After more than ten years with Lim & Tan (L&T) brokerage, I decide to do an OUTWARD TRANSFER of a portion of my stocks, to the custody of Standard Chartered bank (SCB).
WEALTH LENDING SERVICES
One primary reason is SCB’s ability to provide Wealth Lending Service at low rates, typically less than 1.5% p.a. (subject to Libor/sibor). Instead, L&T can only provide Share Margin Lending that are typically 2.99% and higher.
Wealth lending is collateralized by the shares you owned and there is an LTV (Loan to Value) for each of the shares you own. LTV can be 0.3, 0.4, 0.5, 0.6 and up to 0.7 the values of the shares, depending on what shares you own!
For more details, you have to refer back to your individual broker / wealth manager as different portfolio at different time has different LTV and different lending rates.
Custody is another more trivial reason for my transfer. While our SGX shares is generally in the custody of CDP (in a way guaranteed by MAS), your foreign shares are in the custody of the brokerage firm / bank. Henceforth, assuming that the broker firm / bank collapses, there is actually no guarantee of your shares. Of course, MAS in SG has strict rules and regulation, and as long as you are MAS regulatory trading firm, it should be pretty safe. Still, SCB being larger in financial muscle, perhaps give a better assurance than L&T?
Recently, I had my house financed by SCB. I am well pleased with SCB’s fast, simple and good service. Thereafter, I was contacted by SCB wealth / business managers. They are very friendly, knowledgeable and prompt in their response. SCB is not my first contact bank for home loan and wealth management. I contacted DBS, UOB and OCBC initially. In my opinion, SCB is more flexible in their dealing with me and offers more attractive rate. I also feel that the managers at SCB are also “hungrier” with better follow up.
HANDLING FEES & GIFT
The out-transfer handling fees charged by L&T is close to SGD2,000, that in my opinion is very hefty. See below.
Luckily SCB is kind enough to waiver my in-transfer fees and also rewarded me with a sign-up gift. The gift monetary amount more than offset the out-transfer fees I incurred.
L&T ‘s trading fee is not cheap, and it is not as if I don’t know. One reason I ignored the higher fees is due to the good service of my broker. He is more than a broker but a friend. Frankly, I don’t mind paying more for his service. End of the day, my broker is also earning a living from the commissions.
SCB and DBS treasure have more attractive fees. Still, the rates is unable to compare to the likes of TD Ameritrade, Tigerbroker, FSM, Interactive Broker etc. This is because there is a wealth manager assign to you.