Asia as a VIP in World Economy
Asia’s rising affluence has been attracting the world’s private banks to tap into its markets. For example, France’s second largest bank, Credit Agricole SA, is considering expanding its presence in the region. Julius Baer Group Ltd., Switzerland’s third-largest publicly traded private bank, has grasped Asia’s huge growth potential, and foresees a third of its business within five years to be coming from the Asian continent.
Chief Executive Officer Boris Collardi indicates that Asia currently accounts for about 20 percent to 25 percent of its business. He forecasts Asia’s potential to overtake Europe as Julius Baer’s biggest revenue-generating region in the next five years. The bank has been hiring extra staff to meet Asian market needs, and will continue to recruit in Asia. Adding more hubs in the region is also likely to become necessary.
Julius Baer, the fifth-largest private bank in Asia, had $82.4 billion in assets under management and 380 relationship managers at the end of 2016. Regional competitors DBS Group Holdings Ltd. and Oversea-Chinese Banking Corp., which have expanded via acquisitions, are close behind in sixth and seventh, according to Asian Private Banker.
Meanwhile, Boston Consulting Group predicts that Singapore and Hong Kong will attract wealth from abroad at more than twice the speed of Switzerland over the next four years. As Asia’s economic expansion draws cash from millionaires, offshore assets will rise at a compound annual average rate of 8 percent through 2021 in Singapore. Hong Kong’s will climb 7 percent, and Switzerland’s, 3 percent. Switzerland remains the world’s No. 1 offshore wealth management hub with $2.4 trillion in assets, twice as much as Singapore’s.
“Relative to Switzerland, Hong Kong and Singapore are growing faster because of the economic growth from China to India,” said Mariam Jaafar, a Singapore-based BCG partner. “In clients’ minds, Singapore is more independent and secure. The government is also very supportive of the wealth management industry.” China’s restrictions on investment outflows may slow some of the movement of assets from the nation, Jaafar suggested. Still, China ranks above Taiwan, and Hong Kong and Indonesia are the largest source of offshore wealth in the Asia-Pacific region.
Banks from UBS Group AG to Credit Suisse Group AG and DBS Group Holdings Ltd. have been adding wealth management staff to service global clients. Offshore assets in private banking hubs worldwide grew almost 4 percent last year to $10.3 trillion, based on BCG’s report. Amidst the wealthy and rich, Asia certainly plays a VIP role.