Kevin Brown, Singapore
Global and regional banks are struggling to expand its private banking in Asia in an attempt to grab a piece of the wealth generated strong economic growth there, but after some time and the potential wave of assets in Switzerland.
David Conner, CEO of Singapore Oversea-ChineseBanking Corporation, capture the atmosphere exactly a week ago, issued a statement that his institution has paid $ 1.4 billion for the Asian private banking Dutch bank ING. In the financial ratio of 5,8 times the size of assets under management of ING Asian operations are sold to more than twice the estimate of its European private bank that was bought by Julius Baer in the ratio of only 2,3.
The deal is welcomed. Most analysts support the view of Connor, it was a rare opportunity to acquire the Asian private bank at a time when high economic growth returns, and assets begin to expire in Switzerland after the easing of bank secrecy.
At least seven potential buyers have shown interest in the assets of ING. Among the private banks with ambitions for the region is entering the BOC International Holdings, a branch of Bank of China, which established in Hong Kong.
Regional industry of private wealth management grew rapidly over the last decade. Hong Kong and Singapore can boast with over 60 companies in this field.
Industry analysts say that Singapore has about $ 300 billion under management (at $ 50 billion in 2000) and Hong Kong is slightly below those funds.
Despite the enthusiasm of the industry is facing many challenges in Asia.
Pierre Baer, chief executive of private banking Société Genérale in Singapore, told the Financial Times that he expects the number of individuals with high net state (those with over $ 1 million to invest) to grow by 12.3 percent a year in projected 7% in the United States.
Due to the widespread view that the Asia-Pacific region will overtake North America as the largest area of private wealth management at similar level in 2013, however, requires rapid and sustained resumption of growth in Asian gross domestic product. The forecasts do not take into account the risk of a second global downturn, which has withdrawn the emergency government fiscal policies and monetary incentives.
Any delay or slow recovery in the pace of long-term growth could be a very unpleasant consequences. The number of extremely wealthy people in Asia fell 14.2 percent last year, a total value of their assets fell by 22.3 percent to $ 7.4 trillion. Indicates this year’s report, Asia-Pacific Wealth Report of Capgemini and Merrill Lynch.
It is not yet clear whether Switzerland will indeed bear a significant outflow of assets to Asia as a result of shaken banking secrecy regime.
Senior private bankers in Asia say there is no significant signs of a significant inflow of funds. „It is a myth that a large amount of capital was redirected from Europe to Asia over the past few years,“ says the head of a leading private bank in Singapore. „The percentage of the deposited assets in Singapore from sources outside Asia has always been between 4 and 10 per cent. These are mainly customers who have some affinity for the continent and wants to diversify its portfolio of assets, or simply to invest here, „he continues.
It is likely that Switzerland and its Asian competitors may have similar modes of confidentiality, based on the rules of the Organization for Economic Cooperation and Development, all of whom they adopted.
Asian private bankers are faced with cost growth, as regulators in Singapore and Hong Kong are preparing to tighten the rules for relationships with customers, attacked by angry investors who lost money during a financial crisis.
The new rules likely will require bankers to keep a detailed report to follow more closely to invest money in accordance with the objectives of their customers and provide a clear explanation of investment products and related risks. These changes will likely force banks to hire more managers to connect with customers, which would raise costs for recruitment as it becomes increasingly difficult to find experienced bankers.