Asian private banking clients are investing in property in developed markets including London to curtail risks, according to Standard Chartered Plc, the U.K. lender that makes most of its profit in the region.
“We’re seeing quite a flow into the U.K., into prime property in London, both commercial and residential,” the bank’s global head of private banking, Shayne Nelson, said in an interview in Singapore. “The global financial crisis certainly affected risk appetite and it’s not anywhere near back to what it was.”
Standard Chartered will focus on emerging markets for private banking growth as it seeks to woo millionaires in Asia, the Middle East and Africa, Nelson said. Asia, which generated a record 5.9 billion pounds ($9.5 billion) in revenue for the London-based bank last year, will have more rich people than the Americas for the first time by 2013, he said.
“The wealth creation in Asia is pretty incredible,” Nelson, 52, said yesterday. “In China, there are 477,000 high-net worth individuals, or people with $1 million or more of cash to invest. And it’s not just China, but India and Indonesia.”
Private banking assets under management globally grew 31 percent to $46 billion as of Dec. 31, according to a 2011 outlook statement issued March 2 by the bank. Assets in Asia, where Standard Chartered is the sixth-largest private bank, increased 39 percent as the region’s economic expansion drove demand for credit cards and wealth management services.
Wooing Business Owners
Growth this year will be driven by selling more products and services to Standard Chartered’s existing wholesale and consumer banking clients, Singapore-based Nelson said. About 64 percent of high-net worth individuals are business owners, he estimated.
“Because we have a huge business base, especially in places like India, tapping into that is very important,” he said. “We’ve got the clients and they have private banking relationships, just not with Standard Chartered.”
One of the biggest risks to growth is an industry-wide escalation in costs as staff expenses increase, Nelson said. The bank expects to hire another 300 private bankers globally by 2013, bringing the total to 750, Nelson said at a conference in October.
“We’re seeing cost escalation right across the board,” Nelson said from Singapore, where Standard Chartered employs 150 private bankers. “That’s because there is huge wealth accumulation in Asia and not enough private bankers.”
Nelson was appointed to his current role in April last year to replace Peter Flavel, who later quit. A 14-year veteran of the bank, Nelson is also chairman of Standard Chartered Saadiq, its Islamic banking unit, and was previously chief executive officer of operations in the Middle East and North Africa, based in Dubai.