As global economic growth has faltered, OCBC has strengthened its services in order to continue helping clients boost returns and cut funding costs across jurisdictions. The bank not only comes equipped with a repertoire of innovative products that drive value for clients but also the expertise to seamlessly combine clients’ needs with new technology and research.
“We go beyond just the usual forex and interest rate hedging. We want to look at customers’ entire treasury exposures and talk to them holistically across their needs, including investments,” says Wee Wei Min, global head of sales and structuring at the bank.
Already the second-largest bank by assets in Singapore, OCBC harbours ambitions to be one of the largest foreign exchanges houses in Asia. It currently has more than 100 branches and offices in north Asia and close to 500 in South-east Asia. It is also keen to tap into new opportunities that arise from its clients’ rapid expansion, both regionally and internationally.
At the heart of any bank’s success is the ability to take care of clients’ needs. OCBC leverages technology to provide even greater engagement with customers.
This year, OCBC has introduced a new ‘treasury dashboard’, which sales staff can use in order to track details of each client and identify each transaction’s maturity date. This allows the bank to provide a better level of customer service at each stage of a transaction, fixing any problems or issues as early as possible.
“The current dashboard is very dynamic in nature,” says Wee. “Our treasury team feels more equipped to have an active conversation with the clients. We are also forward-looking – providing solutions for clients ahead of time.”
The bank makes good use of its research capabilities to come up with innovative solutions. OCBC’s treasury and strategy department consists of macro research, forex and rates strategy and credit research teams.
These teams provide local insights and economic forecasts across Asian markets, particularly focused on Singapore, Malaysia, Indonesia and other South-east Asian economies. OCBC also offers a good level of research into G7 countries. This has allowed the bank to support clients who could be exposed to a sterling depreciation linked to Brexit.
For one client in the commodities industry who had ongoing sterling receivables and US-dollar payables, OCBC recommended a cancellable forward to guard against a potential fallout from Brexit. Thanks to the bank highlighting early enough the risk of a sudden sterling depreciation, the client was able to hedge a portion of its currency exposure at an attractive rate. It was able to increase the hedge amount as protracted Brexit negotiations dragged on, and started to weigh more heavily on the currency.
The cancellable forward took advantage of rising volatility in the sterling and US dollar markets, in order to achieve an above-average rate in the forex market, which helped the client achieve better pricing for the hedge. The hedging requirement mounted to around £140 million ($168 million) per year.
The bank also has a strong credit research team that covers more than 70 corporate bond issuers predominantly located in Singapore but increasingly in Australia, Europe and China. This significantly helps OCBC in coping with a volatile stock market.
Our treasury team feels more equipped to have an active conversation with the clients. We are also forward-looking – providing solutions for clients ahead of time
Wee Wei Min, OCBC
In light of volatile markets, one thing that OCBC has been working hard to do this year is to drive value for clients from market-neutral equity strategies, which rewards clients irrespective of whether the market is going up or down.
“The stock market has been relatively volatile recently,” says Wee. “It’s a human instinct to hope that the stocks will go up, making it hard to convince a client that, even if the stock market is tough and you take a bearish view, you can still achieve positive returns.”
OCBC has also been persuading some clients to diversify away from the equity markets and invest in more in their bond portfolios, so that the client would continue to get a steady – albeit lower – return even if markets go down (providing there is no default).
Being able to clearly identifying clients’ needs has helped OCBC significantly boost volumes of forex products traded: vanilla hedging strategies and non-deliverable forward solutions are up 20% year-on-year, while forex option volumes grew by 40% year-on-year.
Apart from the success in managing its clients’ foreign currency portfolios, the bank’s leading position in advisory and research has also earned deserving praise from its clients.
As one chief financial officer for a retail electronic products company in Singapore put it: “OCBC’s global treasury advisory team has consistently outperformed its peers by providing competitive prices, executing transactions swiftly and efficiently managing our foreign currency portfolio.
“Furthermore, the team regularly updates our company on the latest trends and insights, allowing us to hedge against potential risks, if any, and ensuring that we are always in an optimal position.”