Private banking agenda driven by Asian roar

Strong new money data, positive growth rate projections and a steady slew of senior management relocations to the Asia Pacific (Apac) region demonstrate that Asia is now seen by most international players as the primary driver of growth for private banks. Credit Suisse’s latest quarterly report on business performance showed that the wealth management business originating from Apac accounted for SFr11.5bn ($10.8bn) of net new money (NNM). This was SFr1.2bn more than from Emea, despite the bank employing only 360 relationship managers (RMs) in the Apac region versus 1,190 RMs in Emea. Significantly, the NNM rate was SFr6bn higher than the bank’s home market of Switzerland. Such rates are greater than the last period when Apac was seen as the market saviour – back in 2006-7 when a wave of international bank growth in the region kicked off through banks setting up physical fully-licensed presences in the region. More mature market In fact, the market appears to be moving to a new level of maturity if one examines the relationship between NNM per RM regionally. At Credit Suisse RMs in Apac have been performing significantly better than their peers in Emea, contributing SFr23.2m in NNM per RM. They are the bet for the future, it seems. So much of a bet that Vontobel’s latest quarterly report also revealed how exposed those wealth managers are that have yet to target the Asian market. While Vontobel has managed to capture a fair percentage of assets flowing out of Switzerland through its newly established European offices, the bank’s CEO has expressed concerns about Vontobel’s ability to continue to preserve its current profitability levels if it doesn’t expand into the Asian market. Meanwhile, one of the most significant indications of the importance of the Apac market can be found in the relocation of key managerial officials to the region. For instance, Douglas Wurth, the head of JPMorgan Private Bank’s international arm, moved last month from New York to Hong Kong. This was followed closely by an announcement that HSBC was planning to move Chris Meares, the bank’s global head of private banking to Hong Kong from London. The Swiss banks are also looking at elevating the firepower of their regional executives to compete against these initiatives, while several of the old hands in the region – such as Citibank Private Bank – have been beefing up their decision making teams. Such increased representation at executive level supported by strong NNM data all point to some clear bets being made on the future importance of the region. The underlying question remains whether the strategies being developed by these senior officials will seek to reach out for new custom or whether they will once again revert to seeking to win market share off each other. Only time, and better data, will tell. Sebastian Dovey is managing partner at Scorpio Partnership, a consultancy dedicated to the global wealth management industry