Credit Suisse sees Asia wealth race shift from offshore hubs

SINGAPORE: After years of racing to accumulate assets in the key offshore centres of Singapore and Hong Kong, the challenge for wealth managers in Asia is shifting to cities such as Manila, Jakarta and Shanghai.

Private banks that want to tap into Asia’s growing onshore wealth need to think less about regional asset totals and more about accumulating a critical mass of wealth in the individual Asian countries, according to Francesco de Ferrari, head of Asia-Pacific private banking at Credit Suisse Group AG.

For the Zurich-based bank, the target is at least US$10bil in each of its 11 key markets across Asia, de Ferrari said in an interview earlier this month.

“What is the minimum critical size for a bank in Asia?

What is the size of assets you need to become viable?

Most people would have said 10 years ago it was US$10bil-US$20bil, now it’s US$30bilUS$40bil,” de Ferrari said.

“But the market size for Asia is completely the wrong question. For me, we need to have a minimum size by market if you want to operate there.”

As booming economies across Asia drove an unprecedented increase in wealth creation, private banks primarily focused on Hong Kong and Singapore, the main regional offshore centres.

That helped Credit Suisse and its competitors build huge operations in Asia, with mar- ket leader UBS Group AG overseeing US$383bil for wealthy clients in the region, according to Asian Private Banker.

Now, a new battleground is opening up in the onshore Asian markets, where total wealth assets are seen growing by an average of 10% annually in the eight years to 2025, according to McKinsey & Co forecasts. Offshore wealth, mainly concentrated in Singapore and Hong Kong, is expected to grow 6%-7% a year over the same period.

De Ferrari said his bank has already been experiencing the shift. “Over the last six, seven years, as our assets doubled overall in Asia, our onshore tripled,” he said.

Credit Suisse set up an onshore wealth team in Manila earlier this year, after creat- ing a similar operation in Bangkok two years ago. The bank is also seeking to raise its stake in its China securities venture with Founder Securities Co to 51% from 33.3%, a move that may pave the way toward an onshore wealth presence on the mainland, where Swiss rival UBS is already established.

Thailand is among the three markets where Credit Suisse still needs to get onshore and offshore assets under management above the US$10bil target, de Ferrari said. He declined to name the other two.

Assets of Thailand’s 100,000-plus high net worth individuals rose 13% to US$548bil in 2016, the second-fastest growth in the AsiaPacific region after Indonesia, according to a Capgemini SE report. — Bloomberg