Barclays combines units to build wealth management in Asia

Mumbai next stop as the group leverages the capabilities of BGI and Barclays Capital.
Barclays Group has decided to aggressively build its private-banking business in Asia and is opening an office in Mumbai to service IndiaÆs growing onshore market.

ôIn Asia weÆre linking more closely to Barclays Capital and Barclays Global Investors,ö explains Thomas Kalaris, the London-based CEO of Barclays Wealth. The initiative comes from the top, pushed by Bob Diamond, the head of the group.

The firm will concentrate on Europe and Asia ex-Japan, as it deems Japan highly regulated, and the United StatesÆ market mature and highly competitive.

Unlike its bigger competitors, Barclays Wealth lacks a retail bank-anchored distribution channel. The regional wealth business will therefore be the responsibility of Robert Morrice, Asia-Pacific chairman and CEO of Barclays Capital in Hong Kong. Nigel Sze in Hong Kong is overseeing the day-to-day of the regional wealth business.

Barclays Wealth now oversees &175 billion of high-net-worth individual assets, making it the largest private bank in the United Kingdom. Kalaris says, however, ôWhen it comes to wealth management, we are hitting far below our weight. The Barclays brand can carry a wealth management business thatÆs a multiple of our current size and scale.ö

Although it lacks the retail infrastructure of bigger rivals, Kalaris argues that Barclays can leverage its brand and its expertise in investment banking and fund management to provide Asian individuals a service that is better geared to their preferences.

ôOur content is world-class product from BGI in beta and alpha [investment strategies],ö says Kalaris, ôand structured products from Barclays Capital. We add a risk-oriented asset allocation on top.ö

Robert Morrice notes that Barclays Wealth doesnÆt need to have the size of mega-private banks like UBS or Credit Suisse in order to be a successful niche provider. ôPrivate banking used to be about small Swiss banks catering to the high-end client,ö he says. ôThatÆs the way to go, not retail banking.ö

He argues that Barclays Wealth can link with BGI as well as offer an open platform of third-party products, while the investment bank can provide contacts.

Will Barclays Wealth be primarily a driver for BGI content, or is open architecture the emphasis? Kalaris replies that the mix varies by client. In some cases, BGI has made joint presentations about solutions; at other times, BGI is merely a provider of investment asset classes on Barclays WealthÆs shelf, or the underlying manager of a Barclays Capital-created structured product.

There is now about 100 staff in Hong Kong and Singapore associated with Barclays Wealth, and hiring and keeping talent remains the biggest challenge, particularly in relationship management. But Kalaris argues that the firm can still boost revenues by 40% in 2007 even without new hires; growth is more about scaling the existing framework.

The main growth in headcount will be in India. Barclays Wealth plans to open an office in Mumbai in February, complementing its existing 150 employees from Barclays Capital there.

ôPrivate banking is new to India,ö Morrice says, noting the non-resident Indian market has long used private banks offshore. ôMany firms are setting up operations there, trying to get in early.ö

Some attractive points about India: the investment culture is equity-oriented, with equities accounting for 30% of assets for wealthy individuals; the Reserve Bank of India is liberalising how wealthy Indians can invest both onshore and overseas; it has a huge middle class of around 200 million souls, from which more rich families are emerging; deregulation and the eventual move toward currency convertibility will stimulate local capital markets as well as offshore investment, as well as support the growth of the domestic mutual funds industry.

ôAnd I canÆt think of a better brand name in India than Barclays,ö Kalaris boasts.
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