TYCOON Oei Hong Leong's staggering $1 billion loss has focused attention on the private banking industry, whose spectacular rate of growth has been hobbled by the global financial crisis.
Investors are keenly awaiting the result of what could become a landmark case brought against Citigroup by Mr Oei, who is alleging negligence and misrepresentation in the handling of his investments in foreign currency and US Treasury bonds.
Many investors have been burnt in recent months, with the meltdown of stock markets allied to volatility in foreign currency markets.
And Mr Oei's suit could prove to be just the tip of the iceberg as the number of lawsuits filed by the wealthy against private banks continues to swell.
High net-worth individuals from Indonesia, Hong Kong and Singapore have lost millions since the start of the credit crunch and are looking to recoup some of their losses via legal action.
Some of the foreign exchange products the banks marketed include currency derivatives known as 'accumulators', that have come to be nicknamed 'I kill you later'.
It is thought, however, that investors claiming they were unaware of the risks inherent in such products are unlikely to win legal actions, given that banks would have put disclaimers in the fine print.
Court appearances will not be the only concern for private banking chiefs over the coming months.
The industry, which has been used to heady double-digit growth rates, especially in Asia, is having to rethink its strategy.
Recent studies have shown that the wealthy are now listing safety and protection as their top priorities, rather than risk.
That means they will demand products which may generate less income for banks, which could prove problematic for many which are subsidiaries of listed entities and under pressure to report buoyant quarterly earnings.
Some of the larger highly leveraged banks have had to cut back on loans to clients as the flow of capital has dried up because of the credit crunch, one industry player noted.
At a recent conference, Mr Jean Pierre Cuoni, founder and chairman of private banking and asset management group EFG International, was quoted as saying that 'private bankers should play the role of the adviser, not the role of the sales person'.
Steep headcount increases over recent years have created its own problems as institutions have had to cut costs.
Jobs have had to be shed. Even HSBC, among the least-affected among the global banks, has said it will cut 100 private bankers in Hong Kong.
Additionally, changes to global offshore secrecy requirements currently being considered may affect the attractiveness of the city state as a private banking centre.
Singapore is one of 38 countries highlighted by the Organisation for Economic Cooperation and Development (OECD) as having agreed to comply with its recommendations, but to date no details have emerged about how bank information will be shared with the foreign tax authorities.
As the industry battles its current challenges, industry insiders suggest it may be the relatively smaller private banking outfits, such as HSBC, Standard Chartered, or European specialists such as Julius Baer, Lombard Odier and EFG that will benefit.
'We take a longer-term outlook for our clients,' said one banker, 'more consistent with their objectives'.
