Millionaires’ Kids Hunt M&A for Standard Chartered - Joyce Koh -

Standard Chartered Plc started a trainee program for the children of private-banking clients, joining bigger rivals including Citigroup Inc. and UBS AG in reaching out to Asia’s next generation of millionaires.

Eighteen people aged 18 to 26 enrolled in the six-week program in Singapore, which ended Aug. 13. They were assigned to projects ranging from identifying potential acquisition targets for London-based Standard Chartered to developing ideas for branch design, said Jungkiu Choi, the executive responsible for the course.

UBS and Citigroup, the biggest managers of money for the rich in the Asia-Pacific region, also run programs for children of their private-banking clients as banks target the scions of millionaires. Asia’s wealth may grow at double the global pace over the next four years, according to a Boston Consulting Group report published in June.

For “rich people, the next generation is their number one concern,” Choi said in an Aug. 23 interview in Singapore. “Transferring knowledge, discipline, business acumen, capability -- that’s more important to them than transferring their wealth.”

Private banks ignore the offspring of rich clients at their peril, said Justin Ong, PricewaterhouseCoopers LLP’s private banking leader for Asia-Pacific. A survey by PwC last year showed almost 40 percent of private banks in Asia don’t know how much money they’ll keep when a clients’ wealth gets transferred, he said.

Loss of Customers

“This is really a time of investment by the banks to develop relationships with the next generation of high net worth,” Singapore-based Ong said. “They have only just come to realize the deepening issue around potential customer loss if they don’t react to this and start building relationships now.”

Standard Chartered, the U.K. lender that gets more than three-quarters of its profit from Asia, restarted wealth management operations in 2006 after a decade-long hiatus. It caters to people with more than $1 million of assets. Half of the interns’ families have at least $10 million managed by the bank, said spokeswoman Ally Lim.

Standard Chartered’s private bank increased assets under management by 27 percent in Asia in the first half, more than twice the global pace.

The bank has no plans to extend the program to other parts of Asia, since most senior executives are based in Singapore, said Choi. This year’s participants came from Singapore, China, Dubai, South Korea, India, Indonesia and Malaysia and paid for transport and accommodation themselves.

UBS, Citigroup Courses

In Asia, Zurich-based UBS runs a two-week course once a year in Singapore and Hong Kong on topics including wealth management, leadership and personal development. Citigroup’s program, which alternates between the two cities, ran for five days this year and covered financial planning, investing and “soft skills” such as public speaking, said Aamir Rahim, the New York-based bank’s Asia-Pacific chief executive officer of wealth management.

Both banks said their courses had record numbers of participants in Asia this year. Credit Suisse Group AG this year started its first Chinese-language course for young investors in Taiwan.

“Our programs for the next generation of ultra-high net worth clients are designed to provide practical advice on how to manage the wealth they will eventually acquire,” said Daniel Harel, UBS’s head of private banking in South Asia for clients with at least 50 million Swiss francs ($48 million) of assets.

M&A Shortlist

Standard Chartered’s program is the only one in Asia that takes place in a real-life business setting, Choi said. At the end of the six-week course, participants can opt for a one-week class in financial planning, he said. They get paid an intern stipend of S$1,300 ($957) a month for their work at the bank.

“I tell them: ‘You are Spiderman. You have a special power and a special responsibility, but you need to learn how to deliver pizza first’,” said Choi.

One thing the trainees may deliver for Standard Chartered is an acquisition. As part of their on-the-job training, they were asked to help identify potential takeover targets for one of the bank’s units. The participants whittled down the list of candidates to less than 10 from “a few hundred,” and Standard Chartered may start talks with those companies, Choi said.

He declined to identify the potential targets.

--Editors: Philip Lagerkranser, Lars Klemming