2015 AUM & RM Headcount League Tables

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Assets under management (AUM) growth at Asia’s largest private banks has stalled for the first time since 2012, and the total number of relationship managers (RMs) servicing the region’s wealthy has declined marginally, according to Asian Private Banker’s 2015 AUM and RM Headcount League Tables.

Asia’s top 20 institutions in terms of AUM saw the total value of their client assets contract by 4.3% to US$1.47 trillion for the full year ending December 31, 2015. Half of the League Table recorded negative or flat year-on-year (YOY) growth, while only two private banks experienced growth in excess of 10%. This is in stark contrast to the heady days of 2014 when 19 out of 20 banks recorded rising AUM.

Asia AUM (US$ billion)

2015 Rank 2014-15 Change in Rank Bank 2012 2013 2014 2015 2014-15 YoY (%)
1 - UBS Wealth Management 207.0 245.0 272.0 274.0 0.7%
2 - Citi (incl. Gold, Private Client and Private Bank) 210.0 238.0 255.0 210.0 -17.6%
3 - Credit Suisse Private Banking 120.8 131.0 154.0 150.6 -2.2%
4 - HSBC Private Bank 91.0 108.0 112.0 112.0 0.0%
5 +1 Julius Baer 43.0 72.0 78.7 75.1 -4.6%
6 +1 DBS (incl.Treasures Private Client and Private Bank) 46.0 54.6 73.2 75.0 2.5%
7 +1 Morgan Stanley Private Wealth Management 58.0 65.2 70.0 72.0 2.9%
8 - Deutsche Bank Wealth Management 84.31 85.01 105.01 66.02 N/A
9 - J.P. Morgan Private Bank 56.0 59.0 62.0 65.0 4.8%
10 - BNP Paribas Wealth Management 42.3 50.8 59.3 64.5 8.8%
11 - Bank of Singapore 43.0 46.0 51.0 55.0 7.8%
12 - Goldman Sachs Private Wealth Management 37.5 45.0 50.0 54.0 8.0%
13 - Standard Chartered Private Bank 35.0 40.6 45.0 45.0 0.0%
14 - Barclays 28.0 34.0 36.0 36.0 0.0%
15 - LGT 16.4 18.9 22.3 25.4 13.9%
16 - Hang Seng Private Banking 19.0 20.0 22.0 25.0 13.6%
17 - EFG Private Bank 18.5 19.5 21.0 20.0 -4.8%
18 - ABN AMRO Private Banking 17.3 19.0 20.0 19.0 -5.0%
19 - J Safra Sarasin 12.9 12.4 15.0 15.3 2.0%
20 - RBC Wealth Management 11.0 12.0 13.0 13.0 0.0%

1 Deutsche Asset and Wealth Management
2 Wealth management unit only, post restructuring and split of the asset and wealth management businesses

Reversal of 2014 Fortunes

Swiss giant UBS Wealth Management (WM) retains the top spot on the 2015 AUM League Table for the third consecutive year with US$274 billion managed, and LGT posted the highest YOY growth, increasing its Asia AUM by 13.9% to US$25.4 billion. Fortunes were different for Citi (including Gold, Private Client and Private Bank), however; the American lender experienced the year’s biggest drop – its Asia AUM falling by 17.6%, primarily due to the sale of its Japan consumer operations last year. 2015 AUM & RM Totals

In all, the region’s RM numbers dipped by 0.8% from their 2014 peak of 5,253 to 5,213 end-2015. Once again, UBS WM leads Asian Private Banker’s 2015 RM Headcount League Table with 1,092 front-line bankers – almost double its nearest rival Credit Suisse (590) – although UBS’s frontline number is down nearly 8% on the previous year. By contrast, Credit Suisse posted a healthy 13.5% YOY increase in RM numbers. The year’s biggest hirers, however, were Hang Seng Private Banking and RBC Wealth Management. Both banks grew their RM headcounts by 25%, well above the top 20 average of 3.9%, although both are well down the Table in terms of total RM numbers. The aforementioned sale of Citi’s Japan operation had further ramifications for its front-line headcount – having boasted as many as 450 Asia RMs in 2014, that number dropped by 27.8% to 325 for the year ending 2015.

