Kuala Lumpur-based RHB Bank has decided that it will cease to operate in Hong Kong, according to an exchange filing from the bank. It expects that all of its subsidiaries, which include RHB Asset Management and RHB Wealth Management, will discontinue operations by the second quarter next year.
Besides asset and wealth management, the bank’s operations in Hong Kong also include brokerage and corporate finance advisory services. In total, the bank has around seven subsidiaries in the SAR, according to the firm’s website.
RHB Asset Management in Hong Kong received its relevant licences in 2008, but it does not have any SFC-authorised funds for retail sale, according to SFC records. Its business is mainly providing discretionary portfolio management services and various fund products to institutions, corporate clients and high net worth individuals in the Asian region, according to its website.
Elsewhere, RHB AM has offices in Singapore and Indonesia. In total, it manages around RM 36.7bn ($8.8bn) in assets.
Meanwhile, RHB Wealth Management in Hong Kong provides financial planning for retirement and education, as well as life protection planning. It distributes traditional life insurance products as well as investment-linked assurance schemes.
The bank has cited an “increasingly challenging operating broking environment in Hong Kong”, which has resulted in losses being recorded for RHB’s Hong Kong operations.
RHB’s move comes at a time when Hong Kong has slipped into recession and remains fragile due to six months of social unrest. Even Hong Kong’s Securities and Futures Commission has taken into account the challenging market environment and waived the licensing fees for all licensed and registered firms for the financial year 2020-2021.
However, a Kuala Lumpur-based spokeswoman at RHB Banking Group noted that its Hong Kong operations have already occurred losses in the last few years.
“As a result, and given our lack of scale [in Hong Kong], it is no longer viable for RHB Hong Kong Group to continue its business operations,” she said.
She added that by pulling out of Hong Kong, the bank will refocus its efforts in the Asean markets, which is in line with the group’s overall strategy.
In Asia, both the asset and wealth management industries are still undergoing a period of consolidation in the region, especially at a time when operating and compliance costs have gone up.
Several wealth management firms have consolidated in the past two years, which include the closing of Edmond de Rothschild Asset Management’s branch in Hong Kong, Indosuez Wealth Management’s acquisition of the private banking division of Credit Industriel et Commercial (CIC), National Australia Bank’s sale of its private wealth business in Hong Kong and Singapore to OCBC and LGT Group acquiring ABN Amro’s private banking business in Asia.
Even asset management giant Vanguard closed its Singapore office last year and consolidated operational and client activities in Hong Kong.