Consolidation is likely to continue as private banks refocus to optimise their client franchise and cost base
Growth in risk-averse investors forces banks to roll up their sleeves, rethink strategies, and recognise that new tactics are needed
Although the timing and impact of the coming round of interest rate hikes is an issue for Hong Kong's private bankers, that is by no means their only concern.
Other repercussions of the economic downturn and all that preceded it linger, obliging leading institutions to react to a change in customer attitudes and investment priorities and, in certain areas, adopt something of a "back to basics" approach.
"Consolidation is likely to continue, driven by the need to achieve efficiency," says Andy Chai, head of Hong Kong market for BNP Paribas Wealth Management. "Cost-to-income ratios have risen to between 80 per cent and 95 per cent for most private banks, meaning that many players are refocusing to optimise their client franchise and cost base."
The business of attracting new clients is not becoming any easier. The mood among investors is seen to be increasingly risk-averse, so banks are having to roll up their sleeves, rethink strategies, and recognise new tactics are needed to achieve organic growth.
"We want to differentiate ourselves by providing a recalibrated experience for clients and deepening the relationship," Chai says. "As part of this, we will launch a relationship manager training programme later this year to strengthen the full range of core competencies."
A key target is the ultra high-net-worth (UHNW) sector which, in Asia, contains a growing percentage of self-made billionaires. Many such clients are looking for a holistic approach when choosing investment services and products, effectively upping the ante among those competing for attention. "We have earmarked this segment as a lever for growth," Chai says. "So far, we have [made good progress], having a business relationship with one in six billionaires in Asia."
On the upside, he notes that increased transparency within the industry and greater scrutiny from without has been a positive force in building trust with clients. It has also brought a slew of new administrative requirements and impositions.