This ostensive reversal of fortunes for many of Asia’s biggest private banks occurred in a year when wholesale restructuring and market exits were stock responses to tightening regulations, policy changes and global market volatility. Yet have client assets shrunk in line with a decrease in portfolio values, or were fewer high net worth dollars put to work? On the talent side, are hiring budgets being scaled back, or is there a genuine talent shortage? As always, the answer appears to be “a little bit of both”.

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Buy or die. Or restructure.

The tandem decline in AUM and RM headcounts is, in broad terms, a natural consequence of the economic downturn in Asia, driven in large part by China’s slowdown, fluctuations in the Swiss franc hitting Swiss institutions, and climbing regulatory-related costs eating into private banks’ bottom lines. The “C-word” was never far from industry lips as management sought to benefit from economies of scale. Indeed, consolidation has become the strategy du jour over the past few years, with at least four such deals being posted in as many years.

Naturally, consolidation takes its toll on AUM and RM numbers. Top front-line talent is usually retained while the rest move on, often leading to net stasis (or even a dip) both in terms of RM headcount and AUM. Another strategy, internal restructuring, is also gaining traction in Asia. Deutsche Bank has done precisely this. Last October, the German lender reversed a decision it had made just three years prior to integrate its asset and wealth management units, and the result as evidenced by our League Tables is clear. In terms of AUM, Deutsche Bank Wealth Management’s figure is considerably lower for the year ending 2015, although its RM headcount increased marginally.
2015 Average AUM per RM
Another industry heavy hitter, Credit Suisse, is banking big on its Asia private banking business by allocating more capital to a dedicated and integrated Asia Pacific division. J.P. Morgan Private Bank, unchanged at 9th on the 2015 AUM League Table, has also reorganised its private banking business in the region by merging its two arms (one servicing HNW clients with US$10 million to US$30 million in assets, the other servicing UHNW clients with over US$30 million in assets) into a single unit.

Those familiar with restructuring will no doubt attest to the disruption it causes to internal processes, particularly if the institution has to rip out and replace or upgrade its legacy technology systems. When this happens, it is usually at the expense of AUM growth, according to one Asia-based private banking head at a global bank. “This year for us, it is all about restructuring, especially when it comes to compliance regulations,” he told Asian Private Banker in a recent discussion. “Without that in place, you cannot do business.”

Asia Relationship Manager Headcount

2015 Rank 2014-15 Change in Rank Bank 2012 2013 2014 2015 2014-15 YoY(%)
1 - UBS Wealth Management 987 1,032 1,186 1,092 -7.9%
2 - Credit Suisse Private Banking 470 470 520 590 13.5%
3 - HSBC Private Bank 450 450 450 440 -2.2%
4 - Citi (incl. Gold, Private Client and Private Bank) 450 450 450 325 -27.8%
5 - Bank of Singapore 280 300 310 314 1.3%
6 +1 Standard Chartered Private Bank 270 270 270 300 11.1%
7 +1 DBS (incl. Treasures Private Client and Private Bank) 209 215 267 289 8.2%
8 -2 Morgan Stanley Private Wealth Management 300 310 275 275 0.0%
9 - Julius Baer 100 239 260 270 3.8%
10 - BNP Paribas Wealth Management 179 213 236 248 5.1%
11 - Deutsche Bank Wealth Management 200 200 200 200 0.0%
12 - ABN AMRO Private Banking 118 136 140 140* 0.0%
13 - J.P. Morgan Private Bank 120 123 131 135 3.1%
14 - Barclays 120 130 130 130 0.0%
15 - EFG Private Bank 100 105 125 120 -4.0%
16 - Goldman Sachs Private Wealth Management 65 70 81 95 17.3%
17 - LGT 59 59 80 85 6.3%
18 - RBC Wealth Management 35 45 52 65 25.0%
19 - Hang Seng Private Banking 38 38 40 50 25.0%
20 - Pictet Wealth Management 30 38 50 50 0.0%

*It was previously reported that ABN AMRO Private Banking had 118 RMs as of end-2015. This report has been revised to reflect this update.
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Time is of the essence

Regulatory pressures have also taken their toll on AUM growth, and private bankers have been forced to reject more potential clients than ever before. “I have been told by my immediate supervisor that we don’t want clients whose kids are going to college in the US, even if they are not US citizens,” remarks a mid-level banker to Asian Private Banker. Of course, his chief concern is the ever-looming menace that is the Foreign Account Tax Compliance Act (FATCA) and its stringent disclosure requirements. Instead, ‘risky’ clients are being referred to independent advisers, given that the failure to ‘report’ can lead to severe ramifications for the bank: “Simple legal advice is expensive, as much as US$40,000-50,000,” adds another private banker.

