Private bankers in Hong Kong could face axe
Lulu Chen and George Chen
Global banks that hoped to make Hong Kong a platform to win rich mainland Chinese clients are now under growing pressure amid a disappointing market performance this year, and some institutions have begun sacking staff to save cost.
Last week, Wall Street bank Goldman Sachs quietly laid off five Hong Kong-based employees, including at least one vice president-level employee, in the China team of its private wealth management division, according to sources familiar with the matter.
Also recently, Swiss private bank Julius Baer cut several employees in its investment team in Hong Kong. Earlier this month, Julius Baer announced a global plan to reduce about 1,000 jobs to cut costs.
"We constantly (do) performance management (of) our people but we are not downsizing," said a spokeswoman for Julius Baer in Hong Kong. Goldman Sachs declined to comment.
According to the Global Wealth Report 2012 released by Credit Suisse this week, mainland China had 964,000 US dollar millionaires by mid-2012 and the number of millionaires is expected to nearly double to 1.9 million, with mainland household wealth expected to total US$38 trillion by 2017, powered by strong growth in the world’s No.2 economy.
Mainland Chinese have become increasingly big spenders when they travel, particularly for wealth management products, making them an ideal target for global banks eager to increase market share in a business that is seen as less volatile and much more stable than investment banking.
But mainland Chinese customers have been less prepared to open foreign bank accounts, partly due to concerns about the worsening euro zone sovereign debt crisis and also because of a stuttering global economic recovery from the global financial crisis triggered by the 2008 collapse of Lehman Brothers.
At Goldman Sachs, the entry-level for a private banking account is believed to be around US$10 million per individual, significantly higher than at other banks.
For more details on this exclusive story, please read Friday's South China Morning Post or visit scmp.com.