily on the development of green finance. The country began its focus on the sector three years ago and, as of last year, green bonds by Chinese entities had risen to 40% of the global total.
Many believe that Singapore could have similar success. The country is looking to “introduce new benchmarks across different asset classes amid signs that sustainable investing can pay off”, writes Tan. “Investors are allocating more capital to sustainable businesses, and Singapore's investment giants Temasek Holdings and GIC are also taking sustainability into consideration when evaluating investments.”
Arunma Oteh, vice president and treasurer at the World Bank, who is cited in the article, believes Singapore could use its technological experience to enter and support the green bond market. The grant scheme “will help issuers defray costs such as second opinion, impact reporting and third party verification,” she says. “That's an incentive that is well-founded and should help encourage corporates to issue green bonds.“ Millennials also have a big role to play in the success of the green market, says Oteh. “Millennials inspire innovation, and companies that focus on millennials think differently about their businesses, have a competitive edge and are able to prepare their businesses for the future.”
If successful, the endeavour could not only bolster Singapore’s financial sector, but also contribute positively to the global fight against climate change.
The Business Times article
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