Client-facing bankers are also lamenting that unwieldy compliance requirements are taking up a disproportionate amount of time, hampering their capacity to generate new business. Another head of a Hong Kong-based global private bank has observed that “over 50%” of his staff’s working hours are now spent on ensuring that all regulatory obligations are being met. A decade ago, “compliance would eat up no more than 20%-30% of one’s time,” he says. “This also explains why more private bankers are setting up external asset management (EAM) businesses that focus solely on advisory services as opposed to booking and custodian operations,” he continues. Recent studies note that Asia EAMs presently manage more than US$30 billion in client assets; more importantly, this figure is expected to double over the next five years.

Silver lining, silver bullet

The good news – and there is always good news – is that the wealth management industry’s growth prospects remains tethered to Asia. By 2020, the number of millionaires worldwide could rise by over 46.2% to almost 50 million persons, according to a Credit Suisse Research Institute report. Asia Pacific numbers, however, are set to grow by 66% – outpacing both North America (33%) and Europe (55%). Cost/income ratios at many banks have also dipped from 80% plus in 2013 and 2014 to close to 70% in 2015. More generally, Asian private banking units at many of the universal banks did well in 2015 when compared with wider group performances. For instance, Credit Suisse Private Banking posted an 11% YOY increase in pre-tax profit for 2015, although the institution as a whole recorded its first annual loss since 2008 due in large part to goodwill and litigation charges. Similarly, HSBC Private Bank in Asia achieved a 20% YOY rise in pre-tax profit even though its group profit was flat.

A further point of note is the fact that UBS WM, Credit Suisse Private Banking, BNP Paribas WM and Citi, have dedicated infrastructure in place for training and development in Asia. Such facilities will become important sources of organic growth in a region where talent is in hot demand. The region’s private bankers can also no longer afford to ignore behavioural changes in Asia’s increasingly tech-savvy clients. Technology budgets at private banks are booming, with 50% of those surveyed by Asian Private Banker spending north of US$60 million on digital investments.

Perhaps now more than ever it is clear that those banks that get their cards right – be it via consolidation or restructuring – will be the best positioned going forward (a truism if ever there was one!); and while size – whether in terms of AUM or RM headcount – is by no means the only criterion for assessing a private bank’s performance and potential, it is, nevertheless, one of the most compelling benchmarks we have.


NOTES:
UBS Wealth Management – HNW clients with over CHF2 million in investible assets;
Citi – Client assets of US$1 million ie. assets from Citigold Private Client, in addition to Citi Private Bank;
Credit Suisse Private Banking – Assets from clients for which the group provides investment advisory and discretionary asset management services;
HSBC Private Bank – Client assets at the rate of exchange applicable, and includes funds under management and customer deposits;
DBS – Assets from clients with US$1 million and above from DBS Treasures Private Clients and DBS Private Bank;
Morgan Stanley Private Wealth Management – Clients assets in Asia Pacific including Australia;
Deutsche Bank Wealth Management – Wealth management unit only, post restructuring and split of the asset and wealth management businesses;
JP Morgan Private Bank – Clients with US$10 million and above in assets;
BNP Paribas Wealth Management – Total market value of all the financial assets which the bank manages on behalf of its clients;
Goldman Sachs Private Wealth Management – Clients with US$100 million and above in assets;
Barclays – AUM includes deposits, credit and investments, including India;
LGT – AUM includes loans.

All data represented in the League Tables are Asian Private Banker estimates and are subject to change as new information comes to hand. The tables exclude institutions whose Asian bases are on mainland China or have expressedly asked to be omitted, among other considerations.