Vontobel is expanding into one of the world's largest markets for derivatives. How will the minnow bank go up against Goldman Sachs and other giants? Investment bank head Roger Studer speaks to finews.asia.
Roger Studer, stock markets are back near record highs. Is this the right time to step into a huge market like Hong Kong?
It's a good time for Vontobel. We are thinking in the long-term. We've been in Asia for five years and have run our structured products business out of Singapore so far. We've been in Hong Kong since the beginning of this year.
We've transferred some of our infrastructure from Singapore to Hong Kong and built up some new know-how and processes for the proper set-up in Hong Kong. We're now ready and just issued the first warrants on Hong Kong's stock exchange.
Financial products like the ones Vontobel is issuing played a role in the financial crisis of 2008-09. Do you think history could repeat itself?
No. Structured products are not per se bad and have their place. These types of derivatives have existed for decades, in Asia for the last 15 to 20 years. Here they are widespread because investors in Asia tend to be more active, which on one hand us due to a relatively high level of investor savvy.
«Vontobel has grown into one of the leading wealth managers and become more international»
On the other hand, many clients here have to generate their own pension savings. With financial products, they can take their investments into their own hands. Structured products are a very good way to do so.
Who is your target client?
For warrants, we are targeting what are called self-directed clients – active and qualified investors who decide themselves, when and where they want to invest. They tend to do so through the online banking of their house bank or through providers like Swissquote.
Your structured products business has been successful in Europe, but Vontobel's name is virtually unknown in Asia. How are you going to get over that?
When I started at Vontobel 30 years ago, Vontobel was small. It has grown into one of the leading wealth managers and become more international. In structured products for wealth and asset management alone, we manage more than 100 billion Swiss francs and are a leading issuer of structured products in Switzerland and wider Europe.
«Switzerland is good at creating value and offering high-quality products»
We've been in Asia for five years. Our success is based on five pillars: product, price, performance and the power of possibilities. We want to use the opportunities that present themselves. In addition, structured products combine quality with digitization, which makes an attractive proposition in Asia.
Switzerland is good at creating value and offering high-quality products, including for investors in structured products. Vontobel can offer exactly this, which is why I'm convinced that making our products available in Hong Kong will be successful.
Who are your biggest competitors for these products in Asia?
Global firms such as J.P. Morgan, Societe Generale, Goldman Sachs and the two major Swiss banks. It takes a period of build-up and a long-term view, which we have done first in Switzerland and then in Europe.
Isn't it just easier and possibly more successful to work with partners in Asia?
Definitely, and we have been doing so for awhile now. In Europe, Vontobel has marketing and distribution cooperations for structured products with roughly 50 other online banks.
«We're also planning derivatives on commodities, foreign exchange and precious metals»
These types of joint efforts help the development of our business. We will also do this in Asia, where we've reached three cooperations with online banks which will position our products on their platforms.
You're starting with two call warrants on Tencent and China Construction Bank. Too little?
The first two products are based on leading Hong Kong-listed stocks and represent a test run for us as well as the soft launch we've been conducting for the last week in order for the stock exchange supervisor to verify that everything is operating correctly.
We'll expand our product offering considerably in the coming days and weeks: leveraged products, warrants, CBBC products, and bull and bear certificates. Our goal is to have roughly 600 products listed, which currently would represent roughly 10 percent of the total offering available in Hong Kong. We're also planning derivatives on commodities, foreign exchange and precious metals.
«We're concentrating on Hong Kong, but Taiwan, South Korea and Japan are also interesting»
We're not leaving anything to chance and are systematically analyzing financial markets to identify new trends and opportunities with investors. It's our traders and marketing people as well as our partner banks who know which products are in demand and where our offering in Hong Kong is missing something.
What will you do after expanding into the Hong Kong market?
Our business plans is a long-term one. We have invested decisively in the last 18 months in infrastructure in Hong Kong, buildin on what we have in Singapore an Switzerland. We'll try other markets in Asia, no doubt.
For now, we're concentrating on Hong Kong, but Taiwan, South Korea and Japan are also interesting markets. As soon as we are ready and have clinched the necessary licenses, we'll communicate it.
When would you like to reach profitability?
I don't want to disclose any specific numbers but I can say that in the past ten years, Vontobel has lifted its share of foreign revenue from less than 10 percent to roughly 60 percent today.
We're aiming for a sensible balance mid-term of roughly 30 percent each in Switzerland, Europe and Asia.
What have you invested in Hong Kong?
Our investments are negligible in the scheme of things because they are also under the bank-wide digitization strategy. The technological digital platform has to be adapted to Hong Kong's standards and we have a scalable structure in Singapore.
What about headcount?
We have invested, but it's interesting for us because we deicded to move existing know-how from Singapore to Hong Kong. We also hired roughly one dozen employees with local know-know: traders, quants, financial engineers, marketing specialists, and IT specialists. Vontobel has rouhgly 50 people in Asia in wealth and asset managment, roughly 30 of them in Hong Kong.
Is Singapore becoming less important for Vontobel?
No, we're keeping distribution and investment products there. All we have done is transfer traders and risk managers to Hong Kong but lawyers and financial engineers will remain in Singapore.
«I travel to Asia three to four times every year»
We have a 5 to 10 percent market share on the SGX, while Hong Kong is the world's largest warrants market. Hong Kong has 30 to 50 times more turnover every day than the Swiss stock exchange does in six weeks.
Volume aside, do you see so much people in Asia?
Because clients there are still quite trading-oriented and because of the pension reasons I mentioned before.
How well do you know the Asia market?
I travel to Asia three to four times every year. More importantly, we have people there who are in daily contact with our clients and partners.
Does the «Swissness» factor that Vontobel likes to embody play a role?
In Asia, quality and reliability are fundamental qualities. Fortunately, in Asia they are heavily associated with Switzerland. Ideal conditions for a specialized Swiss wealth manager to expand in Asia.
Roger Studer has run Vontobel's investment banking since 2008 and is also a member of top management. He joined the Swiss bank in 1984. He worked for DG-Bank in Switzerland from 1995 to 2000, and also worked in insurance as Swiss Life's head of quantitative asset allocation.
He rejoined Vontobel is 2000 as head of risk management and securitized derivatives, advancing to head of financial markets in 2003. Studer has an MBA from the University of Rochester.
