Wealth advisers sat up and took notice last September when Standard Chartered Bank announced its plan to buy American Express Private Bank, Financial News reports.
“It was a bold move for us and we knew it would help catapult us into the top league of wealth management, particularly as emerging markets were becoming so important in wealth creation,” said Peter Flavel, Standard Chartered Private Bank’s chief executive.
The American Express operation has a sizable presence in the Middle East and Latin American regions. Flavel said the acquisition underscored Standard Chartered’s emerging-market credentials, which are well-established in Asia.
Flavel said: “The emerging-market nexus and change in trade flows is of huge benefit to the private bank.”
Listed on the London and Hong Kong stock exchanges, security banking business in emerging markets has been the linchpin of Standard Chartered’s success.
The group derives 90% of its profits from Asia, Africa and the Middle East. Singapore sovereign wealth fund Temasek is a fan: it raised its stake in the bank to 19% this year.
Standard Chartered Private Bank grew assets under management by $10 billion (€6.5 billion) in the six months since it was launched in June last year.
The acquisition of the American Express business added another $22 billion in assets and swelled Standard Chartered Private Bank’s business across nine booking offices and 33 sales offices. The bank now has $38 billion of assets under its roof.
Standard Chartered is lagging in the amount of money held compared to such seasoned campaigners as HSBC Private Bank, with $421 billion of assets under management, and UBS, with more than $1 trillion.
But Australian-born Peter Flavel said the growth momentum can be maintained by Standard Chartered offering “proper” private banking services to the wealthy in emerging markets.
Loan packages tailored for wealthy entrepreneurs are among its specialties.
“Assets of the rich in many emerging markets tend to be handled by mass affluent divisions of banks. Often such clients haven’t been spoken to by a private banker and there is much wealth that remains to be banked,” he said.
A recent study by Barclays Wealth and the Economist Intelligence Unit underlined the growing importance of the wealthy in emerging markets.
The research predicted how the global distribution of household wealth will change during the next 10 years and said, by 2017, China will accelerate from 7th to 3rd place in terms of the number of high net-worth individuals with assets of $1 million or more; India is predicted to move up to 8th from 14th place.
The fact that fast-growing businesses in these economies tend to be controlled by individuals means their wealth has been boosted to a disproportionate extent.
Standard Chartered Private Bank opened an office in Beijing last year and it plans to develop an extensive network to leverage its presence in local retail and wholesale banking.
It is the largest foreign bank in India. It opened its wealth unit in Mumbai and New Delhi in 2007. Plans are afoot to open a further six wealth offices across the country this year.
Standard Chartered has a large slice of the non-resident Indian market, which the bank calls “Global Indian”. This business was enhanced by the American Express purchase.