Asian private banks have been on a buying spree over the last few years, swallowing up their rivals as tough conditions make some smaller firms look for the door. Prominent deals include ABN Amro Private Banking being bought by LGT, ANZ selling its wealth arm to DBS and OCBC buying Barclays' Asian wealth business.
Indosuez Wealth Management, the rebranded private banking arm of Credit Agricole, is now looking to add to that trend.
The division’s relatively small size might make Indosuez an obvious target for a bigger firm; it has $9.5 billion in assets under management in Asia Pacific. But Indosuez is, instead, looking to make acquisitions itself.
The need for scale
There is no consensus as to quite how big private banks need to be in Asia to survive in the current cut-throat environment, although $20 billion is a commonly quoted figure. But in any case, it is clear that the figure is growing, said Indosuez’s global chief executive Paul de Leusse during an interview with FinanceAsia’s sister publication, AsianInvestor, alongside recently appointed Asia CEO Pierre Masclet.
While de Leusse said that organic growth is the firm's first priority worldwide, it is ambitious about its Asia growth, eyeing a mix of acquisitions and partnerships to help it grow.
Indosuez is looking at both regional and local onshore assets, de Leusse said, noting that competition for wealth businesses is fierce and valuations are high.
But successful acquisitions are not always just about the amount being offered for a business, but often the quality of the buyer is a factor as well, argued de Leusse. Sellers would prefer to sell a business to the a high-quality, well-established and well-run operation, he said, pointing out the reputational risk a firm can get from off-loading its business to a firm that does a bad job for its clients.
Likewise, de Leusse (pictured left) said, you need to be very cautious about what you buy. He said the quality of clients, and being clear on the sources of their wealth is more important than ever. He stressed the greater scrutiny by regulators of know-your-customer processes at banks these days.
This has become more of a focus following events such as the closure of Swiss bank BSI's Singapore branch amid allegations of its ties to funds related to the 1MDB scandal in Malaysia.
Indosuez has looked at five or six potential deals since de Leusse started as CEO in January 2016, but has only done one so far – a referral agreement it struck last year with HSBC Private Banking in Monaco.
One Hong Kong-based senior relationship manager at a European private bank confirmed that Indosuez was more active and visible in Asia these days.
“We hadn't heard much from Credit Agricole [on the wealth management side] for a few years, but now their staff are speaking at conferences again and they are busy hiring,” she said.
“Credit Agricole has a very good franchise – they can do a lot of things and they are now obviously looking to grow their wealth management franchise in Asia,” the RM told AsianInvestor. “The question is – are they growing because they are committed to the market or because they ultimately want to sell the business?”
For the original version of this story, please see AsianInvestor’s article, ‘Indosuez WM on Asia expansion drive, eyes acquisitions’