Unlocking Asia's riches a costly business as SocGen reshuffles

[HONG KONG] Global investment banks will find it more costly to unlock wealth in Asia as regulatory changes make accessing domestic markets tougher, according to management consultancy Oliver Wyman.

Taiwan's Financial Supervisory Commission fined the local units of BNP Paribas SA and Deutsche Bank AG last month for letting unauthorized foreign staff provide financial services to onshore clients. Societe Generale SA said last week it has reorganized so that in Asia, commercial strategies are determined locally rather than regionally by product.

Asia remains a "challenge for many global investment banks as revenue pools shift onshore and the cost of accessing them increases," said Christian Edelmann, the London-based head of Oliver Wyman's global corporate & institutional banking practice.

"Global banks need to increasingly comply with local capital, liquidity and other regulatory requirements, making them typically focus on a smaller set of markets." The need for a local presence will force banks to be more selective and cost-conscious when assessing markets, according to Paul McSheaffrey, KPMG China's Hong Kong banking unit head. It doesn't mean regional banking centers like Hong Kong and Singapore can be replaced, he said by phone July 17.

For Societe Generale, which counts structured products and derivatives as one of its key growth drivers, the focus in Asia will be about reinforcing a local presence in their core markets such as Japan, Korea, Singapore and greater China, according to Yann Garnier, the Paris-based bank's deputy head of global markets for the Asia-Pacific region.

Societe Generale last week announced the appointment of five new heads of sales for its global markets division in Asia, according to a company statement July 13.

"In today's world, you can't be everything to everyone," Mr Garnier said. By going local, "you have access to smaller size clients which deepens client penetration."

BLOOMBERG