Where have Asia’s growth opportunities gone?
This digital edition of PBI looks back at a turbulent year for private banks in Asia. Political and economic pressures have weighed heavily the wealth creation that wealth managers once feasted on.
China, Asia’s powerhouse, has seen its economy decelerate to 6.5% in the third quarter, the lowest growth since Q1 2009. A host of economic data – including loans and fiscal revenues – point to an even gloomier picture. Any optimism in China’s economy is darkened by future tariffs from the US.
The affect on China’s wealthy has already been noted by the Hurun Report. Their latest billionaire report counted 1893 such individuals, down 11% from last year. On top of that, most people in the list saw their wealth decline in the 12 months to October.
Some of the largest private banks on the peripheries of the Mainland have witnessed the affect on their bottom lines. Pre-tax income at Credit Suisse’s Asia Pacific business decreased 19% in the third quarter. UBS and others have noted a decline in transaction-based revenue.
UBS has had more concerns than that. The questioning of one of their private bankers by Chinese authorities in October spired the Swiss bank to warn other staffers against travelling to China. Other private banks followed suit.
Though all were later to retract their warnings (and the UBS banker permitted to go back to Singapore), the subsequent detention of Michael Kovrig has not quenched concerns. Kovrig is a senior advisor to the International Crises Group (ICG), a Brussels based think-tank that is familiar with foreign crises. However, even the ICG now say companies should think twice before sending staff to China.
Further afield, other Asian markets are grappling with the fallout from America’s trade tensions. India seems to be immune, while Vietnam is benefiting. Our outlook on Asian emerging markets on page 7 looks at these and others in the year ahead.
Watching from the side-lines are private banks and, increasingly, family offices. The latter of these are on the up, as this issue’s feature on page 3 explores, and they are attracting bankers as well as HNWIs.
Maybank is attempting to stem the flow of talent from its private banks to family offices by investing in a wealth academy. Alvin Lee, head of group wealth management, tells PBI all about it on page 5.
But private banks and family offices cannot just setup shop in Asian capital cities and expect to see wealth flow through its doors. Research carried out by PBI shows private banks and wealth managers in Asia have fewer offices per HNWI than anywhere else in the world. Turn to page 3 to read about Asian expansion opportunities in 2019.
China commences the year of the pig in 2019. This could not come any sooner, as in Chinese culture pigs are the symbol of wealth. HNWIs and their bankers could really use some of their luck right now.
Oliver Williams Editor, Private Banker International