Fubon Financial

According to the Lombard Odier Study, Investments in Green Industries are Projected to Reach Thousand Trillion Dollars by 2030, Highlighting the Investment Potential of Sustainability

During Financial Austerity, Investing 60% in the Stock Market and 40% in the Bond Market may have Limited Allocation Benefits, but the Inclusion of Private Placement Assets is Emerging as a New Trend

With the increasing number of high-net-worth individuals globally and in the Asia-Pacific region, as well as the upcoming trend of second-generation succession, the demand for wealth management services among top-tier clients continues to rise. In order to enhance the quality of private banking services, Taipei Fubon Bank and Lombard Odier announced today (April 10th) that they will extend their cooperation for another five years. The goal is to benchmark international private banking standards during this partnership period, integrating a global perspective into local operations. The collaboration will evolve comprehensively in four major directions: business operations, product development, talent cultivation, and international exchanges, in order to bring a more forward-looking wealth management experience to high-net-worth customers in Taiwan.

Tim Kuo, President of Taipei Fubon Bank, has stated that since 2018, Taipei Fubon Bank has been the only financial institution in Taiwan to collaborate with Lombard Odier, a leading international private bank. Over the past five years, Taipei Fubon Bank and Lombard Odier have worked together to establish a solid foundation for high-end wealth management services. Through close collaboration and positive feedback, they have significantly increased the scale of their high-end wealth management business, with asset management assets growing by over 30% annually in the past three years. This ongoing partnership between Taipei Fubon Bank and Lombard Odier will not only strengthen the bank's capabilities in serving high-net-worth customers, but also provide customers with a wide range of high-quality products and opportunities for international networking. This collaboration will further enhance the expertise of Taiwan's high-end wealth management services and contribute to the development of the wealth management market.

Mr. Frédéric ROCHAT, a Partner at Lombard Odier, highlighted the extensive history of Lombard Odier, which has successfully guided customers through more than 40 financial crises over the course of 227 years. With a positive AA- rating from Fitch Ratings, Lombard Odier currently has established offices or strategic alliances with major local banks in the Asia-Pacific region, including Taiwan, Japan, Hong Kong, Singapore, Thailand, the Philippines, and Australia. This allows us to offer high-net-worth customers localized solutions with a global perspective. Research indicates that approximately 70,000 high-net-worth individuals in the Asia-Pacific region are expected to transfer around US$2.5 trillion in wealth over the next ten years. As the demand and competition in the high-end wealth management market continue to increase, we are delighted to maintain our partnership with Taipei Fubon Bank. Together, we strive for excellence and aim to provide internationally-aligned private banking services to clients in Taiwan.

Throughout the partnership, Lombard Odier's annual Asia/Pacific High-Net-Worth Individual Survey has become an important reference for international high-net-worth individuals and financial institutions in their planning due to its in-depth professional analysis and forward-looking observations. Today, Lombard Odier also released its latest 2023 survey report (Note 2), which points out three key issues of concern for Taiwan's high-net-worth individuals. First, 24.4% of Taiwan's high-net-worth customers have initiated wealth planning, higher than the 20.3% of the overall Asia-Pacific region, indicating that Taiwan's high-net-worth customers have a higher level of awareness and importance of wealth management. However, the proportion of those who have realized their personal goals is only 16.7%, which is lower than the 21.4% of the Asia-Pacific region. This represents a gap in Taiwan's wealth management services. Customers need more professional and comprehensive programs and tools, so that wealth management is no longer just an idea, but a more executable action plan.

Taipei Fubon Bank has established a strong presence in the field of wealth management, with expertise in asset allocation and portfolio construction. Moving forward, Taipei Fubon Bank will enhance its collaboration with Lombard Odier through increased technical exchanges and knowledge transfer. Anticipated for this year, Taipei Fubon Bank will introduce target-oriented wealth planning and personalized investment portfolio recommendations, enabling customers to build tangible and achievable wealth milestones.

Another noteworthy focus in the survey is "sustainability". The high-net-worth individuals in Taiwan place significant importance on the concept of sustainable development, with as many as 87.2% of Taiwanese respondents expressing concerns about issues such as climate change, surpassing the 81.2% in the Asia-Pacific region. However, when it comes to actual actions, only 16.7% of Taiwanese respondents have already implemented or planned to increase their sustainable investments, slightly lower than the 18.4% in the Asia-Pacific region. According to Jerry Wu, Senior Vice President of Taipei Fubon Bank, the past performance of many sustainable investments has not been stable enough, and compared to other industries, the accessibility of information regarding sustainable investments is not easy, lacking transparency and standardization. Additionally, the current allocation methods and available investment options are still not diverse enough, all of which affect investors' concrete actions.

