"In the exclusive world of private banking, a gravitational shift of resources toward Asia is well under way. A shift in profits may take longer to follow.
A number of banks are either acquiring or setting up businesses to manage private wealth in an effort to tap the rising population of multimillionaires, particularly in China and India. Singaporean lender Oversea-Chinese Banking Corp. tripled its private-banking assets when it bought ING Groep’s Asian private-banking operations last year. Macquarie Group started its regional wealth-management unit in 2008. In Japan, Barclays Wealth is in talks to set up a wealth-management venture with Sumitomo Mitsui Financial Group, which invested £500 million, around $997 million at the time but about $750 million today, into Barclays in June 2008.
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Others have been shifting their global or senior executives here. J.P. Morgan Chase’s international private bank chief, Douglas Wurth, moved in February to Hong Kong from New York to take a job heading all private-banking markets outside North America. Deepak Sharma, in Singapore, became the global chairman of Citigroup’s private bank last year, while another Singapore banker, V. Anantha-Nageswaran, became chief investment officer of Swiss private bank Julius Baer.
Accompanying the build-up, after a year of layoffs, is a burst of hiring and poaching. Citigroup is looking to hire 20 to 30 private bankers for China and India this year; BSI, a Swiss private bank that is part of Italian insurer Generali Group, hired 70 private bankers from RBS Coutts Bank in Singapore last year; and Barclays Wealth has hired more than a dozen senior private bankers from market leader UBS in the past six months to focus on India.
UBS, which lost more than $100 billion in client funds in the financial crisis globally and has had a series of private bankers defect to rivals, is itself on a hiring spree. “Asia Pacific is the fastest-growing region for all of UBS’s businesses and we expect to make around 400 hires…throughout front, back, and middle offices of the wealth-management business across the region this year,” said Kathryn Shih, head of UBS Global Wealth Management, Asia Pacific.
Still, winning business from Asian clients could be a challenge. During the financial crisis, many lost big sums on investments in structured products and hedge funds.
Anuj Khanna, head of North Asia private banking at Credit Suisse Group, says that even though the group cut its staff last year, it increased hires at the managing-director level. One benefit, he said: New assets generated in Asia by newly hired relationship managers in 2009 tripled from 2007.
Bankers say clients are being more cautious about hedge funds and stocks. “As there’s a lot of uncertainty still in the markets, our ultra-high-net worth clients are now looking at private-investment opportunities, distressed assets or private equity, rather than stocks or bonds,” Khanna said.
Simply reaching some of the best customers will remain a challenge in India and China, where licenses to bank for the wealthy are hard to obtain. Some of that business naturally goes to Singapore and Hong Kong, away from the prying eyes of domestic tax authorities. But studies have shown that Asia’s wealthy put only 10% to 20% of their assets overseas; the rest stays at home.
A handful of foreign banks may have an edge in these markets. UBS has a license to trade securities for clients in some key Chinese cities, and HSBC Holdings’s retail branches dot India, giving it reach. But even for them, access is nascent, at best.
The rush to bank Asia’s rich may be on, but there is a long way to go."
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