Offshore Financial Services in Singapore 2010

Introduction

With money leaving traditional European offshore centers in the billions, understanding the nature of the rising offshore centers of Asia Pacific is critical. This report explores the offshore clients of Singapore and what strategies are best to attract and retain them making it a critical read, not just for offshore bankers, but also for their onshore competitors.

Features and benefits

Benefit from the findings of the unique Offshore Banks Survey 2010 conducted among banks in six offshore centers, including Singapore.
Understand the source of offshore funds held in Singapore.
Learn about the key product and service needs of your target customers.
Find out who the offshore competitors in the local market and understand strategies of the key competitors through case studies.

Highlights

The key products going forward will be those that allow offshore clients to invest in foreign currencies. The international currency markets have been particularly volatile since the beginning of the credit crunch and global recession, offering opportunity to generate return.

Bankers cited high customer service as a key reason their clients bank with them but few services are deemed to be a big draw for new clients. Only financial planning is seen as being able to attract a significant amount of new offshore business.

Your key questions answered

What is the source of the offshore funds in Singapore?
What products and services will best attract new offshore clients?
Who are the key offshore competitors active in the Singaporean market?

TABLE OF CONTENTS

Overview 1
Catalyst 1
Summary 1
Methodology 1
Executive Summary 2
The client base of Singapore and the Asia Pacific offshore centers is diverse 2
The beneficial tax regime and investment opportunity attracts most clients 3
Banks need to cultivate an investment product range centered around stocks and shares 3
High returns will ensure that clients retain their wealth offshore and at the same bank 4
Offshore Clients of Asia Pacific Offshore Centers 10
Introduction 10
The clientele of Asian international offshore centers are mainly drawn from Europe and Asia 10
Offshore clients have turned to Asian financial centers to take advantage of regional growth 15
The typical portfolio of an offshore client in Asia Pacific is more risk-tolerant than other markets 18
Offshore clients in Asia Pacific are sophisticated and open to new investment ideas if communicated properly 21
The client base of Asia Pacific derive their wealth mainly from entrepreneurship 26
Offshore Clients' Needs in Asia Pacific and Singapore 28
Introduction 28
Offshore clients of Asia Pacific offshore centers are looking for premium service from their banks 28
Government crackdowns and amnesties are having an effect even in Asian offshore centers 29
Few offshore investors require continual use of a bank's online services but it is an important element of the overall package 31
In two years' time demand for investment products, rather than services or credit, will be highest 33
Quality investment products are seen as the best way to gather new clients 36
Basic accounts only need to compete on return, with high interest rates a priority 39
Competitive Dynamics 42
Introduction 42
Expansion into Singapore has seen relentless increasing competition for offshore clients 42
Major players in the Singapore offshore market are providing full service propositions 45
Strategies for Success in Asia Pacific 53
Introduction 53
Giving clients high returns and confidentiality are the best strategies for growth in Singapore 53
Tax amnesties and regulatory changes are the greatest threats to the offshore client base 54
Datamonitor has identified seven key strategies for successfully servicing offshore clients in Singapore 56

Appendix 61
Ask the analyst 61
Datamonitor consulting 61
Disclaimer 62

LIST OF FIGURES

Figure 1: By assets under management, Western European clients still form the largest part of the client base 12
Figure 2: Most Western Europe-based clients in Asia Pacific live in France 13
Figure 3: Most Asia-based clients of Hong Kong and Singapore live in Greater China 14
Figure 4: French clients have been most interested in the opportunity that investment in Asia can bring 16
Figure 5: Chinese clients are drawn to the tax savings and investment opportunities 18
Figure 6: The portfolios of offshore clients in Asia Pacific are weighted towards equities and alternative investments in 2010 19
Figure 7: In two years' time, equities will be the largest asset category within the portfolios of offshore clients in Asia Pacific 21
Figure 8: Offshore clients in Asia Pacific are rated very highly in terms of their understanding of risk and return 23
Figure 9: Offshore clients in Asia Pacific have a higher anticipated appetite for risk in two years’ time compared to today 26
Figure 10: The majority of the offshore client base in Asia Pacific accumulated their wealth through business or entrepreneurship 27
Figure 11: Customer service plays a major role in attracting offshore clients to a bank 29
Figure 12: Offshore centers are uniquely vulnerable to policy risk 31
Figure 13: Most offshore clients in Asia Pacific use online services less than once a week 33
Figure 14: In two years' time, offshore clients in Asia Pacific are expected to show strongest demand for foreign currency investments 34
Figure 15: Most services are predicted to have below average demand from offshore clients going forward 35
Figure 16: Demand for credit that is not directly related to investing will be low in the future 36
Figure 17: Equities will be the chief way for banks to attract new customers 37
Figure 18: Few services are a big draw for offshore clients 38
Figure 19: Only personal loans are deemed to be a significant draw for offshore clients 39
Figure 20: High interest rates are what offshore clients value in a deposit account 40
Figure 21: Singapore-serviced offshore clients are less interested in high rates on their savings and more keen on avoiding fees 41
Figure 22: Citibank presents itself as a universal bank that just happens to be offshore 47
Figure 23: UBS's marketing is more streamlined and restrained 50
Figure 24: UBS seeks to appeal to all risk appetites with its structured products 52
Figure 25: Singapore-serviced clients will respond best to higher returns from their offshore investments 54
Figure 26: Evolving tax law and enforcement is the primary driver behind offshore clients onshoring their wealth 56

LIST OF TABLES

Table 1: Thinking of your offshore client base in Asia Pacific overall, how would you rate them for the following attributes? 24
Table 2: Selected regional GDP growth rates and forecasts, 2005–14 (%) 25
Table 3: Selected market leaders in the Singapore offshore market 46
Table 4: Citibank International Personal Bank (Singapore) selected investment accounts 48
Table 5: Characteristics of offshore clients of Singapore and suggested strategies for targeting them 57