Private Banking and Wealth Management Survey 2013: Chinese private banking grows up
Supported by strong economic growth, China’s domestic private banking sector has been developing rapidly. But could a lack of education and mounting competition from overseas stall its progress?
China’s economic boom of the 1970s spurred by Deng Xiaoping’s economic reforms turned entrepreneurs into millionaires. And although China’s economy has slowed recently, in relative terms it is holding up well.
On the back of its economic growth, China has become the second-largest wealth management market in Asia Pacific. According to research by Boston Consulting Group in conjunction with China Construction Bank, the number of Chinese high-net-worth individuals (HNWIs – those with at least $1 million in investable assets) doubled from 510,000 in 2008 to 1,030,000 by the end of 2010.
China’s financial institutions and banks are rapidly adapting to the needs of this growing number of HNWIs. The strength of China’s private banks has been marked by impressive gains in the league tables. According to Euromoney’s private banking survey, China Merchant Bank rose from 26th place to 19th globally last year, breaking into the top 20 best private banks for the first time. Bank of China rose to 21st place globally, up from 27th place the previous year.
For all its recent progress, the Chinese private banking sector is still relatively young, and its development so far suggests that when it matures it will look different to its western equivalent.