Private bankers are playing musical chairs again as they woo Asia’s growing abundance of wealthy families and individuals.
The region’s 3.3 million high-net-worth individuals (HNWIs) are second in number to North America, and this year they jumped ahead of Europe, according to the Capgemini Merrill Lynch 2011 World Wealth Report released earlier this year.
And the banking business is growing. Assets under management held by the top 20 Asia-Pacific banks has increased by 89% to more than $1 trillion since the last survey of its kind in 2007, according to a survey of the region’s leading private banks released in mid-October by Private Banker International.
Asia is where the business is, but can everyone really make money chasing it? While PricewaterhouseCoopers forecasts that Asia’s private banks should post revenue growth of almost 20% this year, it’s going to be tough to maintain. That’s because in Asia, where building wealth is still the aim (as opposed to preserving it, which is oft the goal in Europe), much of the banks’ revenue comes from commission income on stocks, bonds and currencies.
That income freezes up when investors become wary of the markets, but the bet is that such freezes do not last long. And so banks continue to build.
Yesterday, BNP Paribas Wealth Management announced three recent hires in Asia. Alfred Tsai joined as head of the China market, based in Hong Kong. His last job was managing director and senior adviser at Julius Baer.
Anton Wong joined in Hong Kong as a managing director of what BNP Paribas calls its key client group. He was most recently a director at Credit Suisse.
Vincent Koo joined BNP Paribas Wealth Management as Asia-Pacific head of wealth management compliance, based in Singapore. Koo formerly worked for various international institutions in audit and compliance roles, including Deloitte & Touche, Hang Seng Bank, UBS, Citibank and most recently RBS Coutts.
“We expect to further solidify our strong position in the market, strengthen our offerings to the key clients and accelerate our growth plan,” said Mignonne Cheng, Asia-Pacific chairman and CEO of BNP Paribas Wealth Management.
But BNP is not alone. Earlier this year, Julius Baer received approval to open a representative office in Shanghai from the China Banking Regulatory Commission. It also took over Macquarie Group’s private banking portfolio in Asia.
On Monday, Julius Baer said former Goldman Sachs Group banker Kaven Leung will become its deputy Asia chief executive and North Asia CEO, effective April 19. For gossip on this move, see Leigh Powell’s story over at AsianInvestor.
Leung was previously co-head of Goldman’s Asian private banking business with Ron Lee.
While talent invariably moves often in the banking world, inevitably chasing bigger titles and more money, jumping ship in private banking is trickier. To be of value to your new bank, you need to bring relationships with you. But how often can you move around before your clients get fed up with the changes?
It’s a dangerous game, particularly considering the ferocity of the competition. In the recent survey by Private Banker International, UBS was ranked as the leading wealth manager in the region, followed by Citi and HSBC, which came in a close third, creating a three-horse race. But local banks are making progress with the likes of DBS, OCBC’s Bank of Singapore and Hang Seng Bank claiming market positions of 10th, 11th and 14th respectively.
So, the trick to maintaining growth amid such competition and volatility is to attract more clients. Many of the private banks are now lowering their wealth thresholds and designing new product offerings to chase the region’s future wealthy clients, focused on the $1 million to $5 million wealth range. Isn’t this how we got into the accumulator debacle?
The race to chase the money — from all sides — is surely going to end in a few tears shed. For everyone can’t be a winner.
