International private banks fight to manage assets of Asia’s wealthy

With global bank revenues under pressure, the competition to manage the assets of the new mega wealthy from emerging Asia is fierce. Leading players continue to launch new initiatives and hire more wealth management staff, hoping that fees from managing these assets will offset declines elsewhere. However, with costs rising, return on investments shrinking, talent hard to come by, and much Chinese capital still tied up on the mainland, it seems unlikely all will succeed. However, the rewards for those that do make it will be sizeable.

At the end of 2015, there were 5.1 million high net worth individuals in Asia Pacific with a combined wealth of US$17.4 trillion, according to consulting firm Capgemini’s world wealth report, which assesses a high net worth individual to be one with more than US$1 million in investable assets.

“These sorts of amounts get global banks excited,” said Toby Pittaway, partner at consulting firm Oliver Wyman.

Conversations with bankers support this view. “Asian billionaires are BNP wealth management’s primary source of growth of assets,” says Andy Chai, the company’s head of wealth management for the Hong Kong market, who added that the bank’s wealth management division in Hong Kong had been hiring “more or less [without interruption] since at least 2011”.

They are not the only ones. David Shick, head of private banking for greater China at Julius Baer, said it has “increased the number of relationship managers for greater China by 33 per cent so far this year to service the massive rise in the region’s affluent class”.

Credit Suisse said it increased the number of new relationship managers by 100 just last year, and plans further recruitment on top of that. However, it remains to be seen whether all those new staff will have enough assets to manage.