UOB Thai focuses on ‘wealth banking’
UNITED OVERSEAS Bank (Thai) plans to increase its assets under management by 10-15 per cent per annum by wooing “wealth-banking” customers, defined as those with AUM of Bt1 million to Bt3 million.
Yuttachai Teyarachakul, head of personal financial products, said yesterday that this was an interesting segment for the bank because it is growing and is concerned about retirement security. Traditional banking provides returns of 1-2 per cent, which might not be enough for retirement security.
He said the AUM segment between Bt1 million and Bt3 million was largely untapped, as most banks went after people with AUM of more than Bt3 million.
UOB does too, with what it calls privilege banking. However, the number of Thais who have wealth of Bt1 million is expected to reach 1.5 million within five years, up from 1 million at present, a forecast that is attracting UOB to be active in this segment.
The bank last year initiated wealth banking and set up a wealth-banking centre, for which the number of customers is now 32,000, one-third of them new to UOB.
This segment needs financial advice, so UOB offers these customers the same advisory services as it does its “privilege banking” clients.
“We make wealth service affordable and available to the untapped target segment and use income builders to help them reach their financial goals,” Yuttachai said.
Wealth-banking customers are advised by UOB specialists, and their asset portfolios classified into three categories based on risk and return. For low-risk customers, return on investment will be 4-6 per cent. Moderate-risk customers’ ROE should be 7-8 per cent, while aggressive customers can see as much as 10-12 per cent.
Wealth-banking customers are different from the privilege-banking segment, who have enough money and have diversified risk already. Wealth-banking customers are advised to balance their assets to reduce the impacts from market volatility, he said.
The overall assets under management at UOB Thai are Bt210 billion, with privilege banking contributing 75 per cent of the total.
Yuttachai said that by focusing on wealth-banking customers and having more centres to cater to this segment seriously, within three years these clients should be contributing 17-18 per cent of the bank’s AUM, up from 10 per cent currently. Meanwhile the proportion for privilege-banking customers will drop to 70 per cent from 75 per cent, and that of mass-market customers to 12 per cent from 15 per cent.
Wealth-banking customers will help UOB Thai achieve annual AUM growth of 15-20 per cent, he said.
