Indonesia State Banks Eye a larger proportion of the growing asset market in Singapore

[JAKARTA] Bank Negara Indonesia (BNI) and Bank Mandiri, the state banks in Indonesia, pull out all stops to feel themselves in the competitive wealth management sector in Singapore.

This is an increasingly wealthy Indonesian person and corporate customers who lead their assets to the city state and use a market for around 700 trillion Rupiah ($ 54.7 billion).

The move is part of a larger image to strengthen the connections of the bank with Indonesian expansion of individuals with a high network value (HNWIS) and Ultrahoh-Net-Wurstern (UHNWIS), many of which spread their financial wings and manage significant assets beyond Indonesia.

In an interview with Business timesAgnowo, Director of Corporate Banking from BNI, explained that the market potential for Indonesian high earners in Singapore was significant, with over 3,000 people meet the profile.

Corporate banking forms the backbone of the bank's business. He emphasized that many BNI corporate customers, who also manage extensive personal assets, are increasingly looking for extensive financial solutions that go beyond the borders of Indonesia.

“Our international business strategy is uncomplicated: we follow the flow of Indonesian prosperity and want to support our customers in worldwide expansion,” he noted. “The expansion of our Singapore services is therefore a natural progress in our efforts to better serve our customers.”

In March, BNI started its first asset management service in Singapore and aimed at HNWI customers, including alive in the city state.

The bank has founded partnerships with Schroders and Fullerton Asset Management to meet accredited investors – those with an annual income of over $ 300,000 or assets of more than $ 2 million in Singapore.

Bank plans to expand its partnerships with other major financial institutions in the Republic in the near future in order to build a solid asset management foundation within five years.

Steven Suryana, Senior Executive Vice President of WEATTH Management by BNI, said that BNI will concentrate on operating Indonesian customers and Indonesian diaspora, and at the same time expanding the expansion of its customer base openly.

“We definitely strive for significant growth. In Indonesia it took about eight years to build up our asset management platform. In Singapore we expect us to reach so much faster. Our asset management business in Singapore focuses on HNWIS, not on retail customers,” he said.

He found that there are significant options for Indonesian assets that are parked in Singapore that relate to data from the Indonesian tax amnesty program during the administration of former President Joko Widodo.

According to the Ministry of Finance, the Indonesians explained during the tax amnesty in Singapore Rupiah worth around 700 trillion rupiah, but only about 12 percent of these assets were finally returned to Indonesia. “There is still a considerable amount of prosperity abroad and we see a real opportunity to operate these customers via our office in Singapore,” emphasized Suryana.

BNI currently holds assets of around 6 billion US dollars overseas, with around half of this amount based in Singapore. In Germany, the bank manages around 200 trillion rupiah assets that include both deposits and investments and operates over 100,000 wealthy customers.

Persistent growth

Indonesia quickly appears as a power package in the creation of prosperity, with Hnwis and Uhnwis growing at a speed of 4.2 percent in 2023 and accommodating the country in the top four in the Asian-Pacific region. According to a survey by Knight Frank, this increase was heated by the strong economy and the growing sectoral diversification of Indonesia by the strong economy and the growing sectoral diversification.

The number of Uhnwis is expected to increase sharply over the decade and consolidate the role of Indonesia as a central player in the landscape of Asia.

Apart from BNI, Bank Mandiri, which joined the asset management sector in Singapore in 2019, recorded strong growth in this area.

Tri Nugroho, General Manager and Country manager of Bank Mandiri Singapore, announced that Mandiri Singapore's asset management portfolio has achieved an annual growth rate of 43.55 percent since its introduction.

“With a view to the future, we are expanding our reach to regional investors who are looking for alternatives for asset diversifies, including non -individual investors such as family offices and variable capital companies,” he told BT.

The bank has teamed up with the Swiss company Lombard Odier to develop its private banking department and offer personalized investment solutions and comprehensive family services, he said.

The bank currently serves around 50 important customers in Singapore, most of whom are accredited investors. 63 employees work in the branch in Singapore.

Nugroho added that the wholesale banks remain a core column for Mandiri's business in Singapore and contributes significantly to the generation of sales and long -term strategic value. This segment continues to dominate the bank's overseas portfolio.

Protection

The expansion of the Indonesian banks to the asset management sector in Singapore takes place in the middle of an increased market volatility, which is due to trade voltages and causes customers to apply for safe Haven investments in order to protect their assets from instability. This represents a challenge for both banks because they are working on leading customers through these turbulent times.

According to Bnis Agung, assets with a fixed income are still a popular choice among the bank's customers, in addition to raw materials, in particular from Safe-Haven assets such as gold.

Overall, their investment strategies reflect HNWIS worldwide, with the focus on stability and assets in a volatile market. “In such a market, most people look for more stability.”

Nugroho from Bank Mandiri found the growing interest of HNWIS from Indonesia and Southeast Asia in fixed income instruments, especially Indonesian sovereign and corporate bonds.

“In addition, we see an increasing demand for structured products and fund -based solutions that offer capital protection and diversification, and in relation to the persecution of the stability and growth of our customers after uncertain times,” he said.