Dutch group ABN Amro has just named a new Southeast Asia head of private banking, but it is still seen as likely to sell its regional wealth business amid rising costs and competition.
ABN Amro Private Banking’s Asian AUM was estimated at $22 billion as of April this year, putting it 17th on the list of private banks in the region by size, according to Finews Asia. That put it in the mid-tier of businesses such as UK-based Barclays’ Asian wealth arm, which at the time was 14th on the list, with $36 billion in AUM.
Barclays sold its regional wealth unit to Singapore’s OCBC this year. That followed DBS’s acquisition of French lender Societe Generale’s Asian private bank in 2014, which had held $12.6 billion in AUM at the time of its sale, according to reports.
Some firms have responded to tighter margins in other other ways. Last year JP Morgan folded its wealth management arm into its private banking division in the region and refocused on clients with net worth of at least $10 million, whereas the previous threshold was $5 million. This precipitated the departure of Peter Flavel to UK private bank Coutts.
Challenge for mid-tier players
As a result of rising operating costs, it’s hard for a private bank to survive in Asia in today’s market with below $30 billion in AUM, said one industry observer. “Business has not been good in general for private banking. It’s getting expensive to run a private bank and to invest in people to develop clients, which takes time.”
The environment is particularly challenging for mid-tier players for which private banking is not a core business in Asia, he noted. The biggest wealth managers, such as Citi, Credit Suisse and UBS, are better able to shoulder the rising regulatory and monetary burden. Meanwhile, at the other end of the scale, independent (or external) asset managers and multi-family offices are mounting a growing challenge.
It was against this backdrop that Anuj Khanna (pictured left) started yesterday as ABN Amro's new Southeast Asia head of private banking, amid recent cuts to frontline staff, according to reports by Asian Private Banker. He replaces Lee Chang Tze, whose departure date could not be ascertained by press time.
Khanna was most recently head of Southeast Asia at Swiss private bank Pictet & Cie, but he had left the firm in October last year. Prior to Pictet, he was head of North Asia at Credit Suisse Private Banking in Hong Kong.