CIMB "disappointed" by BNY Mellon's SMA exit

CIMB Private Banking says it is disappointed and surprised by BNY Mellon Investment Management’s decision to pull its separately managed accounts (SMA) platform from the Asian market.

After working with BNY IM for months, the Malaysian firm had already signed up wealthy clients for the platform and still hopes to be able to salvage a service.

And BNY IM’s Asia CEO Alan Harden will be flying to Malaysia next week for talks with CIMB on the future of the abandoned project.

CIMB was one of the first clients of Spectrum, BNY Mellon’s SMA platform, although it is understood that UOB Private Bank has also signed up. UOB declined to comment on this.

Lawrence Yong, managing director of CIMB Private Banking, said his firm was caught by surprise over BNY’s pull-out.

The bank started collaborating with BNY Mellon and UOB Asset Management (which is a manager on the Spectrum platform) in March. It eventually launched the product late last week but AsianInvestor broke the news about BNY’s product withdrawal just days later.

Yong said the SMA strategy suited some of its high-net-worth clients as it allowed them to access global investment strategies and to tap into leading asset managers across the globe. This, coupled with the lower barrier to entry for accessing an SMA strategy, had made it suitable for some of its clientele.

Yong said discretionary mandates from the likes of Capital International and Lazard Asset Management, both managers on the Spectrum platform, usually required a very high minimum investment which only institutions can usually afford. But BNY Mellon’s SMA platform allowed CIMB’s HNW clients to use the service with a mere $500,000 minimum investment.

Industry observers also expressed surprise about BNY’s move and thought the product had a future as it catered to the needs of smaller private banks.

Steven Seow, head of Asia wealth management at Mercer, said: “I thought positively about Spectrum when I first heard about it. The idea of offering smaller private banks, who have no infrastructure and find it costly to set one up, a product like a third-party discretionary portfolio account with good pricing is positive.”

CIMB was in the initial stages of marketing the product and therefore had secured a handful of HNW clients. It has informed these clients of the product pull-out.

Yong said BNY’s Harden and his team would be flying to Malaysia next week to meet them and discuss options on how to proceed. Yong said he had no idea what recommendations would be presented to them.

CIMB Private Banking is the wealth management arm for CIMB Group’s high-net-worth clients. Established in Malaysia in 2002, CIMB Private Banking has expanded to include offices in Indonesia, Thailand and Singapore, and regionally has an AUM of $10 billion.

Operating on an open architecture platform, investment solutions are sourced both from within CIMB Group as well as from third parties. The number of international managers on the platform is small.

Yong said the bank was open to third-party partnerships as it would like to offer a wide range of investment solutions to its clients.

It currently provides integrated investment and banking solutions including equities, fixed income, funds, alternative investments, foreign exchange, derivatives and structured financing.