Asia's private banks receive income boost as discretionary mandates mount

The set-up is more lucrative than a pay per trade basis.

Bloomberg reports that private banks in Asia have discovered that a greater number of their ultra-rich clients are more open to giving them discretionary mandates as the volatile stock markets widened losses and pushed investors towards institutions. 

This set-up is more lucrative for the bank as clients hand over lump sups and let the bank manage the money for a fee to generate a recurring income stream as opposed to having customers pay per trade.

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“Wealthy individuals here in Asia, over time, realise that they can’t beat the market in such a fantastic way as their egos might tell them,” Steven Fong, head of mandate solutions for Singapore at Credit Suisse Group AG’s Asia Pacific private bank told Bloomberg. “More clients tend to give discretionary mandates a chance after every market crisis.”

The assets managed under Credit Suisse’s bespoke mandate business have been growing by about 20% a year in Asia since 2014 whilst roughly a fifth of regional client assets are managed by JPMorgan Chase & Co.

UBS is also aiming to increase the proportion of Asian client assets in mandate accounts to 18% by 2021 from 13% now, according to Stefan Lecher, head of global mandates investment solutions for Asia Pacific. “From a profitability perspective, the trend towards the discretionary mandate more broadly is very essential for UBS,” he added.. 

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