Ample room for private banking to grow in Asia

Ample room for private banking to grow in Asia
By Lynda Hong | Posted: 24 October 2012 2215 hrs
     
SINGAPORE: Citigroup has overtaken Swiss bank UBS to become the top private bank in Asia-Pacific last year.

And despite assets under management (AUM) in the region dipping slightly by 0.5 per cent to US$1.1 trillion in 2011, private bankers said there is still room to grow in Asia.

Less than 20 per cent of wealth owned by Asian of high net worth individuals are professionally managed by private bankers.

This means there is ample room for the industry to grow in Asia.

But experts said the lack of talent may stifle growth for some private banks.

Rajesh Malkani, who is the head of private bank (East Region) at Standard Chartered Private Bank, said: "We are finding more and more that we have to re-train people, whether we bring them from the external world or from the internal world, to really make them capable of dealing with all the changes that is happening in the industry. So it is not an easy industry, there is a lot of new regulation, there a lot of cost growth in our businesses."

The Private Banker International Asia-Pacific AuM Benchmark 2012, which ranks private banks according to the assets of high net worth individuals' funds they manage, placed Citigroup as the top private bank in Asia Pacific.

The US banking group has some US$193 billion under management in 2011.

It overtook UBS, which is now in second place. HSBC came in third in the survey.

JP Morgan Private Wealth Management Asia's chief executive officer, Peter Flavel, said: "Wealth in Asia is growing at low teens and we are expected to grow around that rate or even better over the next three to five years. And I see Asia as the most exciting place for wealth management globally."

The survey added that the drop in Asia Pacific's AUM last year was due to falling asset values caused by the global economic slowdown.

Most of the private wealth management in Asia Pacific were managed by banks that are not headquartered in Asia.

But the study added that universal banks with strong retail offerings have a stronger advantage to target high net worth individuals with assets valued between US$1 million and US$5 million. This is a core segment for Asian private banks.

Currently, foreign banks are taking a bigger slice of the private banking pie, but the four Asian banks in the survey are catching up fast with their combined AUM rising by seven per cent.

Eleven out of 16 of these foreign banks saw their AUM staying static or dipped in 2011.

Tan Su Shan, who is managing director and group head of wealth management at DBS Bank, said: "As interest rates in some local jurisdictions get higher - because of Basel Three or because banks are just shrinking their balance sheets - some of our clients do need liquidity to pump it back into the business to buy ships, to buy palm oil. So the competition for funding is really the business growth."

DBS is the highest ranked Asian headquartered private bank, managing US$39 billion last year.

This is followed by Standard Chartered Private Bank, Bank of Singapore and Hang Seng Bank.

- CNA/fa


- wong chee tat :)