An entrepreneur at heart, Credit Suisse's head of private banking for Asia, Francesco de Ferrari, knows what makes his client pool tick.

Having launched and run three of his own businesses (in the IT, art and
sunglasses professions), Francesco de Ferrari, Credit Suisse’s
recently-appointed head of private banking for Asia-Pacific, has a natural advantage.

An entrepreneur at heart, de Ferrari knows what makes his
client pool tick. “I very clearly remember when I had my own company, the
discussions on opportunity costs, of taking capital away from my business and
putting it with a bank,” he tells WealthBriefingAsia at the Swiss bank’s Hong Kong offices.

“I also remember, since one of my ventures was in the
internet space, how personally painful it was not to have diversified some a
part of the wealth away from your business as when things go bad, you can lose
the work of a lifetime.”

De Ferrari reckons that although they are in pursuit of high
returns, sophisticated Asian entrepreneurs are equally conscious of the need to
diversify and hedge part of that risk - particularly as wealth moves towards their successors. He believes the Swiss bank is in a good
position cater to both sides of the generational spectrum.

“A lot of the clients in Asia tend to be early-stage
entrepreneurs,” said de Ferrari. “So their main consideration would be
‘can I
find a partner who can help me grow my business’ in phase one; can I
find
someone who can help me monetise the capital I have used to run my
business,
and carve out a part of my wealth to provide a hedge in terms of
entrepreneurial risk rather than having all the capital deployed in my
own business. In the third phase we would
consider the more traditional wealth management offerings like trusts or
investment solutions or managed investment products.”

The key to servicing entrepreneurs throughout the generations is Credit Suisse's so-called integrated bank, he believes.

Credit Suisse has been phasing the integrated or 'One Bank' model through
its silos of investment banking, private banking and asset
management since 2006, as a way of encouraging better efficiencies between the divisions to enable optimal client service. Within the last few years, the model has started
to bear fruit,
said de Ferrari, pointing to the fact that 30 per cent of Asia-Pacific’s
billionaires have a relationship with Credit Suisse – a ratio he wants
to
increase.

"With our integrated bank model which places private banking as a core business, we are well-positioned to capture entrepreneurial
wealth, and also to manage it longer
term,” he said.

Making it work

One way to make the integrated bank
model work, said de Ferrari, is to encourage its take up across the bank - from the top of the executive board through to the most junior back
officer. A financial incentive is given to anyone who shares clients
with other divisions, called the single global currency. 

Although it is hard to put a finger on the exact remuneration, he said
it is competitive. "In interviews with candidates, when I explain our incentives around cross-divisional collaboration, they
get
pretty excited," he said. 

In
2011, cross-divisional collaboration revenues generated through providing
integrated bank solutions to private banking ultra high net worth clients in Asia-Pacific
hit a record year, up 51 per cent year
on year. It has been one of de Ferrari's pet projects, and has shown increasing signs of success. But it has been a long process and it has not always been easy.

“Cross-divisional collaboration is easier on paper; it’s much harder in
practice,” he said. “The businesses
have a very different culture. Our objective is not to change that because the
success factors are different in each business. There are two main ways of
making the integrated bank work. You need the right incentives – but that only goes part of the
way.”

He believes the model has also worked because of Credit Suisse’s
inclusive culture. He said Brady Dougan,
Credit Suisse's CEO, frequently mentions the integrated bank which helps the message to filter
down throughout the ranks.

A big move

De Ferrari relocated to Singapore from Milan for five months
grooming for the role, last July. His previous job was as chief executive officer
for Italy. Under former chief executive Marcel Kreis (who is now chairman of Asia-Pacific private banking, reporting to de Ferrari) he learned the ropes and
officially took over in January, inheriting the leadership of one of Credit
Suisse’s fastest growing businesses.

Net new assets at the private bank’s Asia business grew by nearly a
quarter annually in the five years between 2006 and 2011, from SFr3 billion (US$3.1 billion) to
SFr10.4 billion. Assets under management grew by 9 per cent on average in the
same period to SFr 83 billion.

