Citibank Korea’s WM strategy pays off amid market fluctuations

Citibank Korea has seen the pool of high-net-worth clients grow on the back of its unique wealth management program, which focuses on strict product screening for the sake of investor security.

The number of wealth management clients at the local subsidiary of the New York-based bank soared 124 percent on-year in January, according to officials.

Also, its Aggressive Model Portfolio yielded a 19.8 percent return last year, while its Moderate Model Portfolio returned 17.2 percent, despite the market volatility driven by US-China trade tension.

Citibank's progress was attributed in part to the extensive misselling of high-risk financial products, which caused a massive scandal last year. A number of banks and brokerages here came under fire for selling derivatives-linked funds without adequately notifying customers of the risks involved.

In light of the elevated guard against high-risk investments, Citibank’s strict product selection process -- which had once triggered complaints from customers over the limited range of popular investment products -- is now recognized as a customer-friendly forte, officials explained.

Citibank first introduced the Model Portfolio wealth management strategy here in the second half of 2015. The new business strategy triggered some market skepticism in its initial stage, but paid off throughout the stock market crash of end-2018 and the market volatility of 2019, officials said.

To introduce new products onto Citibank’s platform, asset managers are required to clarify in detail the investment objectives, management strategies, past performance and liquidity test results, as well as the capabilities of the management team in charge.

Due to the thoroughness of the process, several product launches have been called off midway -- some at the very last stage of planning.

“Regardless of the popularity of certain products, Citibank has adhered to the principle that all products should be in line with the asset allocation strategy as outlined by the Global Investment Committee,” the bank said.

Seeking to further advance its status as a premier wealth manager, Citibank has established an advisory department that operates separately from its sales units, officials added.

The department comprises a market outlook research team, a group of treasury service officers and portfolio counselors who provide reviews exclusively for top-tier clients with 1 billion won ($803,213) or more in assets -- referred to as the CPC segment.

To extend its team-based advisory service, Citibank is also introducing Investments Counselors for Citigold to serve its next tier of customers, those with assets between 200 million won and 1 billion won.

By Bae Hyun-jung (tellme@heraldcorp.com)