As markets rose over the past decade, banks competed in offering margin loans to a limited group of billionaires. Secured lending against a business magnate’s company stock is a way to deepen a relationship and bring in other business for the bank, such as lucrative fees for advice on mergers or stock listings.

It’s also risky. A soured margin loan to Lu Zhengyao, the billionaire founder of Luckin Coffee Inc., contributed to an increase in Credit Suisse’s first-quarter loan-loss provisions, which grew five-fold from a year earlier, according to people with knowledge of the matter.

As global equities tumbled in March, Credit Suisse and UBS were reportedly among banks asking clients to provide additional collateral against their share-backed debt facilities. Private bankers may be forced to squeeze more collateral from their clients if markets slump again.

Digital Platforms
In Asia, the leading edge of the pandemic as well as the world’s fastest-growing wealth region, the crisis is accelerating the move to digital platforms, according to UBS.

“The epidemic has changed the way we engage with our clients; it’s basically combining the face-to-face and also all the digital channels,” Amy Lo, the Swiss bank’s co-head of Asia Pacific wealth, said this month in an interview with Bloomberg Television. “We’ve seen activity picking up in digital banking. That’s the way to go.”

While the Monaco Grand Prix isn’t the only super-exclusive event for ultra-rich, it has a wow factor that will be particularly difficult to replicate online.

A bank may spend more than $20,000 per client, or 5% to 10% of annual revenues from an account at the lower end of the scale, according to a relationship manager who asked not to be identified. That could include a couple of nights at a hotel and entry to the Paddock Club, which allows race fans to get close enough to smell the gasoline fumes.

Later, banks might take younger clients to F1-driver hangout Jimmy’z, a Monte Carlo nightclub where bottles of Champagne start at $500. Prices at the top restaurants can rise as much as 500% for a set-menu dinner during the Grand Prix.

‘Insane Weekend’
“It’s an insane weekend,” says Nicholas Frankl, a former Hungarian Olympic bobsledder whose company My Yacht Group organizes a four-day super-yacht event in Monaco during the race. “It’s Disneyland for adults.”

Frankl’s go-to staples include kilos of caviar and double magnums of Whispering Angel Rose. Two years ago, the chief executive officer of a financial-services company flew directly from the Nice airport to the yacht’s helipad with his assistant, while deejay Bob Sinclar played a live set for guests.