With bankers stuck at home, Asia wealth management hits snag
Fri, Aug 21, 2020
Hong Kong
PRIVATE bankers in Hong Kong and Singapore had their wings clipped by the pandemic, thwarting their pursuit of millionaires scattered across a region where wealth is growing faster than anywhere else.
For most of the year, relationship managers in two of the world's largest centres for cross-border money management haven't been able to freely travel to China and around South-east Asia to meet new prospects and verify ownership of private yachts, property and more. They've focused instead on a trading boom among existing clients.
But the shrinking pipeline is an increasing worry as Covid-19 flare-ups in the region keep them largely grounded, say executives and relationship managers.
Already, the likes of UBS Group and JPMorgan Chase & Co have seen the growth of new money in Asia take a hit. And while regulators are easing rules that typically require in-person meetings and on-site visits, banks are still catching up with digitisation and some bankers are reluctant to step away from the traditional checks.
"The challenge is the majority of private bankers' business in Asia is coming from offshore," said Benjamin Quinlan, chief executive officer of Quinlan & Associates, a strategy consultant in Hong Kong. "To service clients from another country, you need some physical travel."
More than half of the assets managed in Hong Kong and Singapore are drawn from outside the two hubs. New relationships for private bankers are often nurtured over months of meetings. On top of that come the regulatory requirements to prove client identities and verify sources of their wealth.
Within the wealth business of UBS, Asia contributed just US$200 million to its US$9.2 billion net new money in the second quarter, down from US$1.1 billion a year earlier.
But the region was still its second biggest in terms of profits, buoyed by trading. JPMorgan's number of new private banking clients in Asia dropped more than 10 per cent in the first half from a year earlier, even as brokerage activity increased more than 50 per cent.
Private banks require anything from US$1 million to more than US$10 million to be parked with them, and Asia is fertile ground for that kind of cash. Financial wealth in the region, excluding Japan, has grown 10.8 per cent annually since 2009, almost double the global rate, according to a report by Boston Consulting Group. It's seen growing 5.1 per cent to 7.4 per cent annually until 2024, clocking the fastest pace in the world, the report said.
"The second half is going to be critical," said Kam Shing Kwang, chief executive officer of JPMorgan's Asia private bank. "We're learning to adapt to this new world because not everything has to come to a halt."
Some banks are faring better, in particular those with extensive local networks - often via their retail presence or through partnerships. Bank of Singapore, which oversees US$113 billion in wealth assets, reported a rise in assets of US$9 billion in the second quarter, both from new assets and market gains.
Getting existing clients to add more cash amid resurgent markets has also provided a cushion to the difficulties in wooing new clients. Credit Suisse Group saw net new assets in its Asian private banking business swell by 80 per cent in the second quarter after the trading boom.
UBS has accelerated its digital push as transactions on its e-trading platform in Asia rose fourfold from December to June, a Hong Kong-based spokeswoman said in an e-mail. More than 50 per cent of its equity trades in the region are now executed through the online platform.
Another boon has been an easing regulatory environment. Authorities in Hong Kong and Singapore have temporarily pulled back verification rules, allowing for video conferencing and digital submissions of paperwork such as deeds, licences and signatures.
Julius Baer Group, based in Zurich, started a digital onboarding pilot in Switzerland this year and is planning to roll that out in Asia, according to Asia-Pacific chief operating officer Andreas Zingg.
"As a bank we're convinced that many of the changes on how we engage with clients are here to stay in the long run and this includes further digitalisation of onboarding new clients," he said. BLOOMBERG
Reply With Quote
