KUALA LUMPUR, Dec 8 — Malaysia is emerging as the destination of choice for the region’s super-rich seeking financial services, but the rise of a band of “secret millionaires” has banks searching out new approaches to capture the elusive business, the Financial Times has reported.
According to CIMB’s head of private banking, Carolyn Leng, much of this vast wealth was often tied to where these “secret millionaires” began their roots, away from the glitz and glamour of the urban areas, and forcing banks to dig beneath the surface in order to seek them out.
“They might be sitting there with a pile of cash in Batu Pahat, but they walk around in a T-shirt and old shoes,” the banker, who 12 years ago established CIMB’s wealth management arm, told the London-based business paper.
“Each trade they make is worth US$1 million (RM3.23 million) but none of the banks notice these people, because they don’t wear suits and don’t speak English.”
Reaching out to and convincing these unassuming millionaires to sign up for the bank’s various services meant doing away with usual conventions and strategies, said Leng. Unlike corporate accounts, such clients often chose unconventional paths for their businesses.
In the report, Leng spoke of one example, an owner of successful phone manufacturer who declined repeatedly to list his business. His reason? He did not want to become too busy.
“These people want to be with family and friends, leaving for home at 5pm, rather than being super-wealthy and answerable to shareholders,” Leng was quoted as saying in the report.
While a marketing strategy was the obvious route, Leng said their views meant bankers needed to be more creative in how they could grow such client funds through diversification and planning out successions.
According to the FT report, many of these “secret millionaires” are essentially thriving family businesses looking to spread their wings either in the region or farther afield.
For these, one of the most critical services that banks are doing to win their accounts was facilitate continuity and power transfers across the generations, from father to son and, hopefully, grandson and beyond.
“We work with the people they have identified as potential successors and help show them the scope of things they are expected to know and do, having spoken to the older generation about their expectations,” said Bernard Fung, in charge of Asian family business clients at Credit Suisse in Singapore.
Beyond local and regional “secret millionaires”, Malaysia was also becoming a hot destination for investors from Iran, former Soviet Union states in central Asia and the Arab states, thanks to its fast growing Islamic banking products.
Now rivalling that of Dubai, the FT said Malaysia’s Islamic banking products were a particular draw for those from the aforementioned regions who had at least RM500,000 burning a hole in their pockets.
But not everyone is convinced that conditions are ripe for Malaysian banks to capture more of these “secret millionaires” and investors.
Michael Shone, managing partner and chairman of private equity manager Commercial Intelligence, said the country’s politics and policies encouraged a concentration of wealth rather than its generation, meaning there could be fewer of these new and elusive rich than believed.
“Government policies tend to lead to the continuation of wealth for families who already have money,” he was quoted as saying in the report.
“A small number of people are getting richer and richer, so for private banks, compared with Hong Kong, Singapore and Indonesia, there are relatively small numbers of potential clients.”
Other bankers also said wealthy Malaysians were increasingly removing their funds from the country, either out of wariness of local companies or unhappiness over discriminatory pro-Bumiputera policies.
“They are taking money out of local markets and investing in Europe and the UK,” says Johnny Heng, head of active advisory for Asia at Coutts, the private bank.
