Bank of Singapore urging leveraged clients to sell in rally

Clients encouraged to bring as much collateral as possible now to make sure the bank is able to support their position


SINGAPORE • The head of Oversea-Chinese Banking Corp Ltd’s private banking arm said the coronavirus-fuelled crisis has yet to peak and leveraged clients should take advantage of market rallies to offload some investments.

“You use the rebound to sell some of the items, some of the securities that you do not want to hold. That’s the best time to do it,” Bank of Singapore CEO Bahren Shaari (picture) said in a Bloomberg Television interview yesterday.

“We are only beginning to see the first part of the crisis,” he said. “Many countries are still not well prepared, still do not have a clear plan of how to deal with it.”

Stocks rallied in Asia yesterday, following the best session for US equities in almost a dozen years as Congress negotiates an emergency-spending bill to combat the economic fallout from the pandemic. More than US$20 trillion (RM87.8 trillion) has been lost from equity markets since the peak in January, leaving investors wondering whether the rebound will last.

Bahren said customers have been reducing their leverage “as much as possible” over the past few weeks, though they do need to remain invested. While “a very select few clients” are highly leveraged traders, the majority “are not in that situation”, he added.

“Unfortunately, some clients have to liquidate at a very distressed price,” Bahren said. “So, what we are doing is informing clients to bring as much collateral as possible now to make sure we are able to support their position.”

Asked whether the bank will add more private bankers this year, Bahren said hiring is not a priority for now.

“Our first priority is to protect jobs,” he said. “If there are opportunities for us to look at good hires, we still look at that. But I think you have to also bear in mind that in this market environment, new bankers will have difficulties in bringing clients over.”

The bank has about 400 relationship managers, little changed from a year ago, the CEO said. While it has added bankers, mostly in its North Asia team, there have been departures, including through natural attrition, he added.

One key area for expansion is a segment serving global investors and family offices, which currently accounts for about 30% of assets under management, Bahren said. The team led by Lim Li Li targets clients with a net worth of at least US$250 million, helping them set up family offices and invest in assets including real estate, venture-capital funds and startups, he said. — Bloomberg