DBS Private Bank has launched a multi-family office (MFO) service leveraging on Singapore’s variable capital company (VCC) framework.
DBS claims the DBS Multi Family Office Foundry VCC (DBS MFO) is a first globally. While MFOs in Singapore have long used the VCC framework for client portfolios, Lee Woon Shiu, DBS group head of wealth planning, family office & insurance solutions, said the DBS MFO fills a gap in the market.
Under the DBS MFO, fund administration and custody are done by DBS, which means clients will not have to deal with third-party providers that other MFOs may need to engage. The VCC framework was rolled out in Singapore in 2020, and since then, many MFOs have tapped the structure for client portfolios.
Lee said: “Compared with an entity that may have to outsource some functions, there is always the fear that data may be compromised. That all our services are housed within DBS gives clients a lot of comfort particularly at this point in time when they want stability and safety… These issues became very accentuated after the recent slew of bank failures. This satifies clients’ needs at a time when there is concern over the stability of the financial system.”
He said the bank has received “positive feedback and healthy interest” from clients, and is currently in talks with 20 to 25 clients and prospects.
The minimum wealth for the DBS MFO is around S$15 million. DBS said it already serves as banker to more than a third of the 700 single family offices established in Singapore. Its family office assets under management (AUM) has more than doubled in the last two years. It has declined to specify the AUM of family office clients.
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The VCC structure was hailed as a game-changer as it offers a number of benefits, including tax efficiency and flexibility in terms of fund vehicles, investment strategies and the ability to pool assets. The VCC also helps cater to clients who need family-office services, but do not have enough assets to set up a single family office. Clients also may enjoy cost savings through shared resources and expenses across multiple sub-funds.
Lee said VCC does away with the use of companies or trusts, which were the traditional vehicles used by wealthy families in wealth structuring. “Being able to use structures other than companies and trusts will give families more flexibility to optimise their tax position and enhance their governance planning for succession purposes.”
He added that the DBS MFO is also “an attractive option for some families who are not looking to immediately relocate to Singapore, but would like to consolidate their assets here”.
“As global demand for family offices continues to rise, the unique strength of the ‘Singapore Inc’ proposition – a cocktail of attributes including strong rule of law and political and economic stability, among others – will continue to appeal to families worldwide,” he said.
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