Julius Baer is forming a joint venture (JV) with Siam Commercial Bank (SCB) to offer wealth management advisory to Thailand's high net worth (HNW) individuals.

Instead of setting up a private bank in Thailand, the Swiss bank opted to enter into a JV that will keep accounts separate for assets that are invested locally and overseas. SCB, which will own 60% of the JV, will account for assets invested domestically. Julius Baer will own the remaining 40% of the venture and oversee assets invested abroad. The JV aims to tap Thailand's US$300 billion high net worth (HNW) market.

"If you look globally Julius Baer usually buys something and they build up their ownership over the years depending on KPIs. This JV structure is unique to Thailand," says a senior banker.

The new JV aims to tap the highly lucrative Thai wealth management market following government reforms that now allow Thais to invest overseas.

"Thai investors are traditionally ethnocentric, but that is changing. Now it's legal for Thais to have an account sitting in Bangkok investing in overseas funds. The government is now allowing Thai investors to invest their money overseas, but the people who can help to advise them on wealth management are not there yet. This JV intends to fill that gap," the banker says.

The JV agreement between the two banks was signed on March 8, with the intention of combining SCB's strong brand credibility and wealth management expertise with Julius Baer's full suite of international wealth management capabilities and advisory services. The cooperation will complement SCB's existing private banking capabilities while providing Julius Baer access to the fast-growing Thai wealth management market.

Thailand's overall wealth market is estimated to be around US$300 billion, with a rapidly growing population of high net worth individuals of approximately 30,000, according to the BCG Global Wealth Report 2017.

"Not only is wealth growing in Thailand, the demand for sophisticated wealth management services and global investment strategies is also expanding quickly," the banker says.

As the largest commercial bank in Thailand, SCB has been serving wealthy clients since 1907 with over US$23 billion of AUM from its wealth management operations. SCB has more than 13 million clients across Thailand and is listed on the stock exchange of Thailand, with a current market capitalization of around US$15 billion.

Julius Baer, one of the leading Swiss private banking groups, has CHF 388 billion of total AUM as of the end of 2017, is expected to significantly expand the combined growth prospects for both firms via this pioneering JV.