TMB Bank is looking for more fund-management partnerships, especially for foreign investment funds (FIFs), to tap the rising number of wealthy clients seeking high-risk investments.
Panadda Tanchanchiwin, team head of wealth banking at TMB, said the bank had seen a big change among wealthy clients between late 2012 and early last year, as they dared to invest in high-risk products, moving away from deposit products.
After establishing wealth banking in 2010, TMB now has around 23,000 wealthy customers with total assets under management (AUM) of Bt250 billion. At first these were small and medium-sized entrepreneurs who had conservative investment styles, so the investment portfolio was in deposit products. But in what the bank calls a “big change”, it has seen many successor clients, second-generation businesspeople, come to the bank with the desire to allocate their assets to higher-risk products including FIFs, she said.
“The second generation expects high returns from wealth banking and is willing to invest in high-risk products, following wealth bankers’ advice. The investment proportion of funds of affluent clients at present has climbed to 50 per cent, unlike four years ago when most assets under management were in deposit products,” she said.
TMB both offers in-house funds and acts as sales agent for two fund-management firms, UOB Asset Management and CIMB Principal Asset Management. It focuses on FIFs, especially those that invest in developed countries, in line with the global economic improvement.
The Bank of Thailand’s open architecture platform is a good solution for providing more funds to customers, as affluent clients now have more understanding of such investments.
“As a provider of wealth banking, we should have more funds to cater to various investment requirements to help customers see the returns they expect,” Panadda said.
Return on investment depends on risk appetite, and the average ROI from high-risk funds at TMB is 7-8 per cent.
TMB’s wealth-banking arm defines affluent customers as those with AUM of at least Bt5 million. Each year, their numbers and total AUM expand by 20-30 per cent.
Panadda said competition in wealth banking was serious because even though the number of rich people is small, their assets are important to banks.
Even though the bank has set its wealth-banking AUM minimum at Bt5 million, the average assets under management of its rich customers are Bt10 million.
She added that the bank might add upper-class customers to a new segment of wealth banking in the future if total AUM and the number of customers reach significant volumes.