StanChart India plans to double private bank assets by 2014
The U.K.-based bank, which also has a strong presence in corporate and retail banking in India, will raise the number of private bankers in the country by a third to 60 by 2012 to tap a rapidly mushrooming millionaire population, Sandeep Das said.
"We see a very encouraging long-term story in India. The number of wealthy people are rising at a very fast pace in this country," Das, who has been with Standard Chartered for 20 years, told A news agency in an interview on Wednesday.
The population of high net worth individuals -- those with more than $1 million in investable assets -- rose nearly 21 percent in India to 153,000 in 2010 -- making it the 12th largest such market, ahead of Spain and just behind Brazil, according to a report by Capgemini and Merrill Lynch.
Standard Chartered does not disclose country-specific assets under management for its private banking unit, but Das said the bank is one of the top three wealth managers in India based on assets under management.
The top private banks in India have between $1 billion and $2 billion of assets under management each, industry sources say.
The cut-throat competition in the Indian wealth management sector with a slew of foreign banks vying with local firms for a bigger share of the market and sluggish market conditions are, however, likely to keep the fees under pressure, Das said.
Private banks in India charge between zero and 0.5 percent advisory fees to wealthy clients, which barely covers costs for smaller players, compared to about 0.5 percent to 2 percent in more developed markets.
"There is pressure on fees in the sector as private banks don't want to be on the higher side of the fee band because of the competition and this may continue in the short term," Das said.
Asia, home to more than 3 million millionaires, has become a battleground for private banks as global and Asian players compete for market share in a region that is fast outpacing the United States and Europe in economic growth.
Standard Chartered, which launched its private banking business in India in 2007, counts Hong Kong, Singapore and India as its fastest growing wealth management markets in Asia, Das said.
UPS AND DOWNS
Global banks such as RBS, Morgan Stanley, Standard Chartered and Citigroup and many local players have been fast expanding their wealth management business in India and were aiming to hire hundreds of bankers between them.
But the global markets volatility, a narrow product range, rising costs and falling advisory fees are now putting pressure on the profitability of bankers to the rich in Asia's third-largest economy.
Credit Suisse, one of the largest global private banks and a player in India since 2008, is cutting its India wealth management staff by 12 people, or 20 percent, as part of a global reduction, sources said last month.
Standard Chartered will continue to grow its headcount for the India private banking business by 30 percent over the next few years, Das said. It currently has 45 relationship managers, which is 10 percent of its total private bankers globally.
"Short-term players in India are going to get impacted in this kind of a volatile market. You won't see a linear growth in this market in the short term. There will be ups and downs," Das said.
Expenses, mostly salaries, for private banks in India have been growing by as much as 20 percent a year, some in the industry say, and Das said the wage hike was expected to moderate in the near term due to tough market conditions.
"I do expect people and banks to get realistic about compensation," he said.