Forget Swiss bank accounts, having an offshore Singapore bank account is now the rage amongst the super rich.

If you noticed more Lamborghinis and Ferraris revving up Singapore’s roads lately, don’t be alarmed. It’s just the super rich making Singapore their playground. According to Boston Consulting Group’s latest Global Wealth Report, released September 2008, Singapore has the highest density of millionaires in the world, with an astounding one in 10 households having an investible asset of US$1 million or more. This is followed by Qatar, Switzerland, United Arab Emirates and Kuwait. Even the United States pales in comparison, ranking sixth.

“Singapore is going through a major transformation. It is going upscale and is getting into the highest league of world’s hot spots for the high net worth individuals. It is going to be a happening place, a non-stop party cosmopolitan city. There are many more upscale and very high-end residences and condos coming up, that just a few years back were simply nonexistent, creating more choices for the real rich,” Alex Shlaen, founder of Panache Management, explains.

Singapore has always set its sights on attracting the rich. In 1993, the Urban Redevelopment Authority (URA) approved the Master Plan for Sentosa Cove to develop über luxurious residences. In 2005, the Singapore government announced plans to develop two casinos - the Marina Bay Integrated Resorts and Resorts World at Sentosa. To support the expected arrival of the wealthy, the Singapore Tourism Board (STB) announced more plans to develop the cluster of six islands near Sentosa into a hot new destination in 2006, possibly a super exclusive enclave for billionaires much like Italy’s Isle of Capri or Dubai’s The Palm Island. And why not? Sentosa Cove’s success has witnessed its residential property prices increasing 75 percent since the first homes were sold there in 2003. Some 60 percent of its buyers are wealthy foreigners.

Ironically, the financial scandal that is currently rocking Switzerland, is expected to bring more of them to our shores. In November 2008, Switzerland’s flagship bank, UBS, became the target of a US probe, which alleged that its wealth management chief Raoul Weil helped 17,000 Americans hide about US$20 billion of dollars in offshore Swiss bank accounts. Weil was subsequently charged along with other unidentified UBS bankers, leaving many investors to look elsewhere to park their funds – Singapore.

“In Europe the changing private banking regulations are scaring the high net worth, while here in Singapore the stability of the regulations and the banking sector’s proven success to withstand this massive world economy storm is a magnet for big private banking money,” Shlaen says. “The financial markets and real economy look really bad, especially for the west. Now, many feel that it will take more time for the west to recover then estimated earlier. However, recovery will come eventually. The more the situation deteriorates, the more dramatic the recovery will be. Asia is well positioned and will be a strong engine of the world recovery, with bigger share of money coming in, more than ever before.”

The recent Merrill Lynch Capgemini Wealth Report supports Shlaen’s comments. It estimated that global high net worth financial wealth will grow at an annual rate of 6 percent to reach US$44.6 trillion by 2010. Asia is expected to reach US$10.6 trillion by then, close to the European wealth market. These trends favour Singapore as a leading wealth management centre and so far, the results are promising.

According to the Monetary Authority of Singapore (MAS), total assets under management (AUM) in Singapore’s fund management industry has grown from about S$280 billion in 2000 to more than $600 billion as of 2007. The growth in private banking AUM has been strong, with anecdotal feedback suggesting Singapore private banking AUM averaging 20 percent per annum over the past few years to about US$200 billion currently.

In March last year, Macquarie Bank officially launched its Asian private wealth business with its first office in Singapore. The business is headed by one of Asia’s leading private wealth advisers, Joseph Poon, former JP Morgan Private Bank head for South Asia.

“The decision to establish Macquarie Private Wealth Asia in Singapore followed extensive
consultation with the Singapore market over the last several years,” Guy Hedley, head of Macquarie Private Bank Australia, says.

“Singapore is the world’s fastest growing private banking and wealth management centre and in the future will be one of only two global private banking and wealth management hubs, the other being Switzerland,” Poon says.

While the MAS’s 2008 figures aren’t available as yet, banks in Singapore are hiring wealth management staff in Singapore to cope with the demand now that jobs cuts are happening in London and New York. According to Kees Stoute, managing director of EFG Bank Singapore, the hiring of wealth management staff has increased

“It has increased by 30 percent as of 2008 and is set to continue growing. When it comes to managing wealth, EFG distinguishes itself more through its business model rather than through its products,” Stoute says.

While wealth management centres may be flourishing in Singapore, banks are facing a daunting task ahead in winning back investor confidence. Already, several high net worth investors have seen their wealth eroded due to the current economic crisis, bad product selling and making misinformed decisions. As such, independent financial advisory firms are slowly gaining headways as they tend to be less biased in their financial advisory process, are not obligated to any particular product providers and will not professionally accept deals and sponsorships. One such independent firm is PromiseLand Independent Pte Ltd, who has increased hiring of its financial advisers targeting for growth in 2009 and armed with an impacting range of products to support the Accredited Investors’ (see box for explanation) market.

“Between last year and this year we have increased our hiring by 40 percent. Ten percent of our advisers’ clients comprise high net worth individuals, translating to 40 percent of their total business contribution,” Benedict Tan, manager for PromiseLand’s business development & operations, in an exclusive interview with Property Report, said.

However, Stoute is confident that banks with healthy balance sheets will ride out the storm. As of 30 June 2008, EFG Bank’s net profit was CHF 178.7 million, up 13 percent year-on-year.

“EFG Bank is sound, solid and robust – our healthy balance sheet speaks for itself and this gives comfort to investors,” he concluded.

Where to invest in 2009?
In light of the economic crisis, banks are understandably reticent when asked about their opinion. One such bank is ING Private Banking Asia Pacific.

“We are not able to recommend specific private banking products to the public, hence unfortunately am not able to provide specific answers to this question,” Renato de Guzman, its CEO says.

