"Citi remains entirely committed to the private banking space in China, and we will continue to invest in it," a spokesman said in a statement yesterday. "Any speculation that we are halting our business in this area is untrue. We continue to provide our clients with superior service as we look to expanding our wealth management offering in China."
Citi officials confirmed that a small number of employees at the three-year-old private banking unit will be affected by the move, although no jobs will be lost. A spokesman declined to provide the exact number of people impacted.
This restructuring of the private banking business gets underway just as the US bank is negotiating a sale of a stake in its Smith Barney retail brokerage business to Morgan Stanley. That sales does not impact Asia, since Citi closed its Smith Barney brokerage in Taiwan, Hong Kong and Singapore in March last year, as part of a reorganisation that enabled it to combine its Smith Barney brokerage and private banking businesses into one entity focused on high-net-worth investors.
Wealth management is a growing business in the region. Merrill Lynch and consulting firm Capgemini, in their annual global report on high-net-worth individuals (HNWIs), forecast that assets of HNWIs in Asia-Pacific will grow at an annual rate of 7.9% to reach $13.9 trillion by 2012.
India is the world's fastest-growing HNWI market with a 22.7% gain to 123,000, followed by China with a 20.3% increase to 415,000. So it's no surprise that Citi has been targeting wealthy Chinese with a net worth of at least $10 million, which is a standard benchmark in the industry.