Nevertheless, Lombard Odier also projects that between 2022 and 2030, a cumulative total of US$37 trillion (equivalent to approximately NT$1,184 trillion) in capital expenditure will be allocated to green industries such as energy, material system transformation, and ecological restoration. Sustainable investments not only have a substantial scale but also profoundly reshape the global economic landscape, becoming an indispensable component of future asset allocation. As of 2023, Taipei Fubon Bank has already offered 273 sustainable-related funds and overseas bonds, with a fund size exceeding NT$12.6 billion. Furthermore, the green credit balance for the entire year of 2023 has surpassed NT$260 billion. Moving forward, Taipei Fubon Bank will continue to prioritize strengthening its sustainable product line, developing various financial instruments such as sustainable funds and bonds, and promoting corporate green transformation through diverse services like green credit and sustainable supply chain finance. Through its collaboration with Lombard Odier, it aims to assist high-net-worth clients in optimizing capital efficiency and expanding the influence of sustainable investments.

In terms of investment of private placement assets, the Lombard Odier survey reveals the "anticipating yet afraid of being hurt" attitude of high-net-worth customers. Whether in Taiwan or the Asia-Pacific region as a whole, more than 50% of the survey participants are willing to invest in private placement assets, but only about 20% of investors have actually increased their allocation of private placement assets in the last two years.

Jerry Wu, the Senior Vice President of Taipei Fubon Bank, has highlighted the potential risks associated with the high correlation among traditional asset categories in a tightening financial environment. He emphasized that the previous allocation model of 60% investment in the stock market and 40% investment in the bond market is no longer effective in generating desired returns for investors. However, Wu suggested that incorporating high-quality private placements assets in investment portfolios has proven to be beneficial in increasing the rate of return and reducing risks in the long term.

According to data analysis firm Preqin, the size of the private placement market is estimated to grow 1.5 times from US$12.2 trillion in 2022 to US$17.8 trillion in 2026. This demonstrates the increasing importance of private placement assets. Taipei Fubon Bank, with the assistance of Lombard Odier, will actively help high-net-worth customers enhance their understanding of the international private placement market and provide more opportunities to participate in private placement investments. By offering diverse and complementary investment opportunities, private placement will become a crucial element in a balanced investment portfolio, enhancing the forward-looking nature and influence of Taiwan's wealth management business in diversified investments.

In addition to innovative products and professional tools, "talent" is also a key factor that influences the quality of high-end wealth management services. Taipei Fubon Bank has stated that this collaboration will also introduce the valuable "Lombard Odier Academy" series of courses. It is expected that this year, 60 senior wealth management consultants from Taiwan will be selected to undergo training in the knowledge and skills of private banking across all areas. These selected talents will also have the opportunity to receive overseas training and internships, as well as participate in various international summit forums organized by Lombard Odier. Through professional training, the international perspective of wealth managers will be enhanced, thereby strengthening Taiwan's soft power in wealth management.

In light of the emerging trend of inherited assets in the upcoming decade, the mindset of high-net-worth customers has evolved beyond individual wealth objectives to encompass holistic approaches like establishing a shared vision for family wealth and ensuring the sustainable growth of the family enterprise. Taipei Fubon Bank is poised to leverage its extensive global resources to create a seamless and effective financial platform across the Asia Pacific region, utilizing its branches in Singapore, Hong Kong, Vietnam, Indonesia, Australia, and Fubon Bank (China) to cater to the cross-border financial requirements of high-net-worth households. With a dedicated wealth management team, tailor-made investment solutions, comprehensive portfolio strategies, and specialized family services, Taipei Fubon Bank is committed to aiding clients in enhancing family governance, crafting succession plans, and devising a comprehensive blueprint for the enduring management of family wealth, thereby achieving the objective of sustainable succession from "family" to "clan" to "family business".

Note 1: Source of information-Wealth-X 2021 report

Note 2: Survey participants comprised over 460 high-net-worth individuals from the Asia-Pacific region, possessing investment assets exceeding US$1 million in countries such as Singapore, Hong Kong, Japan, Thailand, the Philippines, Taiwan, and Australia.

Data collection took place between May and June 2023.