However, Property Report managed to speak to a few experts on their investment advice.

According to EFG Bank’s senior investment managers, Harmen Overdijk and Lodewijk Lamaison, several markets to look into include the commodities and energy market, amongst others.

“We believe Asia will actually recover sooner than the rest of the world. The Asian economic fundaments are currently much stronger than during the Asian crisis. We also expect commodity and energy prices to start rising again. Many governments have announced to spend money on large infrastructure projects to stimulate the economy. We would recommend investing in infrastructure, materials and mining companies. We would also recommend investing directly in energy or alternative energy, for example through nuclear technology. In the current market liquidity and transparency are key words for any investment, so we would recommend building exposure through Exchange Traded Funds or selectively through very well established mutual funds,” Overdijk and  Lamaison, say.

According to PromiseLand’s associate director of private wealth, Venugopal V Nair, India is the market to look into.

“In the last year the currency in India has depreciated by 20 percent. The market has come down form the by more than 55 percent. There are a lot of developments in India and at this point, the value of the market is attractive. The Satyam case will improve corporate governance, which would instil better confidence in the market, leading to tighter regulations while existing companies will improve their current procedures,” Nair says.

Nair also says investors may want to consider the UK’s Brandeaux Student Accommodation Fund, which specialises in ground rent and student hostels. The fund has a geographically diverse portfolio across the UK that totals over 15,000 beds in residences located in 18 major university towns and cities.

“This fund has very little correlation to market conditions as it is focussed on student hostels. All the properties are leasehold owned by Dukes, Lords and nobles. The company buys this rights from people with these land titles. The student hostels are located in prime area like in London. They sell the units, you buy the units from the company – income from ground rent and extending the lease. The fund is always performing as there are students all the time,” Nair says.

Another private wealth manager from PromiseLand, Edward Eu, says high net worth investors might want to look at Prestige Funds and Superfunds.

“Prestige funds deal with agricultural products. If you go back to the basics, agriculture is still important,” Eu says.

Meanwhile, Superfunds are trend following fund dealing with commodities and indexes.

“Individuals can profit even if there are markets downturn or upturn,” Eu says.

As in all investments, there are risks involved. Thus, investors will need to seek additional advice from their respective banks and their financial advisers.

Macquarie Private Wealth Asia
Macquarie Private Wealth Asia is a division of Macquarie Private Bank and provides wealth management and full service investment advice to meet the unique needs of the wealthiest individuals and families.

Macquarie Private Wealth offers wealth management, wealth preservation and holistic investment advice, delivering a unique range of services including portfolio management and investment advice covering assets such as private equity, bonds, equities, absolute return funds, property and cash. It also covers global co-investment opportunities, investment and entity structuring, estate planning and philanthropy, amongst others.

“Macquarie private wealth model will provide ultra high net worth clients with access to exclusive deal flows that are normally only available to institutional investors,” Guy Hedley, head of Macquarie Private Bank Australia, says. Requirements: Individuals or families will need to have greater than US$30 million in investment assets. www.macquarie.com/sg/en/private_wealth.htm.

EFG Private Bank Singapore
EFG Private Bank Singapore is part of EFG International, which is a global private banking group offering private banking and asset management services, has headquarters in Zurich. EFG International’s group of private banking businesses currently operates in more than 30 countries in the world. Its private banking activities encompass banking and credit, financial planning, investment management, offshore trust and company formation and management.

“Like most other private banks, we offer all the best products that are available in the market but we distinguish ourselves by focussing on nurturing long-term relationships rather than on sales of  products. We don’t just believe that relationships are fundamental to private banking, our entire Bank is organised around that belief,” Kees Stoute, managing director of EFG Bank Singapore, says. Requirements: Clients must have a net worth of at least S$3 million. www.efgl.com.

ING Private Banking Asia Pacific
ING Private Banking has a global network of over 2,000 private banking professionals, managing 55 billion euros for their clients in 15 countries. As a client, you will have access to the resources and strength, of ING Group, with over 860 billion euros in total assets.

“ING offers Private Banking services which means that above a certain level of wealth, you need customised advice from someone who understands your unique circumstances. For example, your fiscal position can be quite complicated. ING Private Banking provides specialised tax guidance for this. Or, you may have assets in several different countries and currencies, ING Private Banking provides international portfolio management platforms. Or, you sometimes need specialised loans for one-off situations, ING Private Banking offers personalised credits and leasing services,” Renato de Guzman, ING Private Banking Asia Pacific’s CEO, says. Requirements: Clients must have a net worth of at least US$1 million. www.ingprivatebanking.com.

Alternative Wealth Management Centre: PromiseLand Independent Pte Ltd
PromiseLand Independent Pte Ltd is a full-pledged, multi-platform company providing financial planning, financial advice for investment and also insurance broking for life and general insurance. As an independent financial advisory firm, they have a wider range of financial instruments and products unlike banks which will only sell their products. Recommended financial instruments will be objectively based on best fit to investment objective of each individual. Its financial advisers are licensed by the by the Monetary Authority of Singapore (MAS).

“Our advisers are experienced, professionally trained and certified. Products on their platform are researched, checked and only if they are fully comfortable with the instrument, it will be rejected,” Benedict Tan, PromiseLand’s manager for business development & operations, says. Requirements: Individuals will need to qualify as an “accredited investor”, meaning net worth of S$2 million or more or S$300k per annum in income. www.promiseland.com.sg.

Top ten private bank and wealth management centre for ultra high net worth individuals (US$30 million and above) in 2008.
Citigroup
Goldman Sachs
UBS
Credit Suisse
JPMorgan
Morgan Stanley
Merrill Lynch
HSBC
Pictet and Cie
Deutsche Bank
Source: Euromoney