StanChart eyes US$100b private bank assets in growth push

Hong Kong

STANDARD Chartered is targeting growing its private banking assets by 50 per cent to about US$100 billion in three to five years and will hire dozens of bankers in Hong Kong and Singapore towards that goal, a senior executive of the lender said.

The moves show that StanChart has big growth ambitions for the private banking unit that had until recently weighed on the lender's earnings, with its small size stoking speculation that it would be put under review for possible divestment.

The lender will recruit 30-40 private bankers every year in the next two to three years to add to its roughly 300 existing relationship managers, and the bulk of the additions will be in Hong Kong and Singapore, StanChart's global head for private banking and wealth management Didier von Daeniken told Reuters.

With US$65 billion worth of private banking assets, London-headquartered StanChart is a small player compared with UBS which, according to Asian Private Banker data, had assets worth US$2.3 trillion and Credit Suisse, with US$770 billion last year.

The private banking business accounted for just 3.8 per cent of StanChart's total profit before tax in the first-half of this year.

"Our ambition is to see us cross the US$100 billion mark. That makes us meaningful internally for the group, that makes us a meaningful player in this landscape," Mr von Daeniken said. "Hitting US$100 billion can give us credibility internally, help us to attract talent." StanChart's private banking business caters to wealthy individuals across Asia, Africa, the Middle East and Europe, through booking centres in Singapore, Hong Kong, Dubai, India, London and Jersey island.

The unit had weighed on the group's earnings in the recent past, as it sought to reposition the business to target rich individuals with at least US$5 million in investable assets amid stiff competition in Asia, which brings in the bulk of its revenue.

Underscoring a potential turnaround, StanChart's private banking business posted a pre-tax profit of US$100 million in the first half of this year, compared with a loss of US$5 million in the same period last year.

StanChart's private banking return on tangible equity, a key measure of profitability, increased to 15.7 per cent in the first half of the year compared to a negative one per cent in the year-ago period, its latest financial report showed.

As part of the plans to bolster assets under management, the private banking unit plans to tap more of the group's corporate and institutional banking clients in Asia and other emerging markets where it has existing banking networks.

"With US$65 billion we are definitely not among the largest, but we are part. . . of a company with a large balance sheet, with an unmatched presence locally in all the markets, which really matters when you cover the emerging markets," Mr von Daeniken said.

In the near-term, however, concerns about the global economy and 10 weeks of protests in Hong Kong that have plunged the Asian financial hub into its worst crisis had made clients "more prudent" in their investment decisions, he said.

Mr von Daeniken said StanChart's private banking unit had come a long way "but the task before us is as difficult because we really have to maintain the momentum in a difficult market environment". REUTERS