Chinese banks up the ante to lure millionaire clients from overseas private investment houses
More than 60 per cent of mainlanders with personable investible assets worth in excess of US$1 million now hold those offshore, and 10 per cent of that by value are handled by foreign banks
A growing number of well-off Chinese are choosing to invest their wealth offshore, according to a latest McKinsey report, leaving domestic banks in an increasingly tough fight for high net worth individuals, in what is now predicted to soon become the world’s second largest private banking market.
More than 60 per cent of mainlanders with personal investible assets worth in excess of US$1 million now hold those offshore, and 10 per cent of that by value are handled by foreign banks, claims the study published by the consultancy in Shanghai.
The trend is forcing Chinese banks to up their ante by integrating investment platforms that span onshore and offshore offerings, and strengthen their private-banking teams in cities such as Hong Kong, Singapore, London and Zurich, to fight for a larger slice of the valuable pie.
China is now expected to replace Japan as the world’s second largest market for private banking this year, trailing only the United States, according to McKinsey.
“The winners over the next decade will be those with strong offshore capabilities – we are at a watershed in the battlefield for private banking,” said Elaine Huang, an associate partner at McKinsey, based in Shanghai.
Private banking, targeting US dollar millionaires, is now deemed the cherry on the cake for lenders, playing a pivotal role in bank profitability. In China, US dollar millionaires account for 0.5 per cent of the country’s total retail client base, but they contribute to 20 to 25 per cent of total retail banking assets.