The changing shape of Asia’s private banking sector
Singaporean banks and Swiss specialists step up their presence in the sector
After a turbulent few years, Asia’s private banking landscape is starting to develop a new look, as Singaporean and Swiss private banks expand into the space left by departing European institutions.
In 2016, Singapore’s UOB and Swiss UBP broke into the top 20 private banks in Asia ranked by assets under management (AUM), while Bank of Singapore increased moved up four places to become the seventh largest in the region, according to figures released on Tuesday by the Asian Private Banker magazine.
Bank of Singapore, the wealth unit of OCBC, grew its AUM from US$55 billion to US$79 billion, on the back of its acquisition of Barclays’ wealth unit in early 2016.
“The Singaporean banks have regional ambitions, and for them, increasing the size of their private bank is a good way to grow,” said Jan Bellens, EY Asia-Pacific banking and capital markets leader and global emerging markets leader.
“For the Swiss players, I think it is a case that Asia is where the growth is at a time when things are more challenging in their home market.”
Activity in the Asian private banking space in recent years has primarily been among mid-sized players which are either looking to gain size to compete, or withdraw from the market.
The top six places in the table were unchanged from 2015. UBS, with its US$286 billion of AUM, fended off Citi and Credit Suisse to maintain the No 1 spot.
Despite all the comings and goings, assets under management at the top 20 private banks in Asia grew by 6 per cent in 2016 to reach a record high. Collectively, they managed US$1.55 trillion of the region’s wealth in 2016, excluding mainland China, according to the magazine’s calculations.
The magazine noted, however, that AUM growth excluding onshore China was dwarfed by that of Chinese banks. China’s top five private banks have increased their AUM by an average annual growth rate of 27 per cent since 2012, while the top five Asian banks excluding onshore China achieved CAGR of just 6.4 per cent.
The attractions for international private banks of servicing this onshore Chinese wealth are significant, but doing so involves a number of challenges, most recently the strict controls on capital leaving China.
“A number of the international private banks have stated that their aim is to service onshore Chinese wealth, but it is not yet clear what a successful operating model might be,” Bellens said.
