HSBC Private Bank leans on broad suite of services to partner ultra-rich families and entrepreneurs

From growing their businesses to navigating new challenges and planning wealth transfers, they need a holistic partner with broad and deep capabilities such as HSBC Private Bank to help them sail through every milestone.

In the initial stages, as entrepreneurs grow their businesses, their families could expand as well in absolute size and frequently, in their involvement in the businesses. As UHNWI entrepreneurs and their families set up family offices, they are adopting the investment and asset management models similar to those that institutional investors practice.

In the process, they become more knowledgeable and demand more from the private banks they engage, says Tommy Leung, HSBC’s Head of Global Private Banking, South Asia. They require a full spectrum capability – a banking partner with both private and institutional offerings – which HSBC is well-positioned to provide.

“With the growing number of family offices in Singapore over the last 10 years, they are being professionalised. They expect more institutional-like coverage, as opposed to the traditional wine and dine type of private banking relationships.”

These entrepreneurial families need support that could span from expanding the business’s footprint in other markets, to exploring ways to raise capital and hedging their foreign currency exposures. These are above and beyond what a traditional, pure-play private bank can provide.

“Our big clients are always thinking about their operating company, whether it’s cross-border mergers and acquisitions, optimising their capital structure or raising debt and equity. A lot of these are not traditional private banking topics. So if you put a banker who ‘grew up’ in the private banking world and hasn’t acquired new skills, they would struggle to understand what the client is looking for,” Leung explains.

Hence, it is important that private banks can bring in executives with investment banking and capital market knowledge to the table.

Leung points to Kerri Lim, Head of Asia’s Ultra High Net Worth segment at HSBC Global Private Banking, who joined in March 2024 with long-standing experience in investment banking in global markets. Sharnika Silva, Head of Trust and Fiduciary Services, Southeast Asia, also helps support and deliver services such as trust structuring and administration for both private and charitable trusts, as well as estate planning for UHNWIs and entrepreneurial families.

Bringing a team with experience in the various types of banking services is especially important for entrepreneurial clients with established businesses that have expanded to involve many branches of the family, or even related families.

“It’s easy when we talk to one family at the top initially, but as the families transition, they may have a few families in the second and third generations. What each family wants to do is different. So from one relationship, it could end up to be four relationships,” Lim explains.

Apart from operating their businesses, entrepreneurs are also tackling two key transitions.

Transitional challenge

The first is business transition, as it could face fresh demands such as that for greater environmental sustainability after decades of development.

“If you look at countries like Malaysia and Indonesia, a lot of the wealth was created in the natural resources sector, coal mining, oil and gas, palm oil and so on. Historically, these were fine. But over time, there’s greater awareness of their impact on the environment. A lot of the clients also want to transition either into a more sustainable way of harvesting these natural resources, or shifting from fossil fuel to renewable energy,” Leung says.

Succession planning is another challenge. Different members of an entrepreneurial family have differing interests, wants and aspirations. To preserve family unity, it is important to tailor not just the amount of inheritance each member receives, but also their future role in the business.

“Imagine someone spending the last 50 years building one company to a certain size… How do you pass on one company to multiple children? Do you divide it up? Do you split up the roles and responsibilities, (and decide) which branch takes which part of the company?” he asks.

Given the entrepreneur’s decades of dedication in building and growing the business, just broaching the topic of succession planning and intergenerational wealth transfer can stir up emotions, even causing friction in some cases, he notes.

In HSBC’s July report on family-owned businesses in Asia, 78 per cent of the 1,882 entrepreneurs surveyed globally say they would like to keep their business in the family.

Even so, two-thirds of respondents from mainland China, Hong Kong and Taiwan have not planned for how their businesses might continue after them.

“It is a state of affairs that seems likely to not only damage family harmony over the short term, but also jeopardise its wealth and business affairs over the longer one,” the report states.

In such scenarios, HSBC Private Bank, through its support on various fronts for the entrepreneurial families, would already have a deep understanding of the family’s dynamics to tailor a smooth transition.

For instance, while the entrepreneur may pass one part of the business to the eldest child, another branch of the family could end up with the financial assets and managing them through the family office.

This is where HSBC Private Bank’s suite of expertise and services can prove useful, in helping the entrepreneur build a family office framework and governance. In turn, it helps the entrepreneur and his family office manage the assets, while providing the right solutions to do so as well, spanning the areas of asset allocation and manager selections.

Succession planning

McKinsey calculates that US$5.8 trillion of intergenerational wealth transfer will occur within Asia Pacific between 2023 and 2030, of which UHNWIs will account for about 60 per cent. This means Asian countries are rapidly creating new billionaires.

Given the large sums involved, potentially spanning family members who live in different countries, HSBC Private Bank can help entrepreneurial families prepare their wealth and transition plans, which may cover various tax jurisdictions.

While financial concerns are among the top priorities in succession planning, it isn’t all about the money.

“Many of our clients have built significant businesses over decades, and when the time comes to think about the next generation, it’s rarely just about the money,” says Silva.

Managing the emotional aspect of intergenerational wealth transfer is also important – this entails looking at the focus and priorities, which could differ especially for larger families with several branches.

To manage every party’s needs and aspirations, HSBC Private Bank can help every branch of the entrepreneur’s family attain their goals.

While some may want to keep the business, another part may want to exit, or liquidate it. HSBC can tap its capabilities and network to help the clients find partners, or for those seeking to exit, to look at options to liquidate to generate liquidity for their future generations.

Leung likens the range of solutions that HSBC Private Bank provides to a grand piano with 88 keys.

“You have all sorts of products and solutions available, from the retail bank to the private bank to the corporate bank to the investment bank, but most people tend to play the same two octaves because this is their core focus. However, having people with the experience and relevant background allows us to play the whole grand piano and bring the right solutions to the right client.”

With HSBC Private Bank’s leadership bench complete in Singapore, its capabilities are strengthened further for it to be a trusted and holistic partner for UHNWIs and entrepreneurial families, navigating them expertly through their journeys from business expansion, building family offices, ensuring sustainability and succession planning.