THE Royal Bank of Canada (RBC) is applying for an investment management licence in Brunei as the bank eyes prospects in the wealth management segment, top executives said.
RBC Chief Executive Michael Lagopoulos told The Brunei Times earlier this week the bank’s strategy is to provide local access to the bank’s global network so clients are plugged in to all of the bank’s wealth management offices all over the world.
“There is a long-term strategy that involves Brunei as we are focused on institutional businesses and that’s our strategy. With that said, we continue to focus on trying to grow our share of the market in Brunei by being a good long-term partner, not only through servicing our clients well, but investing in Brunei, acquiring licences, hiring people and training people,” he said.
Matthew Yong, president of Royal Bank of Canada's Wealth Management in Asia. Picture: BT/Goh De No
RBC’s Head of Canadian International Centres and Asia Doug Gunton added that RBC, which is Canada’s biggest bank and the 13th biggest bank in the world by market capital, is now looking into developing onshore capabilities.
In 2002, RBC became the first offshore bank in Brunei, servicing government agencies and wealthy individuals.
“Brunei is geographically located to 20 million potential clients or offices within a short distance. Brunei will be very appealing not only to Bruneians but to others as well,” Gunton said. He sees Brunei as an opportunity to be part of RBC’s Asian expansion plan and this would be part of the next revolution of RBC’s strategy that started many years ago.
“We are ready to go on to the next level. The application has been put through and we hope to hear back in the next 30 days or so. This is great for us and our clients,” Gunton explained.
Lagopoulos assured that once the investment management licence is approved the bank hopes to hire more staff and “get as big as we can”, but it all depends on the businesses the bank can attract and the clients.
“RBC will definitely be hiring Bruneians and as for diplomatic ties and the impact on Brunei, I hope it’s going to be positive. We always spend time with the Canadian High Commissioner to understand business relations and relationship between the two countries in a broader sense,” Lagopoulos said.
The executives called on Brunei’s Minister of Finance earlier this week to discuss tax information, talked about broader cooperation and exchange of agreements between Canada and Brunei.
Gunton stated that it was important to resolve any issues on taxation for trade agreements otherwise companies face double taxation in Brunei and Canada, not just from RBC’s perspective but oil companies, service companies and oil service companies.
Since its inception in 2002, RBC has spent a successful $1 billion out of Brunei through the assets they manage in the Sultanate, said Lagopoulos.
He said that the bank is pleased with the assets accumulated in Brunei, adding the bank had seen a good payback from the investments, in turn encouraging the bank to make a bigger investment and see what more it can develop.
With RBC’s expansion, Matthew Yong, president of RBC Wealth Management in Asia, believes Brunei can be a financial hub for the Brunei Indonesia Malaysia Philippines East Asean Growth Area.
Yong, a Bruneian who was recognised as one of the World’s Outstanding Young Private Bankers by the Private Banker International Wealth Management Summit in 2009, said that besides Brunei’s ideal location, the Sultanate’s political and economical stability can attract investors from East Malaysia, Southern Philippines and parts of Indonesia.
Lagopoulos agreed with Yong saying that most clients look for a few important things when investing their money like political stability and financial safety.
“There are places where economy is strong but if they are changing political direction every couple of years, that makes people and institutions with money particularly nervous. Brunei’s got a great story to tell in terms of political stability, economic safety, positive economic direction and a growing economy,” he said.
Lagopoulos added that from that standpoint plus the flexibility of currencies and liberal currency policy is something that wealthy people and institutions would prefer as they like to avoid too much control where one can’t do to much with money in terms of growing or protecting wealth.
“So basically, Brunei ticks all those boxes,” he added.
When asked why it took RBC all this while to think of expanding in the Sultanate, Lagopoulos replied that is RBC’s standard approach “invest a bit, earn, invest again and earn more”.
He said RBC rarely goes in with a big-bang approach and get every licence possible then hope that clients will come to do business with them.
“So we tend to be more focused and make investments to see what kind of reception we get from the market and clients. With the market positive and people like the ideas, we can proceed further,” he said.
“Our products or services are focused on five core banking services, some include investment management, investment advisory and some structure solutions and not every client buy all five but many clients take either do more than one or two services,” he said.
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