CIMB Private Banking will focus on protecting the interests of its clients and consider other partnership opportunities, following news that its recently launched Separately Managed Accounts (SMA) platform, with partners UOB Asset Management (M) Bhd and BNY Mellon Investment Management, has shut down.
The discretionary platform for high net worth investors hit a snag when BNY Mellon announced on June 2 that it would shut down the platform, just days after CIMB announced its launch on May 29.
According to Asian Investor reports, dated June 3 and 5, BNY Mellon confirmed the withdrawal of its SMA business in Asia, citing the slow take-up rate in the region. The company started working on the platform three years ago.
CIMB Private Banking head Carolyn Leng tells Personal Wealth in a phone interview that the platform, which only saw a few investors sign on thus far, will see their investments returned to them.
“The investments are with the managers, who are now working in the best interests of our clients. It will be divested and we will arrange for the investments to be returned to them. [Whether this means a full refund], we don’t have full visibility at this point. The lawyers are working it out,” she says.
“CIMB is the custodian [of the investments], so the money is intact. We are just [in the midst of] sorting things out and waiting for the final date of proceeds to be released [back to investors]. They will get [their monies back] fairly soon.”
The multi-manager platform was aimed at providing investors access to global, regional and thematic strategies that are usually meant for institutional investors. This private mandate service was done through a combination of direct ownership of portfolio securities as well as fully-disclosed and customised portfolio. The minimum investment amount was US$500,000 (RM1.8 million).
Leng expressed shock and frustration at the news of the cancellation. “We had absolutely no idea [this was going to happen]. We found out at almost the same time [when the news was reported]. The minute I was notified, I immediately called the team and made sure everyone got the news,” she says.
“I think you can appreciate that CIMB has always been consistent in the way we communicate our brand and our messaging. This is certainly the last thing we had in mind.”
Leng says that prior to the cancellation, the team had spent more than a year doing due diligence to ensure this was a viable investment opportunity for investors. “There was a lot of due diligence to conduct. It was done over 14 to 15 months. As their office is in Hong Kong, we had to do a fair bit of work to find out who the fund managers were, and tracked their performance.
“As this was done in collaboration with UOB, which is also a conservative outfit, it took time to conduct its due diligence. Only when we were comfortable [with the platform did we go ahead].”
Leng says the private bank will “tighten its due diligence processes and make sure the commitments from all parties are stated clearly”. The team, she adds, will consider similar offerings in the market to replace the platform in the future.
“Since the news broke, we have received a number of queries from managers who offer similar platforms. These companies are very reputable names. [However,] we are not rushing into this. We would like to focus on making sure our existing clients are taken care of before moving forward and looking at other alternatives.”
Despite the incident, CIMB will continue to seek global solutions for its clients. “One thing that doesn’t change is that we will always be on the lookout for global [investment] solutions, which are an important part of asset allocation. We have an ongoing product development process and will look at new things we can incorporate. We will look for managers who can drive consistent returns while having strong risk management.”
When contacted, UOB Asset Management declined to comment on the matter.
This article first appeared in Personal Wealth, The Edge Malaysia Weekly, on June 15 - 21, 2015.
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