Previously people trusted our judgement. Today, they are much more aware. The big conversation today is about the fees.
Having access to a whole lot of SME clients through their lending relationship is ING Vysya’s niche, says Sonalee Panda, Group Head, Private Banking and Wealth Management at ING Vysya Bank. After all, it is this segment of the market whose needs are becoming more sophisticated but not many are paying attention to it, she says.
What are the services you offer under private banking?
We have been in the private banking business in India since 1995. We offer investment advisory across equity, debt and structured products through non-discretionary Portfolio Management Services (PMS). We also offer what is called the investment banking service. For example, most of our private banking clients are entrepreneurs.
So when they want to grow bigger and move to newer markets, they are looking for strategic investments - something like a private equity deal or a venture capital function. We do it for them, but in a small ticket size of Rs 25-50 crore.
The next thing we do is estate management. Say a client has built a business and made a lot of money, we help in protecting the wealth. Then if the second generation is not interested in it, through our investment banking practice we find a person who can take over the business. A fourth service is structured credit.
How do you distinguish the wealth management services from private banking?
The typical wealth management customer is mass affluent and he begins thinking of creating wealth for his future needs as he touches 30-35 years of age.
So wealth management is when you look at this customer, understand his profile, his requirements and then do the asset allocation accordingly. This we started doing in 2007.
Besides equity and debt, in wealth management, we offer structured products, PE deals and also real estate investment options. But the transaction sizes there will be about Rs 25 lakh. When we talk about the same in private banking, we are talking about Rs 25 crore.
Who is your typical customer?
Before ING exited the private banking business in India in 2010, we were catering primarily to the global Indian. Many customers were from UK, Malaysia, South America. So we could offer a lot of offshore products. After the exit, our focus is more domestic.
If you see where the growth is happening in India, it is probably among those who have about $1- 2 million liquidity (Rs 5-10 crore approximately). You can see wealth growing among entrepreneurs.
But this segment is not getting the service it needs. Most banks are treating these customers as wealth management clients but their needs are changing and there is a niche available right now. Secondly, because of Vysya Bank legacy, we have access to SME relationships.
This is our USP. These customers are not very big; they need transactions in the Rs 25-50 crore bracket and nobody is catering to that segment right now. We have 527 branches and SME lending happens across these. So we are able to see the customer’s need and offer services accordingly.
Have you seen the risk appetite of Indians changing after 2008?
Completely. Till 2008, everyone was putting money only in equity. Now everyone wants only gold, real estate to some extent and obviously debt. We tell our customers, “If you buy gold and the price falls, don’t sell it; keep it for 15-20 years.
Similarly, if you enter equity markets at 21000 levels then why should you sell it at 8000 levels? Why don’t you hold it for 10 years?” But today, the consumer is much more risk averse.
Second, previously people were not so aware of what you were selling them and they trusted our judgement. Today, they are much more aware. Another big conversation today is about the fees.
Five years back, I would not have written the fees anywhere. Today when I get a signature from the customer, he signs saying that he has read and is aware of the fees.
Do people actively ask for options abroad?
Most people are interested in the $ 2,00,000 free remittance available to resident individuals. They have a relatively positive view on the US. They want to know what they can do to get there.
However, the maximum that they typically invest offshore will be about 10-20 per cent of the total. The average wealthy Indian believes India is the place. They also understand the markets here much better.
