Two Chinese financial groups have burst into the ranks of the 25 biggest private banks by assets under management, reflecting the rapid growth of mainland wealth and acting as a likely precursor of future trends.
China Merchants Bank and ICBC, standing at 26th and 27th on the list last year, have risen six and four places to 20th and 23rd, respectively (see table below), according to research by wealth industry consultancy Scorpio Partnership.
China Merchants’ AUM grew 57.8% in dollar terms to $192.9 billion as of end-2015, while ICBC’s rose 28.9% to $154.1 billion. The growth was even more marked in renminbi terms (66.4% and 35.9%, respectively).
The fastest growth any of their Western peers came from Spanish bank Santander, whose dollar AUM grew 5.7% to $204.8 billion. Most of the top 25 – the other 23 of which were from Europe or North America – saw their AUM shrink in dollar terms.
This may not be surprising to some, given that China was the fastest growing market by high-net-worth population wealth last year, posting a gain of 16.2%, according to the Capgemini World Wealth Report 2016. That compared to global growth in HNW population of 4.9%.
“Though the Chinese equity markets suffered some volatility throughout the year, they ended on a high note, burnishing China’s status as a global wealth powerhouse,” noted the report. Domestic wealth growth was also driven by high GDP and real estate market growth, it added.
China Merchants and ICBC have taken a more deliberate path to grow their private banking businesses and have a strong client base to draw on, said Sebastian Dovey, managing partner of Scorpio Partnership.
They have also gone through a reorganisation along operational lines to extend their products and services, he told AsianInvestor. “They are going to soon be a notable competitor to international solutions." And other Chinese banks are fast climbing the AUM ranks, Dovey added.
“It is a little bit of a similar story to how the likes of the Singaporean banks began to develop their private banking initiatives just under a decade ago,” he added. “We started to see a similar pick-up in numbers.”
Of course Chinese firms have a far bigger domestic client base to draw on, and Dovey said that appeared to be their focus right now.
But they are increasingly looking offshore, he noted, and some of the mainland regulations, such as the QFII scheme, are supporting a more internationalised money management approach for wealthier clients.