Philippine Daily Inquirer
3:52 am | Thursday, November 21st, 2013
The country has a growing segment of “nouveau riche” individuals who are capitalizing on the country’s solid economic growth to slowly build their wealth.
According to BDO Private Bank, this “emerging rich” client market has driven a recent boom in the country’s wealth-management industry, which is reserved for high net-worth individuals.
“Professionals now are well-compensated and they have learned to build their wealth at an early stage,” said Stella Cabalatungan, executive vice president for BDO Private Bank’s relationship management group.
“There’s an increase in wealth among the emerging wealthy,” Cabalatungan said, noting that this has driven the bank’s growth in the last 10 years.
BDO Private Bank was formerly a local unit of Spain’s Banco Santander before being acquired by the group of retail tycoon Henry Sy in 2003.
Instead of using its universal and commercial banking license to its full potential, BDO Private Bank focused on growing its wealth management business that focuses on high-income clients. The company’s president, Josefina Tan, said BDO Private Bank remained the country’s only real private banking institution.
Last year, BDO Private Bank posted a net income of P480.12 million. This year, the company said it expected its bottom line to more than double to P1.2 billion. The company currently has P230 billion in assets under management.
Apart from mid- to top-level corporate executives, the ranks of the emerging rich also include young individuals who inherit family businesses.
Cabalatungan said these second-generation entrepreneurs were typically more willing to take on risks by spending money to grow their decades-old businesses. As a result, these businessmen are also more likely to succeed.
She said this had driven up the average balance of each of the bank’s 7,000 clients to around P32 million from P7 million five years ago.
The profile of the bank’s clients has also changed since it started its private banking business model in 2003. When it first started, the bank’s main clientele were old rich families and retirees whose main goals were capital preservation and the distribution of wealth to their heirs. Today, wealth accumulation has taken a bigger role in the company’s operations.
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Tags: Banking , BDO Private Bank , nouveau riche , Philippines
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