Over the last 10 years, a number of companies have been attracted to the growing pool of wealth in Asia, but found it difficult to gain traction and mimic the discretionary business of Europe, Wightman said.
Wightman added that cost-to-income ratios remain high, as the cost of doing business in Asia, with a heterogeneous regulatory landscape, is considerable.
“Firms needs scale and an efficient operating model, and the private banking-only businesses lack the pipeline from the mass affluent business. We would expect to see more rationalisation in 2017,” he said.
What’s at stake is the largest amount of HNWI wealth globally: Asia-Pacific now amounts to $17.4trn in 2015, compared to North America’s $16.6trn, according to Capgemini’s World Wealth Report.
Buying and selling
In the region, a number of banks streamlined their operations during the past year by selling off Asia wealth management units.
Most recently, Bank of Singapore on Monday announced that it has completed its acquisition of Barclay’s wealth and investment management businesses in Singapore and Hong Kong.
UK-based Barclays put its Asia wealth management units up for sale last year to offset declining revenues for its global wealth management business, FSA reported earlier.
Another example is DBS, which had been seen as the front-runner to buy Barclays’ Hong Kong and Singapore private wealth units. It announced in October that it was acquiring ANZ’s wealth management and retail units in Asia.
DBS also bought the private banking activities of Societe Generale in Singapore and Hong Kong in 2014.
In April, UBP closed the acquisition of Coutts’ wealth management operations in Hong Kong and Singapore, which brought $9bn to the bank’s platform.
In contrast, other banks, such as Credit Suisse, UBS and Citibank, have all made Asia a key part of their wealth management growth strategy.
BOS scales with Barclays buy
Bank of Singapore, the private banking arm of OCBC, said it paid $227.5m in the Barclays deal – nearly 30% below the initial offer – after a drop in the number of assets being transferred, International Adviser, FSA’s sister publication, reported. According to a filing with the Singapore Exchange, the final price was based on 1.75% of the $13bn in Barclays’ assets transferred to Bank of Singapore.
When the deal was first announced in April, the purchase price was at $320m, based on the $18.3bn in AUM of Barclays’ wealth and investment management business in Hong Kong and Singapore at the end of 2015.
The deal is expected to add a significant chunk to the bank’s AUM, which will skyrocket to $75bn, and will allow it to compete against Singapore’s more established banking heavyweights such as DBS and UBS, according to the IA report.
In addition, the buyout will see around 60 bankers join Bank of Singapore, including two former senior Barclays’ employees – Vikram Malhotra from Singapore and Hong Kong-based Andrew Sum – who have been appointed as members of the bank’s management committee as well as global market heads.
With the additional staff, Bank of Singapore now has around 400 relationship managers, which will help with its coverage in its core markets, including Southeast Asia, Greater China and the Middle East, particularly in the Gulf Cooperation Countries, according to Bahren Shaari, the private bank’s CEO.
Just this month, the bank received regulatory approval to operate a branch in the Dubai International Centre and intends to offer services including wealth planning advisory to its HNWI and UHNW clients in the Middle East.
