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Morning Coffee: Asia’s rainmakers face client drought, even as wealth increases

Private banks underestimate the stickiness of clients to their existing private bank.

Private banks underestimate the stickiness of clients to their existing private bank.

The solution for tapping into the ever-growing pot of wealth in Asia and gaining access to Hong Kong’s billionaire population with an eye-watering average net worth of $4.2bn has always been simple – throw people at the problem. With a landmark new private banking hire comes, in theory, a portable network of clients only too willing to transfer their wealth to a new platform.

Except, it seems, Asia’s private banks are underestimating the long-game required to make it in wealth management. Aside from the problem of the lack of private banking candidates able (and willing) to serve the burgeoning Mainland China market, private banks are facing difficulty finding clients.

“Banks come here, they open for business – then they find costs are as high or more than in their home country. They also find highly regulated markets and they discover that clients are elusive,” Bassam Salem, chief executive of Citi’s private bank in Asia-Pacific told the FT.

And throwing a big-hitter at the problem isn’t going to solve it, he says. “But most of those [new hires] aren’t capable of moving the assets over, as they under­estimate the stickiness of a client relationship with an established institution,” he adds.

Wealth is plentiful and all around them, but private bankers are struggling to win large chunks of client’s portfolios. Partly, it goes back to the GFC – clients are more sceptical and take longer to win over. Private banking has never been such a long-term game in the region.

“Private banking is about long-term relationships and trust, so 2008 was as disruptive for us, the industry, as it gets,” said Michael Benz, global head of Standard Chartered’s private bank. “It was a game changer in terms of how clients look at private banks and the way they grade them and that has not reversed.”

Meanwhile:

Hot skill-set in Asian M&A for 2014 – bilingual associates needed to tap into burgeoning Chinese IPO market (Selby Jennings)

British banker Rurik Jutting is fit to stand trial for the murder of two Indonesian women in his upmarket Hong Kong apartment. Unusually, the case is being delayed by months in order to allow the gathering of forensic evidence. (Straits Times)

The story of Sumarti Ningsih, one of Jutting’s alleged victims (BBC)

Shanghai and Shenzen are well-positioned to rob Hong Kong of its title of leading Asian financial centre by 2019 (Bloomberg)

Hong Kong is one of the biggest employers of CFA charterholders (eFinancialCareers)

China’s banks are likely to be hit by further falling profits, but investors believe that their stock is undervalued (Bloomberg)

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