Tuesday, 05 June 2012 00:00

Asia becomes a mature market for private banking

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The world of Private Banking in Asia is changing quicker than ever before. The last economic crisis forced the banks as well as the bankers to change their mindset.

Private banking business is changing in the Asian region, strong leadership and stability in top management is regarded more important for bankers than the brand name or investments products range.

This is caused by the enormous job changes in the senior management in the last few years, which has created confusion in the direction for Private Bankers and in their compensation structure.

A few years ago clients would move 80% of their assets with their bankers if they move. Nowadays this has changed. Clients would only move 20-25% of their assets if their bankers move to a new employer. This has obviously slowed down the pace of Private Bankers switching their jobs.

Also banks start to realize that the extreme expectations from the head office being put on the region’s private banking executives and passed on the bankers works counterproductive.

Asset growth targets of 40% yoy for a regional office were normal while the market for experienced Private Bankers was and still is very driven by the willingness of senior bankers to move.

Furthermore many banks are still building up their platform of products and services due to the lack of significant investments in IT and product development in the past.

New stricter regulations demand that banks separate the on- and offshore money more clearly than ever. Back to back facilities are subject to more stringent rules to avoid questions from the tax office.

Regional differences
In mainland China, banks need to offer a wide variety of value added services besides a consistent and open platform. Innovative ways to move money overseas or professional advice for choosing overseas university for the children are highly appreciated.

In Singapore and Hong Kong clients are much more price sensitive. In Philippines and Indonesia the clients come from the younger generations and most money is placed offshore, maintaining a large social network in those countries to introduce clients to each other is appreciated.

Wealthier than ever
Clients in Asia are wealthier than ever. Ultra Net Worth Individuals of $ 50 million are found with most banks that can service and maintain these clients. Family offices are on the rise, often started by senior private bankers from Europe or America.

These offices are serving a limited number of clients while selecting brokers for their best capability/expertise. Decisions are taken by the investment managers of the family offices.

It is clear that things are changing for the better. Clients are receiving better service and quality for their money and the big rush of banks to hire anyone with some sort of network has tremendously calmed down. The Private Banking market moves slowly towards the European model though with some strong Asian flavor.