Coutts & Co,
the private banking division of RBS, is remodelling its strategy in
Asia as part of ongoing attempts to reposition the bank and its
brand.
Earlier this month, the
international arm of the private bank, formerly called RBS Coutts,
dropped RBS from its brand and is now being marketed under Coutts
& Co as part of a single global brand.
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The rebrand is part of a broader
rethink around the way it segments and services clients, according
to Nick Pollard, chief executive of RBS Coutts in Asia.
Private banks across the region are
struggling with rising cost-income ratios, with revenue impacted by
less active clients and costs remaining stubbornly high because of
wage inflation.
One of the cost pressures in Asia
is the number of clients that are being serviced by private banks
which are below their usual wealth threshold, usually around $1m or
$2m.
Providing services to these
individuals is costly because they tend not to generate the level
of fees needed for wealth managers to operate profitably.
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By GlobalData
Stronger
segmentation
Pollard is
addressing this problem at Coutts by creating a bigger differential
in service levels between segments, particularly at the lower
end.
Coutts’ usual range for client
wealth is between £0.5m and £75m ($0.8m to $121m).
Within this, its core market is in
the £1.5m to £10m bracket, which is to be operated under a division
called Private Wealth.
Clients with £10m or more of
investable assets will be able to access the bank’s Private Office
services, which will offer lower client loadings and in some cases
coverage from Coutts and RBS’s corporate and investment bank.
The key challenge for Pollard is
how to deal with clients under the £1.5m threshold. Coutts is
calling this segment Private Banking but is not targeting growth at
these levels.
Instead, Pollard is looking for
ways to service its clients in this bracket more cost effectively,
while still allowing them to have a good customer experience with
Coutts.
“The issue for us is they are part
of the Coutts franchise and we want to make sure they get serviced
properly,” he says.
“We also have to do that in a
commercially effective way. Some of that will be using technology;
some of it will be using slightly different approaches to that
market. But all of it will be to make sure the client is still able
to say they have an account with Coutts and it operates in a way
that suits them,” Pollard adds.
Too thinly spread in
Asia
Pollard is also reorganising the bank on geographical lines. He
says the bank is currently too thinly spread across Asia, operating
in a number of markets where it does not have the scale to offer
the platforms and services in a cost-effective way.
He is rationalising Coutts’
footprint in Asia to focus on a revised set of “core markets” in
which he believes the bank can expand market share.
These markets are onshore Hong
Kong, China, Taiwan, onshore Singapore, Indonesia, India and a
global non-resident Indian proposition run out of Singapore.
“It doesn’t mean we won’t have
connections or clients in some of the other countries around the
region, perhaps notably Thailand and Malaysia, etc,” he says.
“But they won’t be top of our
priority list. We will be focused on growing the business in those
core markets,” Pollard concludes.
Costs, including expenses around legal fees, travel and hiring,
are among the reason he gives for the more consolidated
geographical approach.
The strategy is part of an attempt to grow Coutts’ number of
international clients to around 60% of its total, up from around
40% now.
