China 2016 AUM League Table
China’s Top 10 private banks average 35% AUM growth rate since 2012
While the world has been fixated on the steady rise of Hong Kong and Singapore as global wealth management hubs, China’s private banking industry has quietly amassed a pool of assets under management (AUM) to rival any onshore market.
In 2016, China’s Top 10 private banks grew their collective AUM by 21.9% YoY to RMB 7.5 trillion (US$1.1 trillion1), outpacing Asia’s (ex China onshore) Top 20 private banks, whose client assets climbed by 6.1% over the same period during a year, according to Asian Private Banker data.
China’s Top 10 Private Banks by AUM (RMB billion)
|1||China Merchants Bank (CMB) Private Banking||1,659.5||1,252.1||752.6||571.4||434.2||32.5%||39.8%|
|2||Industrial and Commercial Bank of China (ICBC) Private Banking||1,208.4||1,061.6||735.7||541.3||473.2||13.8%||26.4%|
|3||Bank of China (BOC) Private Banking||1,000.0||810.0||720.0||570.0||450.0||23.5%||22.1%|
|4||Agricultural Bank of China (ABC) Private Banking||818.4||807.7||640.0||505.0||396.0||1.3%||19.9%|
|5||China Construction Bank (CCB) Private Banking||786.3||622.9||468.6||396.4||291.5||26.2%||28.2%|
|6||China International Capital Corporation (CICC) Wealth Management||618.8||399.0||216.0||127.6||75.4||55.1%||69.3%|
|7||Bank of Communications (BOCOM) Private Banking||466.5||407.3||291.0||233.9||182.1||14.5%||26.5%|
|8||Shanghai Pudong Development Bank (SPD Bank) Private Banking||346.8||295.0||220.0||140.0||100.0||17.6%||36.5%|
|9||China CITIC Bank (CITIC) Private Banking||321.2||244.1||143.9||85.6||53.7||31.6%||56.4%|
|10||China Minsheng Banking Corporation (Minsheng) Private Banking||296.8||273.0||230.4||191.9||128.2||8.7%||23.4%|
Source: All figures are based on Asian Private Banker estimates and published data
Furthermore, since 2012, the total AUM held by China’s Top 10 private banks has increased at a CAGR of 30.6%, while for Asia’s (ex-China onshore) Top 20, the growth rate is substantially less at 6.75%.
The growth disparity, while pronounced, is unsurprising for a number of key reasons. The Chinese private banking market – at around ten years old – is growing from a low base, notwithstanding the substantial numbers involved, whereas Asia’s comparatively mature offshore industry has been subject to consolidation in recent years as market maturity, margin pressure and regulatory tightening put a squeeze on balance sheets.
This was especially evident in 2015, when Asia’s (ex-China onshore) Top 20 private banks saw their combined AUM decline 4.7%, and in 2016, when market uncertainty and regulatory upheaval contributed to a slump in transactional volumes (some saw as much as a 30% decline in brokerage volumes and structured product trading volumes were down 13.8% across the industry before the US election) and stifled net new money flows, even as total AUM increased slightly.
At the same time, Chinese private banks – most of which are linked to their banks’ retail arms – benefit from a steady pipeline of client assets and tight capital controls as China’s HNW population swells.
Topping the table is China Merchants Bank (CMB) Private Banking, with just under RMB 1.7 trillion in AUM (+33% YoY), followed by state-owned giants Industrial and Commercial Bank of China (ICBC) Private Banking (RMB 1.2 trillion, +13.8% YoY) and Bank of China Private Banking (RMB 1.0 trillion, +23.5% YoY).
All three banks are also in the process of further refining their approach to private banking as investors become more sophisticated in their demands and scrutiny around the distribution of implicitly guaranteed, high-yielding wealth management products increases. For example, CMB Private Banking recently introduced a “scientific” asset allocation system that has been configured for the China market, while Bank of China Private Banking is increasing synergies within the group to bring to private clients a “one-package service”.
China’s onshore opportunity: asset growth outpaces HNW wealth creation
Impressively, India and China represented nearly 10% of global HNWI wealth and accounted for almost 19% of the global increase in new wealth since 2006, according to Capgemini’s Wealth Report. It stated that the two economic powerhouses added US$4 trillion in the last decade.