To foster this growth, the bank has also been hiring aggressively, recruiting around 300 relationship managers in the five years to the end of 2011. During that period, relationship manager numbers in the region grew from 230 to 360. That implies that around 170 people have left the firm for various reasons, including tighter quality standards. In some cases they move to competitors, like four led by Andrew Tung that moved recently to rival Julius Baer, as the ‘war for talent’ rages. This is one ongoing problem, he said.

“Human capital is always a challenge in Asia. The
way we are addressing it is by creating a clear organisational structure with
separate career tracks and development of internal talent. I think we are set up to do very
well on the human capital side but it just takes time.”

Although he does not want to put a number on how many hires
he is aiming for within the next 12 months, his preference will be for large team
acquisitions. The bank is about to take on a large one in July following the acquisition of HSBC’s Japanese retail business, and in April added 70 staff from the recently-absorbed Clariden Leu business into its ranks.

His motive for hiring bigger groups is because private banking is becoming "less of an individual sport, and
more of a team sport. You need to be able to coordinate across divisions and
groups to bring the investment knowledge to clients," he said.

"Generally if we find well-performing teams, that would be
the preferred way forward. A team that historically have performed well together are a good indication of the culture of relationship managers we want,” he added. 

But de Ferrari is realistic about new hires and does not
want to pay over the odds. Cost-to-income ratios - which in the Asia-Pacific private banking industry are now hovering around an eye-watering 83 per cent, according to PriceWaterhouse Coopers  - have to be a consideration, too. “Before, one of the main
metrics was assets and net new clients, volumes," he said. But he says that now, growth must be balanced with profitability. "You need an organisational structure that can provide sustainability and
scalability of the business.”

He adds that there will always be players who want to make quick inroads
into the market and pay high prices to attract staff, but this business model is not
sustainable.

A different tack

Like many private banks in Asia, Credit Suisse claims to have a 'unique model'. But unlike many peers, de Ferrari can point to
things that set it apart from competitors.

For example, within its private bank it does not silo clients into retail,
affluent, high net worth, and ultra high net worth, like many others. It has
just two segments: from $2 million to $50 million and from $50 million and above. De Ferrari decided to keep clients together, partly because wealth is growing at such a fast pace in
China. Since it is a relationship of trust, he said, it is hard to tear a client
away from their private banker and stick him into a different division when he
hits a certain level of wealth.

The bank has also bundled its Greater China area (Hong Kong,
Taiwan and China) together, unlike peers, who mark out territories according to countries. If a Taiwanese entrepreneur opens a
factory onshore on China, said de Ferrari, it is best that he can be served by the same relationship
manager, rather than having to speak to three different people. The bank recently consolidated its Hong Kong, China and Taiwan teams into a new Greater China team, led by Anna Wong, with Eddy Sze and Richard Wong as recent hires. This also made sense after recent departures from the China team.

While many banks complain about increasing
regulation, de Ferrari is sanguine.

“Regulation is an opportunity for us. We are a Swiss bank and
a global player and so we have our own stringent internal policies and procedures. Clear
regulation and a level playing field is a massive competitive advantage as we have our own rules to comply with anyway. People should see it as an opportunity I have lots of
experience in the past five years as to how this might look like, having seen what has happened in Europe.”

West meets East

And de Ferrari has another natural advantage. Wealthy Asians
and their counterparts in his homeland have a lot in common, he believes.

In Italy and Asia the majority of the wealth is driven by
entrepreneurs, frequently heading extended family-run businesses. “I see a lot of similarities with my last assignment in
Italy, although nowadays the remarkable difference is the level of optimism in
Asia, versus an increasingly downbeat Europe,” said the soft-spoken father of
five.

He adds that there is room for Credit Suisse to grow further in Asia as the region becomes the growth engine of the world and the power play shifts from West to East. He reiterates Brady Dougan's ambition to take the share of business
managed in emerging markets from 15 per cent to 25 per cent of assets of the global
business.

“My main focus over the next 12 months will be making sure
every single employee understands our strategy, making sure we execute it well,
and making sure we manage our company culture and our human capital aspects," he said. "So,
nothing revolutionary.”