As more and more European groups offload their Asian private banks or otherwise exit asset or wealth management in the region, French firm Credit Agricole is looking to buck that trend.
Indosuez Wealth Management – rebranded last year and with all or part of it rumoured to be up for sale by Credit Agricole for some time – is making a concerted push to expand its Asian business.
On Friday, AsianInvestor spoke to global chief executive Paul de Leusse and recently appointed Asia CEO Pierre Masclet about their plans.
Indosuez, with $9.5 billion in assets under management in Asia Pacific – of a global total of €109 billion – would seem an obvious candidate for acquisition by a larger firm. That has been trend in the past year, with the likes of ABN Amro Private Banking being bought by LGT, ANZ selling its wealth arm to DBS and OCBC buying Barclays' Asian wealth business.
However, de Leusse said Indosuez had never been on the block. In fact, the firm has made a number of recent senior hires in the region this year – most notably Masclet and Arjan de Boer as Asia head of markets and investment solutions, both to newly created roles. And it aims to increase its front-line staff by 20% in the next couple of years, said Masclet.
The biggest increase will come in the relationship manager team, he noted, but there will also be additions on the product and investment side. He said clients were keen to meet more product specialists more often these days and get more information about their investments.
One source said they knew of four RMs who had joined the firm recently, and Indosuez confirmed that several individuals have come on board in the past few weeks and more are set to join imminently.
The firm has a well established presence in the region, with booking centres in both Hong Kong and Singapore and almost 220 staff in Asia. In 2015 the region overtook the US as having the largest population and volume of wealth of high-net-worth individuals, according to Capgemini.
The need for scale
But De Leusse (pictured below) acknowledged that Indosuez needs to achieve bigger scale in Asia. Whatever the critical mass is for wealth managers in the region now – and $20 billion is a commonly quoted figure – it is clear that figure is growing, he said.
While organic growth is the firm's first priority worldwide, he added, it is also seeking acquisitions in Asia and could also consider partnerships. It is looking at both regional and local onshore assets, he said, noting that competition for wealth businesses is fierce and valuations are high.
Yet sales are not always just about the amount being offered for a business, but often the quality of the buyer is a factor as well, argued de Leusse. Sellers would prefer to sell a business to the a high-quality, well-established and well-run operation, he said. It is a reputational risk if they were to offload a business to a firm that is more likely to do a bad job for clients, he added.
Likewise, he said, you need to be very cautious about what you buy. De Leusse said the quality of clients, and being clear on the sources of their wealth is more important than ever. He stressed the greater scrutiny by regulators of know-your-customer processes at banks these days.
This has become more of a focus following events such as the closure of Swiss bank BSI's Singapore branch amid allegations of its ties to funds related to the 1MDB scandal in Malaysia.
Indosuez has looked at five or six potential deals since de Leusse started as CEO in January 2016, and has only done one – a referral agreement it struck last year with HSBC Private Banking in Monaco.
One Hong Kong-based senior relationship manager at a European private bank confirmed that Indosuez was more active and visible in Asia these days.
“We hadn't heard much from Credit Agricole [on the wealth management side] for a few years, but now their staff are speaking at conferences again and they are busy hiring,” she said.
“Credit Agricole has a very good franchise – they can do a lot of things and they are now obviously looking to grow their wealth management franchise in Asia,” the RM told AsianInvestor. “The question is – are they growing because they are committed to the market or because they ultimately want to sell the business?”
Of course, these two aims are not mutually exclusive.
In the coming days, AsianInvestor will publish the second of this two-part series, focusing in more detail on Indosuez's product and technology platform and how it aims to leverage both.