Last year, too, China’s AUM growth of 22.6% proved to be higher than the growth of its country’s HNW wealth – which grew by 16.9% in the same period (2015 – 2016)2.
Indeed, offshore, the opportunity to tap into the unbanked is less promising. In 2016, Hong Kong’s HNW wealth, grew at a much slower pace of 3% while Singapore’s HNW wealth fell by 3.5% in the same period.3 Also, AUM growth at Asia’s private banks (ex-China onshore) did not keep pace with high net worth (HNW) wealth creation in the Asia Pacific region.
China Top 10 private banks: RMs, clients, branches
|Ranking by AUM||Bank||2016 RM||2015 RM||2016 Clients||2015 Clients||2016 PB branches||2015 PB branches||Threshold||Launch year|
|1||China Merchants Bank (CMB) Private Banking more info||602||530||59,560||49,032||47||42||RMB10 million||2007|
|2||Industrial and Commercial Bank of China (ICBC) Private Banking more info||1,358||974||70,074||62,381||36||36||RMB8 million||2008|
|3||Bank of China (BOC) Private Banking||156||130||95,400||86,500||36||35||RMB8 million||2007|
|4||Agricultural Bank of China (ABC) Private Banking more info||1,600||-||70,000||69,000||37||34||RMB6 million||2010|
|5||China Construction Bank (CCB) Private Banking more info||1,824||-||58,721||32,180||37||37||RMB10 million||2008|
|6||China International Capital Corperation (CICC) Wealth Management more info||275||250||29,972||26,541||20||20||US$1 million||2007|
|7||Bank of Communications (BOCOM) Private Banking more info||277||270||35,043||29,490||37||37||RMB6 million||2008|
|8||Shanghai Pudong Development Bank (SPD Bank) Private Banking||198||147||19,739||15,871||18||12||RMB8 million||2011|
|9||China CITIC Bank (CITIC) Private Banking more info||151||138||21,575||16,424||38||38||RMB6 million||2007|
|10||China Minsheng Banking Corporation (Minsheng) Private Banking more info||463||-||14,884||14,849||41||40||RMB8 million||2008|
Source: All figures are based on Asian Private Banker estimates and published data
China’s private banks add RMs, branches to accommodate swelling AUM and client numbers
To keep up with their substantial growth in assets under management (AUM) and to drive further gains, China’s 10 largest private banks by client assets continued to build their frontlines throughout last year, Asian Private Banker data confirms.
At the end of 2016, the Top 10 had 6,904 relationship managers (RMs) combined, although direct comparisons between this figure and Asia’s (ex China onshore) 2016 total of 5,459 are not possible.
This is because, in many cases, Chinese private banks include retail banking RMs in their totals. Indeed, for some Chinese private banks, retail bankers and private bankers, often alongside legal services teams, attend to the same clients, while for others, private bankers are often accompanied by experts who specialise in “domestic issues such as legal matters”, as well as experts who focus on “overseas/offshore issues”.
However, the industry does appear to be moving towards a higher ratio of dedicated private bankers. For example, one private bank has set itself a target of having 10% of its private banking clients’ accounts managed directly by private banking RMs by the end of this year
Unsurprisingly, as China’s private banks ramped up their RM headcounts, they also continued to expand their branch networks in 2016.
The total number of branches operated by China’s Top 10 hit 347, up from 331 in 2015, reflecting the 18% YoY surge in client numbers, to 474,968.
Again, some caution must be exercised when delving into these numbers. For example, not all of these branches include private banking departments and centres, even if private clients can be serviced from these locations. Moreover, these generally only account for tier-one branches.
Equally, some double-counting is involved when determining private banking client numbers, although most banks spoken to by Asian Private Banker say that those individuals that meet the minimum requirement to be considered a private banking client are shifted out of retail – whether by invitation or automatically – and are no longer counted as part of the retail universe.
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1 Exchange rate as of 31 December 2016
2 3 Capgemini Asia Pacific Wealth Report 2016
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