Private banking: Competition gets hot

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By:
Chris Leahy
Published on:

Although Asia remains in the vanguard of private banking growth, a new survey from Boston Consulting Group highlights key challenges ahead.

According to the BCG report, the market is slowing, with wealth in Asia forecast to grow by 6.8% annually through to 2009. That compares with a compound annual growth rate of 11.8% between 2003 and 2004.

With staff costs on the rise because of a serious shortage of talented bankers, and competition increasingly fierce, Asia’s private bankers need to fight to retain clients and to increase wallet share of fees, says BCG.

The hiring frenzy of the past few years could spell trouble ahead, especially if the market turns sour. Expensive fixed overheads will not be cheap to cut if markets warrant it, and the increasing number of new entrants to the market suggest that not all of Asia’s wealth management businesses are profitable.

Latest to jump on the private banking bandwagon is Standard Chartered Bank, which announced an investment in ultra-high-net-worth wealth manager Fleming Family & Partners. SCB will acquire a 20% stake in FFP valued at approximately $79 million and valuing the entire business at nearly $400 million. FFP will expand its existing business into Asia using SCB’s distribution network, but keeping its existing FFP identity.