Wealth Management Pendulum Swings East

Asia

Asia

The latest acquisition of a European bank’s private wealth business by a domestic Asian bank is another indication that the future of wealth management belongs to Asia.

As the global hub of wealth creation, rather than wealth preservation, Asia is destined to take the lead as the world’s wealth management centre.   

OCBC’s purchase of Barclays Asian units in Hong Kong and Singapore for an indicative purchase price of $320 is the latest in a string of Asian banks picking off the dedicated Asian wealth units of western based wealth managers.

With domestic woes and regulatory complications the «colonial wealth management models» rolled out by European banks across Asia are gradually being diluted. 

Recent Transactions

In 2009 Singapore’s OCBC purchased the private banking unit of Dutch-based ING Group in Asia for $1.5 billion in a deal which would elevate it to Singapore's second-ranked bank by assets. It also launched onto the market the stand alone private bank, The Bank of Singapore.

More recently in 2014 DBS, Singapore’s largest bank, acquired the private banking and selected trust business, of Societe Generale in Hong Kong and Singapore for $220 million, when the Paris based bank decided to withdraw.

The Future

At a presentation several years ago Tan Su Shan Managing Director and Group Head Consumer Banking and Wealth Management at DBS Bank spelt out reasons why Asia will take the lead. 

The increase in numbers is one factor, Asia Pacific today has a middle-class population of more than 500 million and this is predicted to expand significantly, and triple by 2020. Also, unless they have scale, a diversified geographical location such as Asia is not the easiest place to try and roll out a private wealth business.

These factors combined with the rising costs of doing business in relation to experienced personnel and compliance, are weakening the position of marginal banks in the Asian wealth management space.

Swiss Banks Committed

The three major Swiss banks have also pinned their hopes on Asia, indeed Julius Baer calls Asia its second home. Credit Suisse have loudly indicated they are pinning their hopes of future growth on the Asia-Pacific region.

Likewise UBS the market leader, has re-affirmed its commitment to Asia with new high profile premises in Shanghai and Beijing and an aggressive push to further enhance their leading position in the region. 

 

  

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